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Want to be an actuary? Odds are, you’ll fail the test

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Re: Want to be an actuary? Odds are, you’ll fail the test

#291

Post by unknowncomments »

stbtrax wrote: post #3

From experience from a few close friends: Actuarial science is always in the lists of top jobs but it's a terrible career. It's quite limiting and doesn't pay particularly well. The companies are all old and stagnant and the amount of time put in to studying for exams is taxing. It'd be much better ROI to put that time into studying for sw-eng roles. That is, unless you're particularly interested in memorizing math f…

I didn’t go down that path, I went down the SWE path, but I have 2 close friends who I graduated with that decided to become actuaries.

We’re all early 30s.

One of them earns $250k as an FCAS in a reasonable COL city. His job sounds easy, 40 hours a week, no stress etc.

The other got a job in a tax haven, doing something related to pensions and annuities for a private equity company, and gets paid close to $500k. He’s Canadian so he pays 0% income tax. His job sounds fairly stressful but I have to admit, it makes me doubt my decision to not go down that path. He’s currently saving $400k per year and plans to retire at a very young age.

Don’t get me wrong, my career path is great too, but I’m not earning one the big money associated with FAANG etc. I make a nice “above average” income and I enjoy my job.

Re: Want to be an actuary? Odds are, you’ll fail the test

#292

Post by civilized »

mleonhard wrote: post #233
civilized wrote: post #182

Earlier quoted context omitted.

Also, insurance just doesn't have much interesting space for innovation. In life insurance, for example, products other than simple term insurance really shouldn't exist. They're mostly just Rube Goldberg tax sheltered savings accounts for the wealthy. In theory there ought to be some opportunity in the area of incentivizing people to improve their health behaviors. But carriers have been much slower to move on that…

I tried to buy decreasing term life insurance, where the benefit decreases continuously over 20 years, matching the needs of my family. I consulted with several agents and none of them could sell it to me. The best they could do was to divide the term into three time periods with different benefit amounts. One agent told me that most customers drop their policy after a few years. The companies earn most of their inco…

There's a startup that will do this but I don't know if you'd want a policy with a startup.

Re: Want to be an actuary? Odds are, you’ll fail the test

#293

Post by Moodles »

TheRealNGenius wrote: post #216
Moodles wrote: post #148

The red/blue urn question in the article isn't super duper hard right? It's at a level where it's a very hard question (but still doable) for a 16 year old high schooler I think? b = number of blue balls in second urn. P(both same color) = P(both blue) + P(both red) = P(first urn red) * P(second urn red) + P(first urn blue) * P(second urn blue) 0.44 = 4/10 * 16/(16+b) + 6/10 * b/(16+b) Multiply both sides by 10(16+b)…

I just plugged in numbers until I got it to be .44. I tried 2, 3, and 4, and then found the answer without needing to simplify

Even easier since the test itself is multiple choice.

Re: Want to be an actuary? Odds are, you’ll fail the test

#294

Post by civilized »

nerdponx wrote: post #262
civilized wrote: post #173

Earlier quoted context omitted.

The exams have two ultimate objectives: 1. Perpetuate the actuarial guild 2. Shovel money from aspiring actuaries and insurance companies into the SOA's coffers They aren't really, and aren't really meant to be, a marker of general, transferable intellectual skills or achievement outside the insurance industry. So it's not surprising that no one other than the parties involved (the SOA, aspiring actuaries, and insura…

But are they not actually markers of transferable skills? I have worked in insurance, but not as an actuary, and my impression was that actuaries generally do have skills that are broadly useful in data science. Why shouldn't the actuarial exams count for something on other job applications?

I've also worked with actuaries and my impression has been different. Some of them have some skills, but it's very hit-and-miss, and it's not clear to me that the average actuary would compete with the average Master's in Data Science / Stats / CS in terms of effectiveness as a data scientist.

Their big weakness is computational/programming skills. Many of them are simply unable to function outside of Excel.

The SOA is trying to remedy this with new exams (of course) but my impression is that it's too little too late.

Re: Want to be an actuary? Odds are, you’ll fail the test

#295

Post by specialist »

nwiswell wrote: post #248
specialist wrote: post #210

Earlier quoted context omitted.

> They have a fiduciary duty to their shareholders... Citation please.

Does this work? https://www.nolo.com/legal-encyclopedia/fiduciary-responsibi... .

I now realize I misinterpretted your prior reply as copypasta of the "maximize shareholder value" trope.

My apologies.

Re: Want to be an actuary? Odds are, you’ll fail the test

#296

Post by civilized »

namdnay wrote: post #273
seibelj wrote: post #258

Earlier quoted context omitted.

This is the same model of all licenses, which is inherited from the guild system common throughout all of human history (the government (monarchs, oligarchies, democracies) protect favored industries from competition). I put them on a spectrum: - Licenses that anyone can obtain by showing the requisite skills. This is the least nefarious, and the clearest example would be driver's licenses. In a perfect world anyone…

> Licenses that anyone can get, but are purely graded on a curve in order to protect existing members. Finally we get to the actuarial licenses! Similar licenses would be Michelin star restaurants and wine sommeliers. Only a very small community appreciates these licenses, but the value to those that have them is high via the artificial scarcity. In order to keep them fair they offer the test(s) to anyone, but grade…

> These competitions can be useful in case of limited availability (e.g. number of places every year in an elite engineering college), but also just as a signal that you're dealing with the best of the best.

When you're dealing with actuaries, you're definitely not dealing with the collective "best of the best" (although individuals may happen to be excellent). You're dealing with people who were willing to memorize and practice and grind a very specific set of exams because they had no other options or didn't want to do anything else.

Re: Want to be an actuary? Odds are, you’ll fail the test

#297

Post by throw0101a »

d136o wrote: post #39

In this [1] interview by Barry Ritholtz, Markel CEO essentially told the origin story of an insurance giant. Basically a family member was a lawmaker, passed a law that drivers of the newly invented cars (maybe horse buggies?) must be insured. They simultaneously started a company that sold insurance. Over time they learned to make money from investing their customers capital. It blew my mind at how candid he was abo…

> Are there insurance products that people are really satisfied with and trust will pay out in case of event X? I feel like I’m self insuring when it comes to car and healthcare at least.

If you mess up in your car, and kill someone or turn them into a quadriplegic so they need a 24/7 nurse, do you have the several million that it would take to 'pay off' the victims for the suffering you caused?

The most important part of auto insurance is not the cost of fixing/replacing any cars involved in a crash, but the liability component.

Re: Want to be an actuary? Odds are, you’ll fail the test

#298

Post by solumos »

civilized wrote: post #294
nerdponx wrote: post #262

Earlier quoted context omitted.

But are they not actually markers of transferable skills? I have worked in insurance, but not as an actuary, and my impression was that actuaries generally do have skills that are broadly useful in data science. Why shouldn't the actuarial exams count for something on other job applications?

I've also worked with actuaries and my impression has been different. Some of them have some skills, but it's very hit-and-miss, and it's not clear to me that the average actuary would compete with the average Master's in Data Science / Stats / CS in terms of effectiveness as a data scientist. Their big weakness is computational/programming skills. Many of them are simply unable to function outside of Excel. The SOA…

this is true — as an analyst, I was severely reprimanded for writing data cleanup scripts since they couldn't be reviewed in vanilla Excel

Re: Want to be an actuary? Odds are, you’ll fail the test

#299

Post by ActualActuary »

civilized wrote: post #294
nerdponx wrote: post #262

Earlier quoted context omitted.

But are they not actually markers of transferable skills? I have worked in insurance, but not as an actuary, and my impression was that actuaries generally do have skills that are broadly useful in data science. Why shouldn't the actuarial exams count for something on other job applications?

I've also worked with actuaries and my impression has been different. Some of them have some skills, but it's very hit-and-miss, and it's not clear to me that the average actuary would compete with the average Master's in Data Science / Stats / CS in terms of effectiveness as a data scientist. Their big weakness is computational/programming skills. Many of them are simply unable to function outside of Excel. The SOA…

I think it’s an unfair comparison. Of course the average actuary wouldn’t even come close to the average days scientist when it comes to data science skills.

Just like the average doctor wouldn’t, the average lawyer wouldn’t, and the average banker wouldn’t.

The problems they solve require very different skills. The problems I solve on a day to day basis have no need for data science. There are certain areas in my company where we use data science heavily, but in the areas we do need to use it we just use actual data scientists.

The SOA, in my opinion, is going down the wrong path. Actuaries shouldn’t be trying to compete with data scientists. It has such little relevance to the work of most actuaries and in my opinion it’s just a way for the SOA to try and increase their revenues by jumping on a bandwagon.

I agree with you “hit and miss” observation though.

The exams are a barrier, but they’re not perfect. Plenty of mediocre people slip through the net. My company has roughly 100 actuaries. There are maybe 10-15 people that I’d consider very good at their job. The rest are just “meh”. I suspect this is the same in most fields though. Most companies now seem to have some sort of “data science” function. Unless the company is a tech or “data is the product” company, those data science functions don’t seem to contain the brightest data scientists. A friend of mine is a data science lead at retail company, and he’d be the first to admit he’s fairly mediocre. Most of their challenging work is outsourced to a specialist consultancy and their in house staff barely do any actual “science”.

Re: Want to be an actuary? Odds are, you’ll fail the test

#300

Post by civilized »

ActualActuary wrote: post #299
civilized wrote: post #294

Earlier quoted context omitted.

I've also worked with actuaries and my impression has been different. Some of them have some skills, but it's very hit-and-miss, and it's not clear to me that the average actuary would compete with the average Master's in Data Science / Stats / CS in terms of effectiveness as a data scientist. Their big weakness is computational/programming skills. Many of them are simply unable to function outside of Excel. The SOA…

I think it’s an unfair comparison. Of course the average actuary wouldn’t even come close to the average days scientist when it comes to data science skills. Just like the average doctor wouldn’t, the average lawyer wouldn’t, and the average banker wouldn’t. The problems they solve require very different skills. The problems I solve on a day to day basis have no need for data science. There are certain areas in my co…

The question was about whether actuarial credentials should be positive signals in an application to a data science job. And my answer is: all else being equal, having more credentials is arguably good. However, all else is not equal. Having invested in actuarial credentials is a fairly strong signal of very limited computational/programming skills which are critical to a data science career. So the net signaling value of actuarial credentials in data science is actually negative.

I'm well aware that data science is as awash with mediocrity as any other field, but not being able to function outside of Excel makes you mostly useless as a data scientist, not merely mediocre.

I also agree with you that actuaries should not compete with data scientists, and should mostly stick to product, actuarial finance, reserving, etc. unless they desperately want to do data science, in which case they should switch to data science.

> in my opinion it’s just a way for the SOA to try and increase their revenues by jumping on a bandwagon.

It's worth noting that this is exactly what you'd predict if you buy my original thesis about the exams.

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