Actuarial Designations

[Blinky the 3-eyed Fish]

With regard to the SOA designations of ASA or FSA, I do not understand their relevence to pension consulting. It is my understanding that to be an EA (i.e. to be able to certify a schedule B or PBGC form) one has to pass the joint board exams.

My question is then: what is the importance of being an ASA or FSA relating to qualified plans? It must be something because I have noticed many jobs in the pension field that are looking for individuals that have obtained that designation.

[LIBOR]

It's analagous to college degrees; the BS is essential & MS, Phd show additional initiative.

Some firms have higher entry requirements - it's similar in an academic environment too !

[MGB]

Traditionally, there has been a lot of good pension-related information and background in the actuarial exams beyond what is in the enrollment exams (of course, this information is overshadowed by a lot of content that is not applicable). Also, in the larger consulting firms, the only way to advance is to have a broad knowledge of all benefits. That knowledge can be picked up in the actuarial exams, too. The combination of more pension material, other benefits material, and other related material (economics, finance, etc.) that is found on the actuarial exams makes a person more "well-rounded" in the eyes of the employers. There is also a misperception by the consulting firms' clients that an FSA means more, and the consulting firms do not try and change that because they like to flaunt the number of SOA members they have on staff.

Will an FSA (or ASA) help you to do a pension valuation or fill out a Schedule B? No. Will it help you communicate more effectively with executives of Fortune 500 firms? Maybe, but it is only one piece of what you need. Although you would be more well-rounded knowledge-wise, you still need to have communication skills, which are not covered on the actuarial exams (although prior to the '70's, the first actuarial exam was an English exam - maybe they should bring that one back).

The SOA is about to embark on a revamping of the entire examination system (the fourth or fifth such overhaul since I decided to become an actuary in '71). It will move more in the direction of technical matter of quantifying risk. When that happens, many actuarial employers in the pension arena will probably reassess whether that is what they are looking for. My conversations with chief actuaries at the large consulting firms indicates that they do not like the direction that the SOA is taking (the changes are being driven by the academics in the Society, rather than the consulting practitioners, and the insurance people have been somewhat on the sideline accepting that the more academic-nature of the future exams would probably help them with their needs). I have been employed on all three sides in the past (a professor teaching actuarial science, an insurance company employee and a consulting pension actuary - although now I don't do any of the three), and my personal view is that the SOA is about to diverge away (even more than the perception that you may have of it right now) from what the pension consulting profession needs in the background of their employees. So, in the future you may not see such a strong statement that a person must be a Society member from the pension consulting firms.

[Blinky the 3-eyed Fish]

Thanks for the replies. My question has been answered.

[David]

With respect to the "speed issue", I sat for the May 2001 EA1 exam and they increased the number of questions to 29 total (2-1/2 hr exam) . It had been 25 questions for at least the prior 12-15 years. In addition, having gone over every exam from 1989 to 2000, it is clear that they are increasing the difficulty of the questions in general. So they are making the questions more difficult and giving you less time to do them. I don't know what the pass rate has been historically, but the May 2001 EA1 pass rate was something like 28%.

[Blinky the 3-eyed Fish]

You are referring to the EA-1 exam, and actually the pass rate was 21.1%. But, the pass rate did increase to 37.5% for the latest EA-2A exam, so for those with exams to take, at least it's not permanent.

[david rigby]

There has NEVER been an actuarial exam that adequately covers the material on the syllabus. (This is not a bad thing, just a fact.) The only way to do so would be to increase both the number of questions and the exam time.

[Blinky the 3-eyed Fish]

I think the problem David is pointing out that in the exam, which is time-intensive to say the least with 25 questions, they added 4 questions and NO time allotment. Thus, speed became very critical in passing.

Last time I checked, I didn't have a stopwatch at my desk and a dude with a start gun in my office.

[stephen]

And I'll bet that Blinky has resource materials in his office that he can refer to as needed.

[david rigby]

I may not be eloquent, but I'll defend the SOA, an organization whose purpose is education not lobbying.

I am proud of my SOA membership, and proudly advocate a strong educational program for all actuaries, no matter what specialty they may choose. Some, but not all actuaries (yes even in the pension arena), use their strong background in mathematics and statistics on a regular basis. Just because some actuaries don't, or don't want to, does not advocate in favor of lowering the educational standards for the profession.

Actuaries must maintain high standards in this area precisely because the number of our members is so low (at least as compared to other professions). Due to much of this strong background, many of us believe that we are uniquely qualified for certain types of tasks and assignments. I don't want to lose that.

[Chester]

I am a pension actuary who is both an FSA and an EA. I am a member of the SOA , the AAA and ASPA. Pax is right in saying the SOA is an actuarial organization dedicated to education. The AAA (American Academy of Actuaries) is dedicated to serving the actuarial profession through lobbying as well as setting standards of practice, while ASPA does both lobbying and education, for not only actuaries but the entire pension profession (including pension plan administrators). The enrolled actuary designation is required for signing the Schedule B as an actuarial certification. The Associateship and Fellowship levels are attained through passing an exhaustive series of exams, and I have to agree that the exams are somewhat demanding and do require a high level of memorization and clarity of mind. The benefit of earning the FSA designation is that you do attain a more broad-based knowledge of actuarial concepts and benefits knowledge beyond just the knowledge gained from pension practice. The practical fact of the matter is that having the ASA or FSA designation in addition to the EA does elevate a person in the eyes of many clients (and would-be clients). The only reason I proceeded on to receive the ASA and FSA after I earned the EA level was because I took a job at an insurance company that encouraged me to progress through the exams. Am I a better pension actuary because I have the FSA designation? Probably not! But I do think I am a more well-rounded person who at least can be conversant on actuarial topics beyond the pension arena. My advice to those people who are taking actuarial exams is to not get discouraged but continue to try to improve your speed when answering questions--try practicing answering questions as quicky as you can while you are studying. You should also answer essay questions by using outlines and not by writing complete sentences--just get your thoughts down as quickly as possible and put as many ideas down as you can in outline form or short phrases. I found constant drill and doing as many different problems as I could find really helped prepare me for the exam, as it helped pound the concepts into my head. As my professor in Contingencies class used to say, "When in doubt, go back to first principles if you can't remember a formula"--it worked for me!

[LIBOR]

Great discussion !! and probably much, much, more than the originator needed - Amen