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The Actuary The magazine of the Institute & Faculty of Actuaries

Life on the frontier

I was working on a pharmaceuticals M&A. One night, when I got back to my hotel room, I turned on CNN and caught a news story market rumours were beginning to circulate that my client was about to make a targeted acquisition. The media was speculating and had many of the details wrong. It was fascinating to read about my project in the FT as the story unfolded.’ David Marock FIA, McKinsey & Company associate.
Twelve months ago I left a more ‘traditional’ actuarial role in the life insurance industry to become a management consultant. This is my rather subjective view on what management consultants actually do and what I think actuaries have to offer the industry.

What management consultants do?
The ‘management consultant’ label is a bit like the ‘artist’ label there is no specific definition or designation and it can refer to some very different types of work. A musician, for instance, is different from a painter, who is different from a sculptor. In a similar way, implementing large IT systems is different from change management which is different from strategy. The firm I work for is best known for corporate strategy and focuses on advising and problem-solving issues of concern to top management it does relatively little implementation and change management. In addition to strategy, top management issues include organisation (eg corporate structure and post-merger management) and tackling issues in functional areas (eg corporate finance, marketing, and distribution).

A flavour of the work
The best way to think about the type of work management consultants do is by slicing projects two different ways (see figure 1). The first is by function (eg strategy, organisation, corporate finance) and the second is by industry (eg financial services, retailing, oil, and gas). As a generalist, there is scope to get involved in a variety of different industries. Personally, I prefer the strategy function; some of the other actuaries at my firm tend to travel up and down the corporate finance function or have joined as specialists to use their industry expertise in, for example, asset management.
At any given time, most consultants work on a single project that would typically last between two and six months. In the last year I have worked full-time on five projects:
– A UK financial institution We developed the strategic direction for its global retail banking division.
– B2B on-line ship-chartering company Working closely with the client, we formulated the company’s strategy and then the on-the-ground business-building of the e-commerce start-up from scratch.
– Mobile phone software Here we generated and evaluated software application ideas for mobile phones in financial services.
– Canadian on-line retail banking Scoping, assessing and negotiating alliances and partnerships.
– Global consumer company Redesigning the organisation structure to encourage an entrepreneurial and innovative culture.

‘Fit’ with actuarial training
Along with medicine, law, and engineering, the actuarial profession is considered an ideal place to source the type of individuals management consulting firms want bright people with drive, leadership ability, and personal presence. In addition, qualified actuaries are assumed to be numerate, computer-literate logical thinkers with problem-solving ability. In this way, the scope for actuaries to go into management consulting is excellent the qualities that make an exceptional actuarial consultant will also make an exceptional management consultant.
In addition, actuarial training and work experience gives actuaries a head start. Most qualified actuaries will be familiar with economics, accounting, and finance, and are used to the business environment. Their familiarity with managing and valuing risk is also useful in a wide variety of industries. Also, their insurance and asset management knowledge is highly valued.
Having said all this, actuaries who are management consultants do virtually nothing that might be deemed actuarial. Indeed, my raison d’être for entering the wider fields was to do a less purely actuarial job I had previously worked at Legal & General and then as a life insurance consultant with Watson Wyatt. As someone who places a huge premium on variety, I became a management consultant because I wanted to widen my vision and professional tool kit without taking a backward step in my career.

Is there a demand for actuaries?
There is undoubtedly demand for actuaries in the management consulting field. Top firms are now casting their recruiting net further than the traditional MBA pool. Given the basic overlaps, plus the large amount of business experience correlated with years of on-the-job training, actuaries have the kind of pedigree that management consulting firms want. My own firm, for instance, now employs 13 actuaries (seven in the UK and Ireland) and the number is growing.