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The Actuary The magazine of the Institute & Faculty of Actuaries

Student page: Trading places

Here’s a worrying graph for pensions actuarial students. This triple-barred spectre recently appeared in Faculty president Ronnie Bowie’s address, ‘The world needs actuaries’, and represents the number of UK pension funds (excluding SSASs) over time. If this downward trend continues to 2018, with fewer new defined benefit pension schemes, and trustees increasingly buying out liabilities, it looks like the world certainly won’t need pensions actuarial students.

This is a shame, as SA4 remains one of the most consistently popular fellowship exams. Those who took last sitting’s most popular fellowship, SA2, should not be too quick to laugh at their employee benefits colleagues’ thumb-twiddling. Solvency II is likely to keep you busy for a few years; however, with regulators allowing less discretion built into life insurance products, the disappearance of with-profits products could leave the life actuarial student’s in-tray looking somewhat empty in the years to come. Ronnie Bowie’s address highlights some interesting pointers toward the type of work and training that will face today’s actuarial students tomorrow.

Credit crunch implications and the impact of climate change on the insurance industry look set to provide us with new actuarial challenges, but those who have spent years navigating the qualification creek through traditional waters such as the life and pensions 300 series or STs may suddenly feel as if they have misplaced their paddles. General insurance is still thriving and the actuarial careers guide assured us that we’d be gaining transferable skills. However, without relevant work experience and knowledge of the market and legislative environment to which you are intending to move, changing discipline could require some re-training and a short-term reduction in salary.

As one alternative to working in the traditional life and pensions consultancies, the Profession seems keen to support actuaries who decide to set up their own consultancies, possibly offering advice on indemnity cover and IT, standard contracts and peer review.

While there is currently no shortage of graduates signing up to the actuarial life, there is evidence of a small but growing perception among graduates that the fellowship is too arduous a course for a qualification whose traditional markets of life assurance and pensions may be in decline. If displaced students of traditional actuarial disciplines are to infiltrate non-actuarial businesses, we need to look toward our actuarial education system to place us on equal footing with more widely experienced graduates. Employer surveys persistently say that when presenting our work at board or executive level, often the actuarial student’s communication and business awareness skills fall short of the levels that those employers would wish.

The changing face of CA3 has begun to address the issue with the introduction of an oral presentation to the exam. But I’m not convinced that this goes far enough in testing communication. Dr Albert Mehrabian, a noted researcher in the field of communication, found that the total impact of a message is about 7% verbal (words only), 38% vocal (including tone of voice, inflection, and other sounds), and a mammoth 55% non-verbal.

Research indicates that the human body can produce more than seven million unique movements. Most of these can be observed toward the end of a SIAS annual dinner when the disco kicks in, but it might be more difficult to test the correct set of movements to convince a finance director to increase company pension contributions. So CA4 Body Language, CA5 Office Politics and CA6 Networking may look unlikely for now, but it is also unlikely that anyone who qualified more than ten years ago would recognise today’s examination syllabus.

There is further evidence that many of those who start out on the actuarial path fail to make it to qualification. The newly introduced associate qualification may go some way to addressing this apparent waste of actuarial training, provided current students and fellows recognise and help promote the validity of the qualification to the wider financial and risk management industry. Actuaries (for example, those who have achieved the associate qualification) could move into broader areas as well-qualified risk management experts, backed by a qualification with the same cache as FFA or FIA. Interestingly, some doubts seem to have emerged over the appropriateness of the name ‘associate’ for a student who has passed the CT and CA stages.

For an opportunity to shape the future of actuarial students today, please send in your suggestions for an alternative title to studentpage@the-actuary.org.uk