Actuarial Review Return to Main Page

The State of the Market

by Arthur J. Schwartz

To 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:

I asked everyone to speak from the perspective of CAS members and students only.  The exchange of views was exciting, as I'm sure you'll agree.

Schwartz: Let's talk about salaries. What would be typical salary ranges for:

  1. students with 1 to 4 exams
  2. pre-Associates with 5 to 6 exams
  3. new Associates
  4. new Fellows
  5. experienced Fellows (about ten or more years beyond Fellowship)?
Also, how active is the job market for each of these categories?

Dossin: We're seeing tremendous demand at all levels, especially for the entry-level students with 1 to 4 exams.  There's some salary compression at the 1 to 4 exam level between the students with no experience and the students with 3 to 4 years' experience.  The entry-level students are coming in at a higher salary level because of the demand, at salaries of roughly $45,000 to $50,000.

Cho: We're also seeing a lot of demand.  I'd like to point out the D.W. Simpson Salary Survey, which we update twice a year. The Survey provides all ranges of actuaries' salaries by exams and years of experience.  However, we caution the use of salary figures only by exams or number of years of experience, because many other factors affect salary, for example, the type of employer (insurer, reinsurer, consultant), the line of business, and, to some extent, geographic location.  Here are some rough ranges: Exams 1 to 4 roughly $43,000 to $65,000; Exams 5 to 6 (pre-Associates) $52,000 to $80,000; new Associates $62,000 to $95,000; new Fellows $82,000 to $125,000; and experienced Fellows $95,000 to $200,000+.  These ranges are from active candidates whom we've recently placed.

Dossin: I'd agree with those ranges.  I'd point out how rough those ranges are; much depends on supply and demand. For example, to use a sports analogy, what's a third baseman or a shortstop worth?  With actuaries, it depends on what line of business, plus how good they are.  Generally the star performers are getting the high-end salaries, with the medium performers in the middle, and so on.  Another factor is that some folks, though they're good performers, maybe even great performers, can be undervalued.  Again, that's like some ballplayers.

Cho: The sports analogy is a good one.  There are some actuaries who are clearly undervalued.  So far as how active the market is, we see that demand is strong at all levels.  Traditionally, there are always more opportunities for Associates than Fellows, and for students than for Associates.

Dossin: One area of interest is the Fellows with 30-plus years of experience.  Because of mergers, the number of insurers has consolidated.  Many of these Fellows have found their jobs eliminated.  If they've got good technical skills, they can find a new position pretty easily.  If their skills are in management, they have a more difficult time finding employment.

Cho: Yes, for these Fellows in particular, good computer skills are very important.  It's harder for Fellows whose recent work has been in general insurance operations or management than someone who is doing hands-on actuarial work or working in a highly technical area.

* Milkint: We're seeing a level of demand, at all levels, that I can only describe as insatiable. There's been quite an escalation in the salaries for students (1 to 4 exams) and pre-Associates (5 to 6 exams). We're seeing new students, just out of school, with one or two exams, starting at 40K to 45K, sometimes 45K to 50K, and even 60K is not unheard of. Companies paying these salaries are reasoning that they're making an investment, and they have to pay more to attract star players. For Associates, we see 75K to 100K, which is high historically. And for FCAS there's a wide range with new Fellows at about 100K, and more experienced Fellows at 200K and above. The market is very competitive, with many employers competing for talent.

Schwartz: What technical backgrounds seem to be most in demand?  For example, personal or commercial lines; pricing or reserving; dynamic financial analysis; or catastrophe modeling?

Dossin: We see demand in all areas.

Cho: I agree. Some areas are not as hot as [they were] previously.  A few years ago, securitization or experience in finite risk transfers was hot; now it seems as if DFA is getting a lot more attention.

Dossin: About a year ago, having a search assignment in "e-commerce" was a positive; now it's a negative.  In commercial lines, you need more actuaries as you write more business, partly because of the complexity of these lines.  If you look at three of the largest insurers, State Farm, Allstate, and Farmers, they're largely personal lines.  You can write those lines more efficiently with fewer actuaries.  Also, we see about three pricing positions for every one reserving position.

* Milkint: As for what's "hot", in the last five years, we had seen more of a demand for commercial lines over personal lines. Recently, we see more of a balance. There's a great demand for actuaries with experience in various niches like DFA, catastrophe modeling, reinsurance, and risk management.

Schwartz: What personal or professional skills seem to lead to the higher salaries or the more interesting career choices?  Can these skills be acquired and, if so, how would you recommend doing so?  Would offering classes at actuarial meetings help?

* Milkint: The most important personal skill is to be able to make strong presentations, verbally and in writing. Making technical concepts understandable to non-actuaries is critical if an actuary is going to move to the next level. The CAS could make this a part of their training. If actuaries can get comfortable speaking to a non-technical audience, it's a way to break through to higher salaries and management level duties.

The skill of speaking effectively means getting behind the numbers: "what does it mean? How can it help us make money?" If the actuary can give this kind of presentation, then they are viewed as a business person who just happens to be an actuary. Again, these skills are critical if you're going to be a consultant or be a company's President.

Dossin: My perception is that the CAS does a great job at teaching technical skills through the exams and the various seminars.  However, they do not seem to have any programs to develop communication or management skills.

Cho: On the SOA side, they've offered a few sessions, as part of a larger meeting, on "how to" subjects…such as making presentations and personal appearance and presentation.  Right now, it's up to each individual actuary to take it upon themselves to learn these skills.  Communication and leadership skills are key elements.  Candidates with these skills tend to be the stronger candidates in competition for a particular position.

Years ago, there used to be catchwords for certain types of actuaries, "generalists" versus "specialists."  In today's market, we see demand for actuaries with hands-on experience in many different areas; someone who's been around and accomplished a lot in various areas.   They're in demand because they bring more to the table.   Employers want actuaries who show initiative, who can produce creative solutions, and bring these solutions to their managers, rather than only someone who does what they're asked to do.

Dossin: So far as improving these skills, simply talking more would help.  The more you do it, with people from all walks of life, the better you'll get at it.  

Cho: We often hear from employers [about] their interest in candidates with a "business orientation."  For example, working with a mathematical model will always capture an actuary's interest.   However, management's interest is: "How does that model help us? How does it help us run the business better?"

Dossin: From the business perspective, how do the numbers fit into the big picture?  Actuaries who want to progress should study this.

Cho: Most employers want someone who is well rounded, unless it's a highly specialized area.  I'd emphasize the need for people who show initiative in understanding how their day-to-day work contributes.  

Dossin: Yes, "after I come up with this rate, what happens next?"

Cho: What's wanted is "big picture" thinking.  Another thing that helps in getting promotions is having strong mentors to guide them.

Schwartz: Should the mentors be from within the person's own company?

Cho: It's much better if they are.  The mentor needs to know the person, know their environment.  

Dossin: The mentor knows the culture.  The ideal mentor is somebody who has the job where you'd eventually like to be.  They've made it.  And they have the ability to move you up.  The best person is someone who's two or three levels above you.  Also, it's not necessary that the mentor be an actuary.  Of course there's the question of how you get a mentor.  You can't go into someone's office and say, "Can you be my mentor?"

All: [Laughter]

Schwartz: How much does it help to have an advanced degree or designation, such as an MBA, CFA, or CPCU?  How much is this "worth" in terms of salary, or more interesting career choices?

Milkint: It's definitely an advantage, especially CPCU, possibly CFA.  It shows a well-rounded background.  It would be more important in the nontraditional actuarial roles.

Cho: I agree.

Dossin: It's helpful.  But I've rarely had a company ask for anything extra.  On those rare occasions, it's been the MBA.  If someone were an Associate, my advice would be to become a Fellow before going for anything else.

Milkint: I'd counsel someone the same way— "finish the exams first."

Dossin: ACAS is like the first layer of cake; FCAS is your second layer, and anything extra is like the frosting.  The cake is good without the frosting.

Cho: One consideration is to quantify the value.  Time and money are spent getting these designations; is the payoff there?   If the actuary's going into a nontraditional position, yes, it puts you in a better light.  But there's no guarantee of higher compensation.

Schwartz: There's been a lot of discussion about students abandoning the actuarial exams to take the three CFA exams.  Presumably the salary for someone who's passed these exams are about equal to a high-level Associate or even a Fellow.  Yet the CFA exams are easier to pass and there are far fewer than the seven exams needed for the Associate designation.  What's your take on this?

Dossin: We see students dropping out and going into high tech, IT (information technology), and less often for the CFA.

Cho: If a student chooses to stay in the actuarial field, they should go for the actuarial designation first.  The CFA doesn't guarantee additional success.

Milkint: I agree.  Some students are looking for an easy answer.  Companies have to support their actuarial studies, plus it takes personal time and dedication.  Getting an actuarial designation takes intensity and commitment.  The CFA designation is not the answer.  A person with that designation does not have the technical skills or the attention to detail needed for long-term career success.  The actuarial exams are more than a rite of passage.  They are a training ground for future personal and professional growth.

Dossin: We've seen many students dropping out because of the transition rules.  The CFA seems like an easy way out; it's not.  Otherwise, you'd have 50,000 people taking it; all the college grads majoring in economics, finance, or business; they can't all be making $100,000 a year!

Milkint: The slowdown in the economy is a real PR opportunity for the CAS and the SOA.  Historically, these slumps in the economy have not affected the demand for actuaries.  Demand was strong in the early 80's; as it is now.

Dossin: Supply was incredible in the late 80's and the early 90's, when a survey came out ranking actuaries as the number one occupation in America.

Milkint: We were flooded with calls.

Dossin: Yes, everybody and his brother was calling, asking: "What's an actuary?  How do I become one?"

Milkint: The CAS could market the profession more aggressively. Now they can play up the nontraditional roles as a marketing angle.

Schwartz: I've suggested, in a posting on CASNET, that the CAS be more proactive, contact colleges and universities with strong programs in math or finance, and send out members to talk about the career.  Any comments?

Milkint: That's a great idea.  Be proactive.  Actuaries talking about what they do and why.  A program like that could be done at various career fairs also.

Dossin: It would be great if it could be done on a local basis.  An actuary in New York handles New York schools; if the actuary's in Georgia, the Georgia schools.

Milkint: It comes down to grassroots marketing.  If a student meets an actuary face-to-face, a student can see how the career combines their love for math and business.  That's how the spark starts.

Dossin: Some large companies are doing just that—sending their actuaries out to colleges.

Milkint: To take my comments a step farther, what about sponsoring a group of college students in your office for a day?  They can see how an actuarial department runs.  And they'll figure, "Hey, I make this commitment…and I get to do something I like…and yes, I like this!"

Schwartz: Another of my suggestions on CASNET was to send a letter to the candidates who registered for Exams 1 to 4 either as a "student" or as "unaffiliated" with either the CAS or SOA.  The letter would include the name and number of a local CAS member who they could call and talk to about the career.  Comments?

Milkint: A good suggestion.  They can follow up with someone if they have not yet made a commitment.

Cho: These two suggestions are great.  However, another challenge is, once they get into the field, to keep them in it.  We hear a lot of complaints about Exams 3 and 4 being too hard.

Dossin: Students are dropping like flies.  The CAS has to stop the bleeding.

Milkint: That makes sense.  Bring the bleeding to an end; bring in new students; and make sure they have the communication skills they need to do well.

Dossin: I'd like to add that the demand we're seeing for actuaries right now is a recruiter's dream come true.

Schwartz: On that note, I'd like to thank all of you for contributing to our first round-table discussion.  Thank you all very much!

*Indicates comments not included in the final print version

***

Please look for Part Two of our round-table discussion in a future issue of The Actuarial Review.

If you have any questions or comments on this article, please feel free to send them to esmith@casact.org