collageWhen learning about a job as an actuary, it’s usual to hear about all of the advantages. It pays well, has a low stress level, and is a mentally demanding and challenging job. However, the downsides of the profession are rarely discussed. There aren’t many, to be honest. However, there are a few things you should think about before beginning your actuarial profession because they will have a significant impact on your future. Keep in mind that the ideas I discuss below are entirely subjective. Some people may see these characteristics of the job as disadvantages, while others see them as benefits.
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Actuary Meaning
a person who compiles and analyses statistics and uses them to calculate insurance risks and premiums.
Disadvantages of Being An Actuary
- Educational requirements. Actuaries often have knowledge in a variety of disciplines. …
- Testing requirements. Actuaries often pass a series of exams before becoming fully qualified in their fields. …
- High level of responsibility. …
- Individual work. …
- Work environment.
Average Actuary Salary
Because of the rigorous academic requirements and competitive nature of the work, actuaries make incomes well above average. The 2010 median annual salary for an actuary was $87,650, according to the Bureau of Labor Statistics. Entry level work commonly pays between $45,000 and $55,000. Actuaries are also in high demand, with projections of 27 percent growth in jobs between 2010 and 2020. This is significantly higher than the growth outlook for jobs in general.
Interesting Work
Actuary work is vital to the success of financial organizations and the financial health of many other for-profit and non-profit businesses. Actuaries usually enjoy the combination of working in a business environment and applying math and statistical skills in their jobs. While actuarial jobs are stressful at times, the challenges and importance of the work are common motivators for people who get into this line of work. Decisions recommended by actuaries can often lead to success or failure in a financial transaction.
Stress
Any job with a description that includes the word “risk” likely involves some level of stress. This is especially true for actuaries because they consider the risks of financial decisions for employers and others. They must make precise calculations and analyses to avoid major financial missteps or poor investment decisions. In insurance, for instance, understating the risks of offering a policy at a certain rate to a person or business could lead to a huge loss for the company on a claim.
Educational Demands
Becoming an actuary is not easy. You not only need to earn a degree in a finance-related area, but employers often expect a grade-point average of at least 3.2 given the importance of quality and accuracy in the work. Following graduation, you typically have to complete a few years of employment in an associate’s role. Achieving the professional status of actuary requires successful completion of one or more actuarial exams through an accredited academy or professional society.
2016 Salary Information for Actuaries
Actuaries earned a median annual salary of $100,610 in 2016, according to the U.S. Bureau of Labor Statistics. On the low end, actuaries earned a 25th percentile salary of $74,480, meaning 75 percent earned more than this amount. The 75th percentile salary is $140,190, meaning 25 percent earn more. In 2016, 23,600 people were employed in the U.S. as actuaries.
When you learn about a career as an actuary, it’s common to hear all the great benefits of it. It pays well, it’s low stress, and its a mentally stimulating and a challenging career.
But the disadvantages of the career aren’t talked about as frequently. Honestly, there aren’t many. But there are a few that are important for you to consider before starting your actuarial career because they’ll have a big impact on your future.
Keep in mind that the points I talk about below are a matter of personal opinion. These are aspects of the career some people may find to be disadvantages, while others find them to be advantages.
Studying for Exams
As you probably already know, studying for actuarial exams takes hundreds and hundreds of hours of your own time to study. Many people take 7-10 years to become fully qualified, and within that time frame you don’t get many breaks from studying. Many people don’t even finish all the exams.
Don’t take this lightly
You’re going to have to sacrifice huge amounts of your time. That’s time with friends, family (think long term if you don’t have your own family yet), and just time doing the things you love.
Of all the disadvantages that I’ll mention in this post, I believe this is the BIGGEST. This is the only one where I’ll suggest you ask yourself, “Is it worth it to you?”.
Research some of the other jobs that you could do that require a similar skill set but no exams. Then weigh out the pros and cons. Are the pros of being an actuary good enough to make all the study time worth it?
Continuing on. I said above that many people don’t finish all the exams. But, that doesn’t mean that you can just stop writing them at any time and continue working as an actuary.
This could happen if you pass all the preliminary exams and get your ASA or CAS designation. There is a place for actuaries that decide to stop writing exams once they reach that stage.
But if you quit before you’ve hit that milestone you likely won’t be able to keep your actuarial job.
Most companies that hire lots of actuaries require that their actuarial employees pass exams regularly. For example, it may be required that they pass at least one exam every 1 or 1.5 years, for example. If someone doesn’t then that person may end up losing their job.
So if you’re going to commit to a career as an actuary make sure that you’re in it for the long-haul.
Very Specialized and Competitive
Actuaries are extremely valuable to an insurance company because of their very specialized knowledge of how insurance and risk work, as well as their ability to understand complex mathematics and statistics.
But, outside of the insurance industry, an actuarial science degree and actuarial exams aren’t necessarily as highly valued. Many employers won’t even know what an actuary is.
That means that if you decided to exit the actuarial career (probably because you no longer wanted to write exams or didn’t like the work), other employers likely wouldn’t be willing to pay you as much as you’d get paid in an actuarial position.
That could lead to you putting in a whole lot of time, effort and money to pass exams, but you don’t get the reward of the higher pay.
This isn’t to say that other employers don’t value the skills and expertise of an actuary. Instead I’m saying that the actuarial world teaches actuaries to apply their skills so specifically to insurance and related products, that they’d have to learn how to generalize those skills and knowledge in order to apply it to other areas.
On top of that, this specialization means that there aren’t endless actuarial opportunities. Actuaries are hired by many different types of organizations, but there are only so many positions available due to the type of work.
So, this results in the actuarial career being fairly competitive in the United States, and Canada especially.
With so many people deciding to pursue the actuarial career path, but a slower increase in actuarial positions, it has been difficult for many aspiring actuaries to find jobs unless they’re very good candidates.
Actuary Work Life Balance
When you think about the work an actuary does, you may come to feel that it isn’t as fulfilling of a career as you would like. Ultimately, the actuarial career path comes down to analyzing uncertain events (more about that here) and putting a dollar value to them.
When you start working in an entry-level actuarial job, you’ll probably be ‘in the weeds’ doing all the dirty work that is necessary, but not necessarily fulfilling. You’ll be in Excel or some sort of modelling software, all day long, doing all the tasks that you’ve been asked to do by your manager.
Of course, as you advance your career, you’ll gradually move out of this role and into higher and higher management positions. During this transition you’ll spend more of your time in meetings, making strategic decisions, and planning for the future. You’ll move away from doing all the day-to-day tasks that need to get done.
But, consider if this will be fulfilling for you.
Insurance companies offer people products that help them significantly in times of need. And being a part of that can feel extremely rewarding and fulfilling. But, on the other hand, it can be difficult to see the big picture when you’re at the beginning of your career and don’t see how all the pieces connect.
Actuary Work Hours
When you’re just starting out in your actuarial career, it’s usually fairly easy to work your 7.5 or 8 hours during the day and then be done with work. It’s unlikely that you’ll have a large amount of responsibility and have to stay at the office late on a regular basis.
But, in my experience, it seems that as you advance further in your career as an actuary you start getting more and more responsibilities piled on you. You often have to manage a team on top of getting your own work done.
As a result, I’ve seen actuaries in management positions work much longer hours than they’re paid for. They constantly seem like they’re so busy, and I can only imagine it feels stressful to be in that situation.
Of course, this is ultimately a problem with the processes in place at the company and/or the number of staff. But I doubt my experiences are isolated. This probably happens at companies all over. After all, qualified actuaries with management experience are expensive employees so having more than absolutely necessary could put a strain on the company’s budget.
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