From experience from a few close friends: Actuarial science is always in the lists of top jobs but it's a terrible career. It's quite limiting and doesn't pay particularly well. The companies are all old and stagnant and the amount of time put in to studying for exams is taxing. It'd be much better ROI to put that time into studying for sw-eng roles. That is, unless you're particularly interested in memorizing math formulas for insurance calculations
I left the actuarial field for basically the reasons you describe, but the characterization still strikes me as somewhat unfair. Actuaries reliably make significantly above the median US income right out of undergrad, and reliably double that income within a decade, working 40 hours a week, without needing to go to a target school or get an advanced degree. That alone makes it a good career by most objective standards.
Software engineering is sort of a trump card in that it looks better than basically any other career on paper, but everyone can't be a software engineer. And while the actuarial field draws from a similar talent pool as software engineering, I think most people who enjoy one wouldn't enjoy the other - the former is much more of a business-y profession. I personally find the work I do as a SWE way less interesting than the work I did as an actuary, even though I'm not big on memorizing formulas.
I suspect that SWE is becoming a bi-modal field. We often talk about SWE salaries pushing mid-> high six figures, but this is only true for experienced professionals working in very successful companies benefiting from large stock appreciations.
If the stock market was falling/flat for a few years SWE comp would not be as high. By definition, most SWEs will not work at Netflix. The current situation of stable, well paying, and public tech companies is unlikely to persist indefinitely.
I suspect the average US "Senior SWE" is lucky to retire after decades of work having broken $200,000 compensation.
For every 20-30-40something FAANG engineer making $300-500k+, there are legions upon legions of SWEs working at IT-as-a-cost-center non-tech companies making a fraction of that amount.
Yeah, that's a factor too. The actuaries had way better salary trajectories than the programmers we worked with when I was at an insurance company in the Midwest.
A survey I saw said actuaries have high job satisfaction. I had actuary and math colleagues in the risk dept (i was in diff group) and they loved running risk sims, programming, data visualization. In addition to high salary per hour, low stress, no bro-grammer environment or ageism, or shiny new web framework.
This could be outdated information that I have, but don't actuaries constantly need to study for their exams/certs? Does that fall outside of the 40 hour/week range, or is that done on work time?
The exam process probably takes something like 2000-3000 hours total, with roughly half done on company time. Exam season is really stressful and can go significantly above 40 hours/week between work and study time, but it doesn't add up to a ton of time when you amortize it over a whole career.
There's also a career-long continuing education requirement that typically boils down to 15 hours/year of seminars or webcasts, all done on company time.
You could argue that a lot of SWEs also have to constantly study leetcode on their own, outside of working hours. Especially if you are targeting many of the high paying companies that would pay substantially more than an actuary.
Even if you are fortunate not to have to do leetcode (i.e. frontend engineer interviews seem to diverge from leetcode problems nowadays), you still have to extracurricularly grind on coding in ways that you would typically not encounter during your normal work.
> unless you're particularly interested in memorizing math formulas for insurance calculations
Note that the formulas in question are the opposite of interesting formulas. They're just made-up regulatory rules about how much capital an insurance company has to hold in order to sell insurance. Everyone agrees that some amount of capital needs to be held. Everyone, except maybe some of the "actuarial scientists" themselves, understands that this isn't a scientific endeavor like discovering the laws of General Relativity, it is an arbitrary and convoluted "rule of thumb" type of formula, but it's better than nothing because you really do need to force insurance companies to hold some minimum capital and you need some kind of standard formula to calculate that capital in order for there to be a level playing field between insurance companies.
I think actuarial science undergrad students choose that career because it is one of the safest choices for someone who is good at math but has no interest in science or technology. They are allured by the promise of steady employment and a $100,000 salary, and vague visions of being a high paid "math AND business expert" for a big insurance company where they will get to make decisions involving large sums of money with scientific precision using advanced mathematical concepts.
By the time your young actuary has started working, they are already too deep in to be able to change careers. They made the "safe" choice, now they have to live with it. At first everything seems new and exciting. But 10 years into it, they have settled down roots and family somewhere in the middle of Iowa (because that's where the insurance company is located), knee deep into spreadsheets calculating "Solvency II" formulas for "quarter end." They don't get to make any business decisions, they barely understand how their employers' business even really works, and their career has plateaued at a mediocre level despite having spent 10 years writing all of the available actuarial exams. Unfortunately, that is the only employer of actuaries in town, so they are completely marooned. They spend their free time learning the latest tips and tricks about Excel VBA programming, watching the movie "About Schmidt" repeatedly, and mistakenly envying their peers who work in banking instead of insurance
- risk aggregation (do we have too much exposure to a single risk or type of risk)
- loss forecasting (primarily for reserving, but also for a 'true' indication of performance, as claims experience is necessarily very laggy)
- product development (for example, what does a travel insurance product look like in a COVID world? What can we reasonably offer and how do we assess the pricing/reinsurance/risk appetite)
Moreover, none of these tasks required nor employed any memorised formulas. You either use a model someone else built, or build one yourself, and then analyse and test as much data as you can so that you can provide good advice. Importantly you have to be able to show exactly how you produced that advice, and be ready to justify every single choice you made while doing so. A large part of the actuarial training seems to be ways of working and thinking that enable this (at least this is my impression from the actuaries I work with).
There are actuaries who just calculate '"Solvency II" formulas for "quarter end"', but there are also actuaries developing advanced risk models for catastrophic weather events using large data sets and machine learning, or shutting down products because the market has shifted and it's no longer viable. In every insurance company I've worked at, actuaries are some of the most influential and respected people there, and do very interesting work (along with some really mind-numbing work!).
This is a fantastic summary of everything actuarial science can touch on. I started my career as a junior actuary at a small insurance startup and was fortunate to be able to meaningfully contribute to many of these areas because we didn't have many senior actuaries on staff. It was a lot of fun as a 23-24 year old to be involved in making such important strategic decision making, it made me realize that insurance companies are really fascinating financial objects.
There are definitely downsides as many are mentioning. As you specialize your job does get more narrow and "boring" (unless you climb the management ladder). Many major insurance companies are not headquartered in interesting or fun places to live. At some point I realized that life was not for me, and transitioned my skillset to data science/machine learning to give myself a more varied career.
But there are absolutely interesting problems to be solved in the insurance space, particularly for people with strong communication/business skills in addition to the wherewithal needed to deal with the actual nuts and bolts of the math and analysis.
"...that is the only employer of actuaries in town, so they are completely marooned..."
In any career there were always those who will limit themselves to the options "in town" and those who will go anywhere, anyhow to move ahead or find a better quality of life. Not saying that one is right and the other wrong, and this may now finally change with the remote work wave, but, there it is.
I didn’t go down that path, I went down the SWE path, but I have 2 close friends who I graduated with that decided to become actuaries.
We’re all early 30s.
One of them earns $250k as an FCAS in a reasonable COL city. His job sounds easy, 40 hours a week, no stress etc.
The other got a job in a tax haven, doing something related to pensions and annuities for a private equity company, and gets paid close to $500k. He’s Canadian so he pays 0% income tax. His job sounds fairly stressful but I have to admit, it makes me doubt my decision to not go down that path. He’s currently saving $400k per year and plans to retire at a very young age.
Don’t get me wrong, my career path is great too, but I’m not earning one the big money associated with FAANG etc. I make a nice “above average” income and I enjoy my job.
why not both? an environment of stagnant companies offering jobs involving difficult calculations sounds ripe for disruption- is it being strangled by regulation or something?
> why not both? an environment of stagnant companies offering jobs involving difficult calculations sounds ripe for disruption- is it being strangled by regulation or something?
Those jobs only exist because of regulation. The regulation dictates that the insurance companies must do those calculations and that the calculations must be done by a specially ordained priesthood of actuaries who have passed a bunch of random math and finance exams. That priesthood does not want technological disruption, they like their spreadsheets just fine, thank you. In recent years the executives at the insurance companies went through a fad where they decided they wanted to try out this whole "disruption" and "innovation" thing, so they created various kinds of "innovation" departments. Typically, when a company does that, after a few years "innovation" becomes a four letter word and they never talk about it again. In order to climb the corporate ladder as an actuary, you have to focus on the politics surrounding you and not on the terrible technology surrounding you.
I’m not an actuary, but worked earlier in my career for a “chief innovation officer”. Being young and dumb I feel for it, and in truth we had an awesome team that did some really cool stuff with lasting value.
But once we had a few wins, the chief innovator guy got promoted away, and he was the guy with political power. The various fiefdoms goobled up the innovation budget like thanksgiving turkey. The IT idiots “innovated” by buying high capacity toner. The data center people bought new air conditioners.
In all honesty the actuarial pay is really quite good. Keep in mind your average FCAS makes about 200k a year at only the 10 year mark which is probably 60 to 70k more than your average SWE. That FCAS will go on to have an average salary of 300 to 500k+ later in their career as well. And these jobs are often obtainable outside super expensive areas where SWEs tend to reside (SF, Seattle, NY, etc), which makes the salary much more attractive.
