July 18, 2009

ME AN ACTUARY? SEVEN QUESTIONS FROM A STUDENT

"I am 19 and good at math. I would like to learn more about the actuarial profession. Could I take a moment of your time to ask a few q?" --- Vicki

Sure. Since there aren't many actuaries around, I get questions regularly. Most come from work-age people who want to know if they should switch to an actuarial career. Generally not. Passing the actuarial exams takes years and few succeed. If you do, you've probably got too little experience for your age and are harder to train. Most actuarial students have the advantage of starting their careers fresh out of university with several exams already passed. They know how to study. They have momentum. They have energy. They appeal to employers.

Even Warren Buffett thought of becoming an actuary. Without the benefit of my wisdom, he ended up as a billionaire instead. I can't help everyone.

What About Students?
We can do magic in these times.
Be what we want to be.
--- Joe Jackson, Nineteen Forever
Vicki asked seven questions from her perspective as a 19 year old looking for a career choice. You can learn more about actuaries from the links at the bottom of this post. An actuarial career is well worth considering. You do challenging work, get paid well and have many opportunities. However, you are in a narrow field that few outsiders understand.

The careers with a lot of opportunity require a lot of skills.
--- Lawren Shatkin, 200 Best Jobs for College Graduates
Perhaps no job in the top 10 illustrates that fact better than an actuary.
--- Forbes
Here are the top 5 based on starting income in $US:
  1. actuary ($48.8K starting income with only 3,245 annual openings but growing by 23.7% annually)
  2. network systems and data communications analyst ($40.1K)
  3. market research analyst ($33.3K)
  4. sales agent in financial services ($30.9K)
  5. sales agent in securities and commodities ($30.9K)
Actuaries have evolved to remain in demand. Forbes notes "With margins thinner, actuarial accuracy is more necessary than ever to companies and the global economy."

Caveat
Average people are in the majority but they're not in demand.
--- Seth Godin
The world keeps changing. We're unlikely to work for the same company for our entire career. We must be self-reliant and keep aquiring new portable skills to stay relevant. Do read The Dip by Seth Godin to understand why you need to become the best in the world and how you can. I just re-read The Dip and it's still on my desk. Malcolm Gladwell writes about the 10,000 hour rule in Outliers. Also a must-read book. You might want to read Talent is Overrated by Geoff Colvin, which is still on my to-get list.

How do you answer mainstream questions when you have a nontraditional position and come from an older generation? I started my actuarial career at Metropolitan Life in 1984. That's 25 years ago. Life happens fast. My perspectives may not be meaningful for today's generation.

Let's get to the questions.

Q: What's a marketing actuary?
Me :)

Actuaries get labeled as technicians and aren't an obvious source for marketing expertise. Until mid-2005, I worked as a product actuary with 10 staff, a prime corner office and a gorgeous view. Now I work in the field helping advisors help their clients.

"Marketing" and "sales" get used as synomyns. Let's contrast them with help from Seth. Selling uses techniques to overcome our naturally reluctance to buy. Marketing tells stories that spread. I know didly about selling but have a lifetime of experience in detecting underlying needs and finding simple, elegant solutions.

When people think of life insurance, they think of low cost temporary coverage. They don't ask if Warren Buffett would "buy term and invest the difference". There's little understanding of the unique tax planning opportunities that permanent life insurance provides: tax-sheltered growth, tax-free income and a tax-free death benefit. You can even get tax deductions when borrowing to invest using the market value of the insurance as collateral. I help fill this void with tools such as this blog.

Here's the reality. Advisors are experts in selling. That's not wrong but they face big hurdles. They aren't experts in the inner workings of the complex products they use. They don't know they "why" behind product designs, which insiders rarely disclose. Since advisors get paid commissions, their credibility suffers. They aren't perceived in the same category as professionals such as doctors, lawyers and accountants. For financial advice, the wealthy trust their accountants. However, accountants received limited training about the tax advantages of life insurance and have the usual suspicions about the motives of commission-driven advisors.

Actuaries have deep technical knowledge, credibility, and strict codes of professional conduct. Combine that with clear, accurate, simple explanations. Now you have a marketing actuary who can connect parties that doubt one another. So clients can reduce their financial risks and get peace of mind.

Q: How do you like working at your company?
Lots since that's how I became who I am.

Working for a company has pros and cons (as does working for yourself). You learn the benefits of discipline and even bureaucracy. I've done budgeting, performance appraisals, disaster recovery plans and run projects. This skills help in many ways and I'm thankful that I had the opportunity to acquire them. I'm also thankful for the opportunity to switch from a traditional product actuary to a new role for which I initially lacked the skills. You don't know if you'll sink or swim if the lifeguard won't let you go into the water.

Q: What type of work do you do?
I help people live up to the light inside them. When I had staff, I quickly found that people are where they are because of who they are. Now I accept that and focus on those who want help.

If you're flexible, you can acquire valuable new skills. I watched what others wouldn't do or didn't like to do. Then I learned to fill those gaps. This creates better teams, keeps your mind fresh, and increases your value. I've built up diverse skills over the years by doing the new.

You'll go far by building skills in communication (written, verbal), time management and getting along with others. People will like you and like working with you.

Q: What's a typical day like?
I plan by the week. A typical week consists of
  • occasional presentations to groups of advisors (generally in the mornings)
  • meeting advisors individually (may include lunch)
  • preparing proposals for specific cases (generally in the afternoons)
  • accompanying advisors to meetings with accountants and clients
  • answering emails and phone calls
  • developing or improving marketing material
I spend hours of personal time in self-development: reading, reflecting and writing.

Q: What's the organizational structure like?
Layers and layers. As a product actuary, I reported to a Senior Vice President who reported to the President. I learned plenty about how senior executives think and act.

Now, I'm layers down in a larger organization and rarely see the President (though we are on a first name basis from my previous role). If I cared about titles, you could say I've been demoted. I'm actually happier, though. I no longer have staff to manage or regular meetings to attend or budgets to prepare. I have considerable control over my schedule, what I do and who I help. With fewer distractions, I focus much better.

Q: What do you enjoy most about your work?
Meeting clients and advisors. Working in a head office, your main face-to-face contact is with colleagues. While that is comforting, you get into routines. Working outside, you dont know who you'll meet or how you can help them. You get to exercise more creativity. Your actions matter. If you can quickly build rapport with strangers, your life will be good. As an introvert, I did not know if I could until I tried.

Q: What do you dislike most about your work?
Clerical tasks like filling out expense reports. Overnight travel means time away from my family. Eating with advisors means eating more and exercising less.

Links
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