Roundtable Discussion
The Market For Actuarial Talent
By Arthur J. SchwartzTo assess the state of the employment market for actuaries, I recently held a round-table discussion with a number of prominent recruiters. Our panel included:
Angie Wachholz, from DW Simpson in Chicago. Angie is a senior recruiter. Her firm specializes in actuarial recruitment within all lines of business, including property & casualty, life, health and pension as well as all levels from entry to Fellows. She can be reached at angie.wachholz@dwsimpson.com.
Margaret Resce Milkint, from Jacobson Associates in Chicago. Margaret is a Partner. Her firm places all types of specialties for insurers; actuaries of course, but also underwriters and claims specialists. She can be reached at margaretmilkint@jacobsononline.com
James Coleman, from Nationwide Actuarial Search in Las Vegas. Jim’s firm specializes in placing casualty actuaries only. He can be reached at jim@actuary-recruiter.com
Pauline Reimer, ASA, MAAA, from Pryor Associates in New York. Pauline has been director of the actuarial placement division since 1986 and has nearly a decade of actuarial employment experience in insurance and consulting firms. She can be reached at Paulinereimer@aol.com.
Schwartz: [Looking at Table 1,] how active is the job market for each of these categories? Are there any areas (either types of practice, skill sets, or backgrounds) that are really “hot” right now? What areas are really “cold?”
Reimer: All areas of property & casualty are in extremely high demand, especially in comparison to their life, health, and pension actuarial counterparts. All levels of exams and all experience levels are in demand. Especially hot right now are any form of modeling: generalized linear modeling, predictive modeling, or cat modeling. Reinsurance pricing and reserving are always in high demand. On the cold side, in just the last few years, former Attorney General Eliot Spitzer put the kibosh on the once-hot financial reinsurance market, so the demand for people with those skills is low. Also, because of the subprime mortgage debacle, investment banks are not hiring at this time. Hopefully this is just temporary and if we look beyond March 2008, the investment banks will once again recognize the contributions of property & casualty actuaries in performing the securitization of cat bonds and side cars, and they will begin to rehire actuaries.
Wachholz: We see that actuaries with skills in cat modeling and generalized linear modeling are definitely “hot.” Other nontraditional areas of interest to employers are actuaries with skills in ERM (enterprise risk management). The new CERA (certified enterprise risk analyst) designation is becoming an impressive credential for actuaries to have if they want to demonstrate their expertise in ERM. The CERA designation is open to actuaries with an SOA or a CAS background. In addition, at DW Simpson, we are seeing more employers that are interested in hiring actuaries with good “business skills,” and they are hiring actuaries into positions like CFO (chief financial officer), which is a nontraditional career path for actuaries. For these employers, the actuarial “skill set” is very attractive; they are looking to actuaries to fill roles that are not specifically “actuarial” but that do require a broad understanding of business trends.
Coleman: Everything’s hot in the actuarial marketplace right now. If you have a solid P&C background and are able to communicate effectively, there’s a company out there looking for you! All employers, of course, will evaluate the total experience level the candidate brings.
Milkint: We see the same intensity in the market now. The demand for actuarial talent at all exam levels is at a peak. The hot areas are in the nontraditional “space”—predictive modeling, business intelligence and management reporting, product management, and ERM. Actuaries are continuing to move into broad-based business roles and are being sought out for those posts like never before.
Wachholz: We do not see any really cold areas but the recession in 2001 led to a reduction in new students for a few years. There was a hesitancy to add to staff then. That has led to a shortage of students at that level (of about 5 exams to 7 exams). So we see a lot of demand from employers for students at that exam level.
Coleman: There’s really high demand in the 3 exam to 5 exam range now. It seems like almost every company out there is trying to hire students in that exam range.
Reimer: There’s really high demand to hire new Associates through new Fellows right now.
Schwartz:Let’s discuss student programs, their features and any trends you are noticing among employers in designing these programs. First, what is the average amount of study time granted per exam?
Coleman: For the first exam sitting, employers typically offer 120 to 130 hours. If a person doesn’t pass the first sitting their study time may be reduced. It generally reduces by as much as half after the first sitting.
Reimer: Not every company reduces the study hours, so some students would continue to receive the same amount of hours for a second or later sitting.
Milkint: We see that as well. Companies have a program but many are using the program as a guideline and will “humanize and personalize” it when appropriate.
Schwartz: To what extent do employers generally have a required passing rate or a required score (for example, the employer requires one exam passed per three or four sittings or where the employer requires a certain score achieved)?
Wachholz: Employers generally don’t care what your score was: if you pass, you pass.
Reimer: There are some employers that, on a second attempt, will reduce your study time more if your score was a 3 or below (rather than a 4 or 5). If they see you did an honest attempt and got a 4 or 5, or if they know you had a major project to handle during your normal study sessions, these employers may not reduce your study hours. A major trend in the last decade is that companies are offering bonuses for students passing on the first attempt, in addition to the regular standard exam raise. This is an excellent concept because it truly does increase the incentive to pass an exam on the first try.
Schwartz: It’s a win-win situation. The candidate wins because they are getting through the exams faster and they are becoming more valuable to the employer with the additional knowledge gained on every successful exam; bluntly, they can tackle more varied projects for their employer. The employer wins as they do not have to spend as much on study time (for a second or third retaking of the same exam) and the employer reduces the costs for their student to retake an exam (the fees to register for and take exams have become very expensive in recent years). A bonus for passing on the first try would definitely add to a student’s enthusiasm for doing a good job on their studies and “getting it right the first time.”
Coleman: An interesting observation that we have made recently is that at least one major company has pared back their exam support. This company has clearly moved away from the generous traditional actuarial support that most larger companies continue to offer. With this employer, less emphasis is placed on whether a person is passing actuarial exams, as long as they can do the work.
Reimer: Those property/casualty employers that have a strict rule of requiring students to pass one exam every 3 or 4 sittings tend to be employers that are tied to a life insurance company. Life companies require students to pass according to some fixed frequency—or the student’s out of the study program.
Wachholz: Another important point is whether you are working for a traditional insurance company versus a consulting firm. If you are working for a consulting firm, you may not get as much study time, because when a client calls, you have to jump.
Coleman: That’s particularly true in the first half of the year when reserving and Annual Statement work make for a super-busy workload. Consulting companies are particularly challenging environments for students to find study time. Study time is often easier to take toward the second half of the year.
Reimer: I like to remind actuarial students that we are the only profession, not only in the insurance industry but among any type of financial services company, that is privileged to receive a special package of a study program plus strong study encouragement from employers. Even looking at other professions, such as lawyers, doctors, CFAs, or CPAs, there usually is no strong level of employer support for their studies. Not all actuarial students seem to appreciate how special the privilege really is to study during an employer’s normal working hours. The companies that Coleman mentions are putting actuarial students on the same level as other college graduates with strong economic, financial, or quantitative backgrounds.
Milkint: The P&C actuarial student is really in an enviable position today. He or she is being groomed technically for success through the CAS examination process plus many students are being groomed for leadership and management roles at earlier and earlier stages of their career. As a trend, companies see the value of providing a balanced experience to their actuaries at the student level and certainly at the Associate level. It’s great for the recruitment and the retention of Generation Y! Schwartz: Do employers generally grant attendance at exam seminars, and if so, how often?
Wachholz: Employers typically let a student go to one seminar per each exam taken. If you pass two exams per year, then a student can usually attend two exam seminars. It depends on the company. Most employers prefer that you attend a seminar that’s close by (in town or geographically). They’ll typically pay for travel to the seminar, the hotel, meals, and the seminar fees as well.
Schwartz: Do employers usually pay for study materials and exam fees? [Study materials include texts on the syllabus, and exam questions with model answers.]
Coleman: In general, employers pay for these materials and fees fully. However we do see some employers (relatively few) asking students to pay for these costs up front, with the employer reimbursing the student after the exam if the student has been successful and passed.
Wachholz: I have seen this happen recently with two candidates. This policy does make sense. Another twist on this is that the employer pays for half of these materials and fees up front. If you pass, they will reimburse you the other half. This gives students more of an incentive to pass the exam. This trend though is pretty rare; the vast majority of employers pay fully for study materials and exam fees. Some materials like books have to be returned to the company.
Coleman: Books and other study materials are often part of an employer’s library and are shared with other students coming up through the exams.
Milkint: Companies are typically very generous. We see all costs being covered and have not heard of any scaling back with this benefit.
Reimer: Some employers won’t pay for study materials that are duplicative. For example, employers will generally pay for only one provider of study notes, not two.
Schwartz: How do employers plan a student’s job rotation to other parts of the company (to help the student become more well-rounded and knowledgeable about the employer’s business)?
Coleman: Large employers generally have rotations lasting 18 to 24 months in different areas such as pricing, reserving, and underwriting. Smaller employers may not have formal rotation programs—but students in smaller companies are going to get much broader exposure in their duties and therefore may have a more thorough experience base.
Wachholz: It’s important to note that although, in a larger company, you get rotated around for 18 to 24 months, in a smaller company that lacks a formal rotation program you are not doing the same thing every 18 to 24 months. You are essentially rotating every day you are there! Sometimes that’s important to point out to students who get blinded by the large company’s rotation program. In the smaller company, the student actually gains more business and actuarial skills. In the smaller company, the result is the same—and possibly better!
Coleman: You see projects from start to finish in a smaller company, that in a large company you may see rarely, if ever.
Wachholz: Also in a small company, the student may be working right alongside the chief actuary, whereas in the large company you may not ever work with the chief actuary.
Milkint: We see many companies creating a career strategy with their new hires. The rotational program has evolved into a true career development and a management development tool. There is shared decision-making to ensure that the student actuary is seeing and being exposed to the areas or disciplines they are most attracted to or appear to be well-suited for. Many rotations now include moves into non-actuarial areas like underwriting, finance, investments, or even IT.
Reimer: A novice to the actuarial profession is in awe of a rotational program. They think it’s gold. They don’t realize that in a small company, they could have the equivalent of ten different rotations in a single year.
Schwartz: Table 2 shows figures on the average salary increase per exam passed. What other trends do you see regarding salary and exams?
Reimer: A very important trend is the first-time bonuses, for passing an exam on the first sitting, and that ranges from 50% to 100% of the flat dollar exam increases. There are some companies that have a percent increase per exam passed rather than a flat dollar amount; these percents range from 5% to 7% per exam. These percent increases are very rare among employers; however, they are very productive in creating a significant incentive for their students to pass exams quickly.
Wachholz: It’s important to note that in most companies passing exams is a significant and integral part of a student’s position. Students who progress quickly and successfully through the exams are also more likely to be successful from an overall career perspective.
Schwartz: To what extent will you see a student choosing among employers based on an employer’s student programs and, if so, what features do students most appreciate?
Wachholz: Students really like it when they can take study time at home or at their office—but only when there’s a quiet area for them at the office, so that they don’t have to study at their desks. Some students, especially those facing a long commute, like to take a full day off or come in late while getting in their study time at home. The reason is that if students are sitting at their desks, they may be pulled into other projects. On the other hand, some employers really want students to study at their desks, so if an emergency comes up, they can bring the students in quickly.
Reimer: Employers with the latter policy want to ensure that students don’t abuse their study time. They want students that treat their study time as a privilege.
Coleman: Most students strongly prefer when an employer lets them take study time in half-day or full-day blocks (as opposed to two hours here or one hour there, when they can find the time). Also students strongly prefer to take the study time away from the office.
Wachholz: It’s a matter of flexibility. In today’s job market, employees are looking for some flexibility in their work schedules. Many students are trying to achieve an appropriate “work-life” balance. Having the flexibility to take some study time at home is very attractive to many students.
Milkint: The student program is a big factor for most students. They often become experts in their employer’s attitude towards exams by closely studying the features of the student program. Employer support and flexibility in applying the program to an individual student’s needs and talents are critical to attract and retain the top students.
Schwartz: Are there any other interesting or unusual features of student programs or trends in student programs that you see?
Coleman: Many employers keep the features of their student programs in confidence. They are reluctant to put the details in the open; perhaps they don’t want it shared with other employers (whom they’re competing with for actuarial talent).
Wachholz: Many employers see the features of their student programs as proprietary information. They prefer to keep things close to the vest.
Coleman: Some employers will tell you exam range increases, but they won’t send prospective new hires anything in writing. Also, employers may show exam increases in percentages of base pay versus a flat dollar amount.
Milkint: A trend that we see incorporated in a few innovative student programs is the appointment of a mentor to guide the student through the process of exams and also into assimilation into the company. The mentor is typically not the student’s manager. This added feature is very well received.
Wachholz: One trend that we see is that students often want to see a copy of the student program before they join a company. Often companies will walk them through the features verbally. Once the student accepts a job, then companies will send them something in writing. They feel the student’s now “part of the team.”
Schwartz: How do companies know if their student programs are competitive?
Reimer: There are forums such as ASNY (Actuarial Society of Greater New York) where we’ll actually have annual meetings for employers to discuss and compare details of their student programs. Most employers do not want actuarial talent leaving their company just because their student program is not competitive.
Wachholz: Students talk a lot amongst themselves about student programs. They often use the CAS discussion forums or the Actuarial Outpost, a Web site that DW Simpson sponsors. The students are on the Actuarial Outpost, asking questions, discussing features of their current employers program. That discussion gets back to employers and helps to equalize the program features.
Milkint: The actuarial profession is so committed to its growth and the success of each student that sharing and collaboration is the norm—not the exception. Hiring managers will share high-level information with each other and companies are constantly “testing” their competitiveness. It is good for the profession and the industry.
Schwartz: Thank you all for a great discussion!
