Advising Students about Actuarial Exams
From Diane Evans:
In the Fall, I asked for [isostat members’] advice with the following “number of actuarial exams to take before graduation” question:
“I have a student (senior) who wants to have a career as an actuary and has already passed the first 2 exams. She came to me asking advice on whether or not she should take the 3rd exam before she graduates (this year). She was given the advice to not take the 3rd exam until she starts a job with an actuarial company. I think the advice is based on pricing herself out of the job market by having too many tests passed with no actuarial experience up to this point. Any advice? Or any suggestions on who to contact for advice?”
· I have had three students get through three or four exams by the time they graduated. All of them received multiple offers. Passing more exams demonstrates knowledge and commitment. It also means that the company is more likely to have a full-fledged actuary in a shorter period of time, so the company will be spending less of their salary on study time.
· One of my international students found a job simply because she had 3 exams. Having passed many exams could be a problem but 3 exams is not much. Fifteen years ago, our students got internships without any exams but now having one exam is a must and two exams is a plus. My judgment is that three exams is okay! If you want I can ask several of my former students who are fellows!
· In my opinion, there is no such thing as having too many exams prior to finding a job. With as often as exams are administered nowadays, it would not be surprising if a student had 3 or even 4 exams completed by the time they graduated. The only reason that I could see waiting on #3 would be if she was worried about which path she was going to take: Society of Actuaries or Casualty Actuarial Society. There are two parts to #3, and this is where the exam path starts to differ between the two organizations. I would suggest that she look into taking Society of Actuaries exam MFE. If I remember correctly, this one is still identical between the two organizations and counts for credit in both. She may double check that info though. It's also possible that she could skip #3 and go to #4, which the Society calls Exam C. It too counts for credit in both organizations. Supposedly, #4 assumes knowledge learned on #3, but I don't remember there being really much correlation between the two.
· I am not sure where she got that advice. We have number of students passing 3 and we have some who passed the first 5 exams. What I see is that they are unlikely to get a job if they don’t have at least 2 exams. Since she will be competing with students who have 2 or more exams, my advice to her would be to do as many as she can. Yes, there are some companies (very few) who don’t want to hire students with several exams. Also, most of my students have at least one internship. Students with more than 2 exams have 2 internships (these are good students). Typically, students end up with companies where they interned. Hope this helps. Feel free to call me if you need additional information.
· In my experience, there is no penalty to adding that third exam. We actually hired someone with six (!) exams coming out of college a few years ago. What may potentially happen is the company would adjust their starting offer to account for the lack of experience, but then they would need to “true up” the person’s salary over time as the experience catches up to the exams.
· For what it's worth, I have "heard" this piece of advice as well. I don't sweat the details of it too much, since it's rare for a student (at our institution) to pass more than two examinations before graduating anyway. I have the impression that some companies want to "track" you in a very specific way -- they don't want folks to be at variance with that "tracking," or to put pressure on them for differential salary/rank treatment based on 3-4 exams passed -- and other companies want absolutely as much as they can get.
· I agree with Person x and Person xx. All of our students who have passed 3 exams have been very happy with their job opportunities. Also, internships are particularly important in this field. We have been trying to increase summer employment opportunities for our students. Many of our students who have only passed one exam seem to have trouble getting an internship. I would be very interested in hearing ideas on how to increase the number of actuarial internships for undergraduate students.
· My answer would be that depends! The third exam is split into two parts: life contingencies (MLC) and financial economics (MFE). The MFE is required by both actuary societies, while the MLC is only required by the SOA. The CAS has a different exam. If the student is for certain not going into casualty insurance, then she could take either MLC or MFE. But if she changes her mind, or gets a job with a casualty company, she would in effect have "wasted" her time passing MLC as it does not count toward the path to associate in the CAS. I tend to think that the more exams passed the better and that she would not be pricing herself out. Note that the fourth exam, Exam C is the same between the two organizations, so she might want to consider studying for either Exam MFE or Exam C. I would not recommend Exam MLC until she has a permanent position and knows which path she will take. Most companies will pay for the study materials and exam fees, and paid time off to study, so it might be financially beneficial for her to wait.
· I am sorry, but one thing your colleague said is not true. Yes, the 3rd exam is split into two MFE and MLC. CAS does give its own exam instead of MLC but they give credit to MLC if someone has passed that exam. So, if the student takes MLC and passes then it will not be wasted. That is why, at Drake we only teach for MLC and most of our students take MLC. Some who know they want to do casualty, do not take it.
· I would definitely caution a student from passing too many exams before gaining any experience (pricing yourself out of the market is exactly the reason!) but I don't think 3 exams is too many for a recent graduate. In fact, I would say a student should stop right before taking exam 4 which means it’s safe to take BOTH parts of 3 (exam 3 used to be one exam but it is now split into 3F/MFE and 3L/MLC). This is just my opinion, but I know plenty of actuaries who have been hired entry level with one or both parts of exam 3. One more word of caution, the email didn't say which part of 3 the student is taking but I would recommend starting with 3F/MFE. The reason is that 3L/ MLC is specific to what specialty you work in (property & casualty vs. life & health) and you want to avoid choosing a specialty before you've decided which career path you want. If the student definitely wants to take 3L/MLC, take the MLC version because it counts for either specialty.
· I don’t think it is a problem for a student to be graduating with 3 actuarial exams. We see many students coming from “actuarial schools” that have passed 3 exams. I would tell the student to make sure that she isn’t forgoing being in clubs and other extracurricular activities to get this exam passed. When we are recruiting, we want to see a well rounded person, not just someone who went to school and took exams.