Over the last number of years, there has been a sea-change in the average actuary’s career path. No longer does he or she want to be tagged as a “life actuary” or “pensions actuary” for their whole career but as a “business actuary” who has experience of a number of actuarial disciplines. There are many reasons for this:
- they have become bored in their current roles and feel like a new challenge
- the merging of financial services organisations has meant that a number of different actuarial disciplines are now offered by the one employer, making it easier for the actuary to move jobs internally, or
- because they have moved out into the countryside for family reasons and the choice is between the local fish-processing factory and whatever actuarial organisation happens to be in the area.
The purpose of this article therefore is to:
- advise actuaries on how to switch between the various actuarial disciplines
- reassure pension actuaries that there is life after the culling of Defined Benefit schemes
- provide all of the above with some of the tools they require in the job-search jungle.
In order to transfer smoothly from one actuarial discipline to another, it is important that you are able to identify your “transferable” skills. The first step in this is to ask “what skills do you have?” not “what job do you do?” From that, you should then identify and highlight those skills which are relevant or useful in your new role. The reason for this is that your previous day-to-day tasks are likely to have little relevance to your new duties and responsibilities (and probably will make little or no sense to your potential new employer). However, your underlying skills may be very relevant and, once transferred, can be utilised in very different ways within your new role to achieve your desired level of success.
Some sample transferable skills are given in the table opposite. For example, instead of saying you “priced life insurance products” (life actuary), “set premium rates for motor insurance” (non-life actuary) or “performed triennial valuations” (pensions actuary), you should be highlighting the underlying skill – you “used a combination of financial, cashflow and risk modelling skills ……” to achieve the desired result.
In summary: Think skills, not tasks.
[Don’t overdo it though: consider those of you who spent your summers working down at the local Esso garage, filling fuel-tanks all day long: you know you were a “petrol pump attendant” – don’t pump it up and call yourself a “fuel injection technician”!]
The Skill-Set CV
A Curriculum Vitae is ultimately a Marketing document – a short summary of your working life and achievements, highlighting those skills, knowledge and events which will appeal to your new potential employer.
For many employers, mentioning the words “SIB review” is the kiss of death. Therefore, once again, it is important for actuaries wishing to secure new employment that they demonstrate what their underlying skills are to the potential employer, rather than just listing the tasks they have been performing. For example, I have included below extracts from two curriculum vitae – one is task-orientated while the other is skill-orientated. Not many will secure jobs using the first format.
Using specific SIB Review terminology.
- Performing SIB Review loss assessment calculations
- Checking loss assessments and signing off letters after editing them.
- Providing technical assistance to loss assessment team.
- Keeping up to date with changes in regulations and techniques involved with assessing cases.
- Testing spreadsheets prior to implementation.
- Training others in loss assessment calculations
Using generic employee benefits terminology
- Modelling Occupational Scheme benefits for comparison with Personal Pension funds.
- Reporting results to clients.
- Providing technical assistance to clients and external caseworkers on complex modelling issues.
- Ensuring that current procedures are in accordance with FSA regulations and amending procedures to reflect changes in regulation.
- Software testing and Quality Assurance validation.
- Training of others in regulatory issues and Occupational Pension Scheme features.
The defining moment for Defined Benefit
The advent of FRS17 was a defining moment for defined benefit schemes – the beginning of the end. What was introduced as a mechanism for reporting the ‘true’ cost of running the employer-sponsored retirement scheme has actually influenced employers to withdraw from DB schemes and switch to Defined Contribution instead. Apart from asking “was this what was really intended?” pensions actuaries are also now asking themselves “what next for me?”
There’s no need to worry. Even where employers are putting new employees into DC schemes, the DB scheme for existing employees may take many years yet to run-off and thus the DB pensions actuary will still be required when I’m pushing up daisies.
In addition, employers with DC schemes will still require significant advice from actuaries. Why? Because DB and DC are really just different sides of the same coin – with the first, you know the end benefit (pension as a percentage of final salary) and you need to calculate the contribution rate, while with the second you know the contribution rate and you need to calculate the projected retirement fund.
The latter may sound simpler, but in reality it will be of little use to quote ‘telephone numbers’ to pension scheme employees – it is likely that pension actuaries will convert the projected retirement fund into an annual pension equivalent so that employees can readily understand its relationship to their final salary, as well as understanding whether their current contribution rate is sufficient. Michael Moloney, an employee benefits consultant with Mercer says “In a DC environment you need to be able to explain the key factors driving retirement income to members, not just trustees.” Pensions actuaries will be using the same skills, just in a different environment.
“It’s Life Insurance, Jim, but not as we know it.”
For my final example, I will look at the Financial Reinsurance or Alternative Risk Transfer market. This market for actuaries has, until recently, burgeoned over the last few years. One example of an ART product is an Investment loan to a Life or General Insurance company, with a Reinsurance wrapper. So do I need to be a life, general insurance or investment actuary to work in this area? If you look at a cross-section of the actuaries practising in this field you will see that they come from very diverse backgrounds and represent all the major disciplines – they have very different past experience but all were able to demonstrate the underlying skills (analytical, financial modelling and client relationship skills) required to switch to ART.
Whether you want move up the ladder in your current company, change tack completely to ART or want that job in the local fish-processing factory, the most important thing to remember is highlight your relevant skills.
- If you are a life actuary and want to become a general insurance actuary – focus on your data modelling, statistical modelling and risk modelling skills.
- If you are a general insurance actuary and want to become an employee benefits actuary – focus on your communication skills, client relationship skills and business development skills.
- If you are a SIB Review actuary and want to specialise in investment – pray hard.
(Picture: SIB review actuary going into confession box and saying “forgive me, Father, for I have sinned”) ????
I agree with the good people at Orange – the future is bright. More and more actuaries are becoming less specialist and more generalist. We are opening more doors for ourselves, not only within the different disciplines of our profession but also in wider fields e.g. management consulting, environmental impact modelling (and recruitment!).
As Bill Gates from Microsoft would say “Where do you want to go today?”
Paul Walsh FIA is Managing Director of Acumen Resources, the specialist actuarial recruitment company.
Financial modelling skills
- Risk modelling
- Cashflow modelling
- Statistical modelling
- Stochastic modelling
- Data modelling
- Verbal skills
- Written skills
- Facilitation skills
- Presentation skills
- Negotiation skills
- Time management
- Project management
- Attention to detail
- Financial analysis
- Strategic analysis
- Operational analysis
Client relationship skills
- 2 ears, 1 mouth approach
- Understand their needs
- Manage their expectations
- Man management
- Team working
- Coaching and development
Technical knowledge skills
- Legislative knowledge
- Regulatory knowledge
- European directives
- Irish taxation law
- International taxation law
Business development skills
- Business retention