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How to Become an Actuary: The Career Change Guide

How to Become an Actuary: The Career Change Guide

Last updated: August 8, 2019
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Are you a mathematician with keen analytical skills who is bored in your current role? Is problem-solving your hobby? If so, you may be looking for a new job with plenty of future growth. Specifically, you might want to learn how to become an actuary.

Actuaries are people who evaluate financial risk and the associated costs. According to the Bureau of Labor Statistics, the job outlook for actuarial analysts in the United States is expected to grow by 22% through 2026 (from 2016), which is significantly faster than average.

If you’re unfamiliar with actuarial jobs, there’s no need to worry. We have a complete guide on how to become an actuary.

What Is an Actuary?

According to the Society of Actuaries (SOA), “Actuaries measure and manage risk. Actuaries have a deep understanding of mathematics, statistics, and business management. With this, they help businesses grow and provide value to their customers. Actuaries help leaders make strategic decisions, and consumers prepare for the future.”

Actuaries work with the insurance industry to measure and manage risk. Actuaries can help businesses and individuals determine how much risk they carry and find ways to lower this risk so that these companies are not such a liability to insurance companies.

One of the primary roles of an actuary is the ability to gather and process statistical data. The client will then use this data to predict the likelihood and expected cost of an event, such as:

  • Sickness
  • Death
  • An accident
  • A natural disaster

Once actuaries know the probability that an accident is going to occur, they engage in risk management. They will design and administer everything from business strategies to life insurance policies to help reduce risk while maximizing profits. Actuaries should be familiar with this information and how to produce it in various chart and table formats.

How Much Are Actuaries Paid?

The Bureau of Labor Statistics says the average actuary salary in the United States is roughly $103,000. Other sites are a bit more bullish about actuary jobs. For instance, the website Be An Actuary says experienced actuaries can earn around $200,000 or more annually.

Actuaries can find themselves working for a company that provides these services. Those with experience could also move to an independent or freelance consulting role.

How to Become an Actuary

Are you interested in actuarial science? The first thing you’ll need is a bachelor’s degree. Many companies consider this the bare minimum for an actuarial job. Most companies would prefer an undergraduate degree in something like mathematics, statistics, analytics, or computer science. A high school diploma and work experience are not enough.

Once you have a bachelor’s degree, you’ll need to study to become a member of one of two professional societies: the Casualty Actuarial Society (CAS) or the Society of Actuaries. Both have sponsor programs that will eventually lead to full professional status. Entry-level actuaries are certified as associates and can eventually graduate to fellows.

The coursework for these two programs is different, so pick the plan you feel best aligns with your interests. The CAS is for those who want to work in property and casualty insurance, including things such as automobile and workers’ compensation. The SOA is for those who want to work in fields such as health insurance, investing, corporate finance, pension plans, and retirement benefits.

Before receiving associate certification, you must sit for and complete seven actuarial exams. If you’re still in school, you may want to consider sitting for the first and second certification exams before you graduate. The first two exams for both tracks are the Probability Exam (Exam P) and Financial Mathematics Exam (Exam FM).

These exams are no walk in the park. A single example can take hundreds of hours of studying and months of preparation. Students should expect to study for four to seven years before finally earning their associate certification. It takes another couple of years after that to make fellowship status.

During this time, you should still look for relevant actuarial work experience. If you’re still in college, start with an actuarial internship to gain a better idea of whether this career path suits you. Then, try working for a firm that provides sponsorship, so that you can continue to gain relevant work experience while continuing to work your way toward fellowship status.

In addition to passing the certification exams, you must also take continuing education coursework. These are known as Validation by Educational Experience (VEE) topics. These topics include things such as mathematical statistics, economics, finance, and accounting.

What Other Skills Are Relevant for Actuaries?

Are you still wondering whether an actuarial career is right for you? Consider whether you have the skills needed to thrive in this role.

Analytics

Those interested in an actuarial position need to have an analytical mind. They must know not only how to organize and compile data, but also how to analyze it and identify potential trends and patterns. Analytics is perhaps the single most critical skill needed for actuaries.

Ability to Communicate

Successful actuaries have strong communication skills. While actuaries are some of the smartest people in the world, they need to convey complex topics to people who may not understand. They also need to talk with clients to better understand their unique circumstances. Lastly, actuaries should have a strong writing background and should be able to draft memos and other reports clearly.

Computer Skills

Much of an actuary’s day is spent on a computer, combing through data and running complex equations. The best actuaries have a firm grasp of programming languages and know how to use tools like Microsoft Excel to create databases and spreadsheets.

Math and Problem-Solving Skills

In addition to analytical skills, actuaries need to have strong math and problem-solving skills. They should have a sound understanding of calculus and probability.

Frequently Asked Questions

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Understanding what an actuary does and how to become an actuary can be quite confusing. We’ve compiled some of the most commonly asked questions regarding actuaries.

1. When must you decide which type of actuarial work to pursue?

As mentioned, there are two different types of exam tracks. Fortunately, you don’t have to decide immediately.

There are a couple of things that should influence your decision. First and foremost, you should consider why you like each track. CAS is the better option for those who want to work in property and casualty, working with things such as natural disasters. SOA is the better choice if you’d rather work with people, dealing with things such as pension plans or life insurance. Enrolling in different internships within each track can give you a better understanding of the two before you make your decision.

You’ll also want to consider jobs available in your location. Some jobs may be limited in your area, so you’ll want to check on the availability and job outlook before jumping in.

If you decide that you want to go the CAS route, you’ll find that there is only one track of exams available. This track broadly covers “Property & Casualty.” If you would rather work with SOA, you’re eventually going to have to choose a specific exam track. SOA offers six different exam tracks depending on which field you want to get involved with. These six tracks are:

  1. Corporate Finance and ERM
  2. Individual Life Insurance and Annuities
  3. Quantitative Finance and Investment
  4. Retirement Benefits
  5. Group and Health Insurance
  6. General Insurance

2. Which coursework is best to take in college?

When obtaining your bachelor’s degree, there are a few courses to take if you’re going to become an actuary. You should have at least three semesters of calculus under your belt, as well as two semesters of statistics. You should also take two semesters of economics, and at least one semester each of corporate finance and business communications.

3. Is a graduate degree necessary for actuaries?

A graduate degree isn’t necessary to become an actuary. In fact, it could be counterproductive, as you’re going to need to dedicate a lot of time and resources to studying for your actuarial exams. So long as you have a relevant bachelor’s degree, you won’t need to go to graduate school for this career path.

However, if you discovered actuarial sciences later in life, and your undergraduate field of study was in something unrelated, then a graduate school could be worth your while.

Put Your Math Skills to Good Use

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If you have strong math and analytical skills, a full-time actuarial job could be right for you. The above-average pay and job growth should make this an attractive option to many, along with the fact that you could work in this role remotely.

If you don’t think actuarial work is right for you, you could look at other math-based remote jobs, such as tutoring in mathematics. There are a number of remote tutoring jobs available, providing you with steady pay and a work-life balance.

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