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The Actuary The magazine of the Institute & Faculty of Actuaries

Money, money, money

Are you turning Japanese? Or, to put it another way, do you follow the oriental style of reading The Actuary by starting from the back? Reflecting on my own perusal of the back pages, I realised that I always look for two things — the words ‘non-life’ or ‘GI’ and then a figure of a certain size. Only if these two criteria are satisfied will I then read the blurb.

I should probably enter a disclaimer at this point to my boss — don’t worry, I’m not desperately seeking anyone. I do this mainly out of curiosity. Mainly.

But the fact that I focus on actuarial field and salary tells me that I regard these as the biggest factors in any career decisions I might make in the future — initially. I shouldn’t, but I do. And I don’t think that makes me abnormal. Indeed, quick inspection tells me that recruiters know this, as these two pieces of information are usually in the largest 
font. Either that or they dangle the carrot 
of intrigue that the salary is ‘competitive’ 
or ‘excellent’.

We’ll consider the different fields of actuarial work next month. For now, though, let’s focus on money… cash… wonga!

To say money is a factor that influences our lives is like saying that a constant air supply is reassuring. Just typing the word ‘money’ into my generic MP3 music player yields 19 songs with that word in the title. For actuaries, interest in money is even more acute. Our entire profession is based around money; estimating the quantum and timing of future cashflows — something you can say the next time that someone asks you, “So, what exactly does an actuary do, anyway?”

Churn, baby, churn
It is also undeniable that the actuarial profession is lucrative — it certainly is at senior levels. We are, generally, well remunerated for our efforts. But being paid well, in of itself, may not be enough. It is thought that one of the determinants of how happy a person is how they perceive their wealth relative to those around them rather than the absolute measure of their wealth. 
In other words, people feel hard done by if they think that the guy/girl across the street gets paid more than them for a similar task.

Keeping up with the Joneses in this way may have symptoms — one of which appears to be an issue for the employers of actuarial talent right now.

That is, I don’t believe that the easiest way to increase your salary as an actuarial student is to determine to work harder in your current job. It is to quit and take a job somewhere else.

With Solvency II, among other things, currently hoovering up more actuaries, the market demand is currently outstripping the supply of actuaries that have 2-8 years of experience. It doesn’t take a ‘P’ in CT7 to know that this creates upward pressure on wages for those who are looking — sometimes just across the street. Indeed, in my discussions with people from around the industry, ‘churn’ seems to be a feature of the job market for actuaries right now.

Should I stay or should I go?
This creates a difficult situation for students and their relationship with their employer. Students will want to reciprocate the faith put in them by their employer for giving them a job and providing them with a study package that is generous relative to many professionals. This will create a natural tension between the long-term desire to build a profile within your company — and the profession — and the short-term desire to maximise your own earnings.

So whether it is the root of all evil or whether it makes the world go around, thinking about the money you earn is inevitable. Student actuaries and their employers have a relationship that is, ultimately, bound by it.

With the market for actuaries being best described as ‘hard’ at present, it is tempting to think that it’s all about the Benjamins. But it is worth remembering that life is a long song and salary is probably not something you will boast about on your CV in the future.