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The Actuary The magazine of the Institute & Faculty of Actuaries

Roundtable: Future of recruitment

The panel
>> Margaret de Valois, consultant, HSBC Actuaries and Consultants; editor, The Actuary (chair)
>> John Ball, head of defined benefit consulting, Watson Wyatt
>> Ian Farr, immediate past-chairman, the Association of Consulting Actuaries
>> Douglas Wright, senior lecturer in actuarial science, Cass Business School
>> James Turner, recruitment consultant, Goodman Masson
>> Alistair Brindley, head of pensions and investment actuarial, Hanover Search & Selection
>> Paul Sweeting, longevity strategist, Munich Re
>> Christiane Perera, pensions consultant, OAC Actuaries and Consultants
>> Jean Eu, actuarial analyst, RGA UK; student editor, The Actuary

Margaret de Valois (MdV): Do you believe that so-called soft skills such as communication and client relationship management (CRM) are becoming more important than technical skills?

Christiane Perera (CP): Not everybody is going to be a top communicator. You would not want to lose the expertise by taking on the soft skills but they are very important in developing client relationships.

Paul Sweeting (PS): It depends on the role. It is important to have a minimum level of communication skills but that does not have to mean presenting to a room of 5000 people.

Ian Farr (IF): If you are going to be a consulting actuary, you need to have the substance or you have nothing to deliver. The skill is being able to adapt your communication to your audience. You may need to say something entirely different to trustees around a table, rather than to the managing director or finance director.

John Ball (JB): Our clients want to see the person who has done the work. They don’t want a middle man as the communicator. So the actuary needs to be able to communicate clearly, even in areas which are increasingly technical such as mortality. Being able to build strong relationships is also very important.

MdV: So how do you assess candidates’ balance of skills in the recruitment process?

Alistair Brindley (AB): The curriculum vitae (CV) often reveals whether they have got the technical skills, and take them out for lunch and you will find out whether they have got the soft skills. You can identify people who have CRM skills or new business skills easily, and the demand has been for the whole finished article. However, the market is changing and companies need technical actuaries for intricate work arising from the various legislative changes.

MdV: If you assess soft skills and communications via behaviour at lunch does that make the existing communications exam redundant?

PS: The communications paper is intended to give people a base level of skills so you can communicate with your colleagues but you would need a much greater range to become a consultant.

IF: Well, this raises the question of a distinction between written and oral communication skills. Many young actuaries and actuarial students struggle to explain themselves clearly and interestingly on paper. Consulting firms have to train them to do that and it can be a hard job.

Jean Eu (JE): The Profession has recognised this because it is looking to change the communications exam. There will be a two-day course as of 2010, I believe, where the first day comprises a course on general communication skills and the second day is the exam, where half is a written exam and the other is a presentation.

MdV: What are your views on actuaries moving into wider fields such as risk management and healthcare?

PS: There are many instances where an actuarial way of thinking can give you an advantage. I think this is the reason actuaries originally started moving into general insurance (GI) — risks could be priced much more accurately.

AB: The changes in the pensions and investment markets are forcing people to move into a range of different areas. Many senior people are moving into the banking sector, especially with the growth of buyout firms.

MdV: Are employers in wider fields proactively looking for actuaries or vice-versa?

PS: It is dangerous to suggest that area-specific wider fields need actuaries and we are going to parachute some in. It would be better to migrate gradually from traditional roles.

JB: Even in the traditional areas of actuarial work, it is increasingly the case that many skills are transferable, for example, between insurance and pensions.

PS: That can extend to wider fields as well. GI risks are not a million miles away from credit risks, for example.

MdV: Do you think the traditional image of actuaries may be hindering movements to wider fields?

IF: It’s vital that we continue to recruit the best as it is the lively, clever people who are finding new areas for themselves, whether it’s geographically or in new markets. They will bring others in behind them and stimulate this movement.

Douglas Wright (DW): The Profession has had fairly bad press over the past few years and the onus is now on us to recognise where we can apply our skills and show what we can do. Actuaries who have made that move to the wider fields tend to have the soft skills.

AB: In-demand actuaries are often those who can stand alone and build a business around them. Increasingly people are going to come up with ideas they can take to market, as opposed to servicing clients on an ongoing basis. They will become much more aggressive and businesslike.

James Turner (JT): I have also seen an increase in people wanting to move between traditional fields — from a pensions consultancy role into investment consulting, or into life or GI — those who just want to do something different.

MdV: How receptive are employers to candidates wishing to move into different fields of work?

JT: If you send a pensions actuary’s CV to a GI company, there are going to be five CVs of people with GI experience already on the desk, so they need to show they can add value and give employers a reason to select them for interview. Those who have given it thought and can present themselves well will be successful. Successful candidates often also need to be prepared to relocate or commute for half an hour outside of London to gain the experience they want.

IF: That’s an interesting point in terms of relocation. Actuarial skills are transferable throughout the world.

MdV: Are we seeing a drain of people going to overseas employers?

JB: I worked abroad early in my career, and found that it gave me a broader perspective which has always served me well. It is something which I would recommend to any young actuary.

MdV: There are the tax advantages as well.

JT: Firms are getting better at offering staff the opportunity to go on secondment abroad, rather than losing them to another firm.

MdV: So the onus appears to be on candidates initiating a move abroad. How good do you think actuaries are at managing their own careers?

JT: I don’t think they look 20 or 30 years ahead. It’s more like four or five.

JE: I have met students who move jobs just so that they can get more study leave. They are not really thinking about long term, it’s more the short-term benefits.

PS: People think in two stages, don’t they? Goal one is qualifying and goal two is everything afterwards.

MdV: Given this divide, do you think it is helpful to change jobs soon after qualifying to shed the student image?

AB: There is so much demand for nearly or newly qualified actuaries, particularly in pensions and investment, so I don’t think it matters. They are prized as gold and looked after accordingly.

PS: If the firm is doing its job properly then when someone qualifies it should not be too big a change — it should be more of a gradual transition.

IF: Getting the letters after your name is a very important point in terms of pressure off your back but for career development, it is just a mere early stepping stone. With some firms, it is possible to have a fantastically varied and interesting career and stay with the firm for the whole time.

MdV: Some actuaries seek further qualifications after qualifying. Do these make a candidate more employable?

PS: It depends on the field. If you are working, say in investment banking, then doing something like the CFA qualification fills in some of the gaps in the actuarial exams. It can also be important from a signalling point of view, not least because some employers might not know how useful an actuarial qualification can be.

AB: There is demand for people with derivatives exams, especially from the banks.

MdV: Given this demand, should the actuarial exams expand their brief?

PS: The actuarial exams can’t be allowed to grow uncontrollably. Already there is specialisation in the later exams as there is so much to cover. Too much specialisation and there is a risk that actuaries won’t be learning enough in key actuarial areas.

DW: It’s wrong to think that we can have exams in every single area that an actuary might want to operate in. We are at the stage where you can qualify without any understanding of a traditional actuary’s role and that is probably further than we should go. One thing in our favour is being part of a profession with a code of conduct to adhere to standards, to respect fellow professionals and to work in a particular way. It is a privilege to be a member of a small profession and having that network is tremendously useful and something that is envied by many other professions.

MdV: So is there a case for keeping the profession small?

PS: There is a natural limit because there is a very small percentage of the population that could qualify to become an actuary.

JB: I believe that the issue is to persuade enough people that they want an actuarial career, rather than trying to limit numbers. In my area, we have to convince actuaries both that there is a future advising a person on pension issues, but also that in doing so they will develop the transferable skills, for example in risk management, to enable them to do broader work.

CP: But isn’t that broader work one way of encouraging school leavers and graduates to come into the profession? The Institute’s careers information seems to refer more to the traditional elements.

PS: An alternative approach is if you are talking about actuarial careers at a careers evening, make sure you turn up in an expensive car.

MdV: Do you believe young actuaries enter the profession mainly for the money?

PS: Those who are thinking about joining the profession may initially be more motivated by the money. People already working as actuaries find that the work is interesting but it can be quite difficult to get that across.

MdV: Perhaps we need an Apprentice-type television show where we send the new professionals out with a shopping list in Marrakesh and ask them to come back with the best deal.

JB: We already do something similar. Our new graduates work in teams to raise money for charity as a way of developing their commercial acumen.

JE: I found the graduate actuarial market ultracompetitive, and I wonder whether that might discourage some?

JT: Even with the bigger companies’ graduate programmes, it’s sometimes difficult to cater for those who might want to take time out after graduating or who missed out on the selection process.

MdV: Money aside, how do you think that we can persuade more graduates to join the actuarial profession?

PS: The Profession has done an enormous amount in universities and schools, encouraging people to take maths A-level and providing literature for careers officers and schools. The main challenge is trying to attract people from a wider range of disciplines.

AB: You have to consider the cyclicality of actuarial vacancies. Companies have to scale down their recruitment programme if it happens to be one of those years. We have seen patterns in the market where one year graduate intake is cut and then two or three years down the line, the same company claims it hasn’t got enough nearly or newly qualified actuaries.

IF: I know of one firm that paid the penalty in this way and there was a lesson to be learnt. So when it was unfashionable to recruit, it continued to do so even though there was a downturn. In the long term, that is what you have to do otherwise you come unstuck.

AB: It is sometimes to do with scale. A smaller company is going to have to react more to how the market is dealing than a larger one.

JB: Not all employers recruit at graduate level, which has always been an issue in getting enough people into the profession.

JE: I remember debating whether some employers just don’t see the value of actuarial degrees because they say, ‘Oh, you don’t have any work experience’.

MdV: Graduates with actuarial science degrees potentially join work with half the exams. They should therefore be good value, however, it seems that employers have sometimes preferred maths graduates to actuarial science ones. Why would this be the case?

IF: I imagine there is a higher fall-out rate for maths graduates, so I would have thought that was in favour of employers taking on actuarial graduates.

DW: There used to be resentment when new actuarial graduates got paid more than the person at the next desk who had been sitting there for three or four years. But companies have become a little bit more sophisticated in redressing this balance. They can see the value of the technical training but they can also see the value of work experience.

JT: We took a vacancy brief this week from a company that is not interested in people with actuarial science degrees, so the people who show early commitment to an actuarial career are still sometimes being overlooked.

DW: There has always been a perception that it is an easier route but we would argue that it’s a better one. You get the grounding in a university and then pick up the workplace skills on the job.