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The Actuary The magazine of the Institute & Faculty of Actuaries

Associate or fellow?

s it your ambition to be a scheme actuary or actuarial function-holder filling one of the public interest roles reserved to actuaries by statute and regulation? Or is it your ambition to apply the quantitative actuarial toolkit to management problems, not necessarily within the insurance or pensions fields?
The shape of UK financial services continues to evolve rapidly mutual life offices have largely disappeared, and defined benefit pension schemes may well follow (at least in the private sector)! On the other hand, the UK is home to global financial services giants and London is a leading global centre for markets in securities, derivatives, and insurance. UK financial services regulation is widely admired and the regulator exercises a strong influence on the direction of European Union developments.
In its education strategy introduced in 2005, the profession recognised the growing diversity of actuarial roles and employments by separating the core universal knowledge relevant to all actuaries from the specialised and often country-specific material thus the division into core technical/core applications (CA/CT) and specialist technical/specialist applications (ST/SA). The associateship (including the right to use the letters AFA or AIA and describe oneself as an actuary) is available to members on completion of the CT/CA series. In addition to completing the relevant examinations, attendance at a one-day professionalism course and one year’s logged work experience (if applicable) is also required for all in the associateship membership class.
The associateship is a valuable qualification which increases the career options available to members. It is recognised internationally as meeting the minimum requirements to be an actuary. It can be attained relatively quickly, particularly if one’s course of study confers a right to exemptions. Associates have the same rights to vote on matters affecting the future of our profession as do fellows. Qualification as an associate demonstrates greater mastery of the quantitative techniques underlying modern risk management than any alternative.
As a result of its review of strategy, the profession believes actuaries should be encouraged to take advantage of the availability of associateship, either as a career platform in its own right or as recognition of having laid the foundation to progress to a specialised role as a fellow. This process is under way as the profession has begun contacting eligible candidates to invite to take up this valuable option. In the future, eligible candidates will be contacted once the results of each examination diet are published.
Even more importantly, employers outside the traditional fields of employment can be persuaded to put graduate recruits through the profession’s examinations to associateship level, which will give them grounding in:
– financial mathematics and its simple applications;
– statistics, statistical modelling and statistical techniques of particular relevance to financial work;
– stochastic processes and survival models and their application;
– mathematical techniques which can be used to model and value cashflows dependent on death, survival, or other uncertain risks;
– fundamental concepts of economics as they affect the operation of insurance and other financial systems, both from the point of view of individuals and their requirements for financial security, and from the point of view of financial institutions and their ability to provide products that meet customer needs;
– ability to interpret the economic environment and to make informed judgements as to suitable assumptions to make regarding future inflation, returns on investment, stock market behaviour, exchange rates, and economic growth;
– basic understanding of corporate finance including knowledge of the instruments used by companies to raise finance and manage financial risk and to provide the ability to interpret the accounts and financial statements of companies and financial institutions;
– ability to construct asset liability models and to value financial derivatives and to communicate with other financial professionals and to critically evaluate modern financial theories;
– understanding of risk management processes in financial firms including ways of measuring, monitoring and controlling the risks faced.
They will also gain an understanding of:
– the business environment they work in;
– how to tackle business-related problems;
– their professional responsibilities;
– the need for lifelong learning;
– applying a wide range of key financial concepts and in particular risk management in simple traditional and non-traditional situations
– how to model data in practice and to maintain an audit trail for information
– how to present fundamental financial ideas and arguments to others outside the profession.
Promoting the associateship as a qualification in its own right is entirely consistent with our prime responsibility for maintaining standards for our fellowship after all, those qualifying for fellowship will have all the foregoing and more! Developing the reputation of associates as quantitatively skilled versatile problem-solvers can only boost the reputation of fellows also.
Offering two highly respected qualifications one generalist and one specialist will strengthen our profession both by extending our reputation as the ‘first choice’ for those with a quantitative aptitude and by extending the range of candidates we can hope to attract into membership.
If you have already passed the core subjects, you can take advantage of the benefits of associateship immediately contact karen.brocklesby@actuaries.org.uk for details on how to apply.
Why is the associate class of membership being relaunched?
The associate class of membership has always existed in the profession and recognises a significant milestone in an actuary’s career. The demand for diverse roles within the financial sector is increasing and, by highlighting the benefits of being an associate of the profession, we aim to raise the profile and skillset recognition of the profession’s associates. Reaffirming the associate status further recognises the role many associates can and do play in the profession.
When will it be relaunched?
We are contacting those people who already qualify to be associates. After examination results are published, we will contact those people who qualify to become associates.
What does associateship offer me?
The associateship is a valuable qualification that increases career options. It is recognised internationally as meeting the minimum requirements to be an actuary in many countries of the world. This brings the profession into line with other international actuarial bodies. Once you’ve met the criteria for associate status, you can call yourself an actuary with the full blessing of the profession and use the initials AFA [Faculty” or AIA [Institute”.
How do I become an associate?
You must complete the core technical (CT) and core applications (CA) examinations (or have exemptions for some or all of them) and have one year’s worth of relevant work-based skills experience (if applicable). You also need to complete a one-day professionalism course within one year of qualifying as an associate.
Will this dilute the value of the fellowship?
The associateship focuses on the CT and CA subjects and provides a generalist qualification, to meet the diverse roles within the financial sector. The fellowship retains its role for those people who wish to specialise.
Is it likely that people will only join and study to reach associate status and not go on to fellowship?
Some people may see the associateship as a career platform in its own right, others may see it as a foundation to progress towards fellowship. The profession is seeking to provide a qualification that members and employers recognise has value to meet the changing employment market.
I only have to sit three more examination papers to become a fellow. Isn’t it worth me continuing anyway?
Everyone has a different work and life situation. You may decide associateship matches the expectations of you and your employer. You may decide to delay becoming a fellow. Highlighting both qualifications strengthens the profession’s reputation as the first choice for people with quantitative skills and abilities.
Which employers will want to support people reach associate status?
Employers can decide for themselves how to support their actuarial trainees in becoming associates. It is likely that, over time, specific actuarial roles for associates will be developed by employers.
Has it been market-tested?
The proposal has been discussed at length as part of the profession’s strategic response to the Morris Report. In particular, employers, students, and newly qualified fellows have contributed to the debate as have a number of the profession’s boards and committees.
How do we know this will work?
More than 1,000 people are currently eligible for associate status. These people are members of the profession and work in many different roles in the financial sector. The profession wants to continue to support these members and ensure they and future members have the training and professional development they need to fulfil their potential.
Will this get us a broader membership base? Don’t most people start off on a traditional field then move to non-traditional fields?
The associateship will attract members from non-traditional fields, eg risk managers, human resources. Their experience in different fields will add to the diversity of the profession’s membership and broaden our skillset.
Do other professional bodies have different levels of membership?
Many other professional bodies offer different classes of membership to reflect the needs of their members and potential employers.