Actuarial Exams / CFA Exams

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SeesFA

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The Basics
Some people asked me in another thread to compare my experience with actuarial exams and the CFA exams so far. I thought I’d just start another thread so I didn’t completely derail the other one.
As someone pointed out in that thread, not only are the exams very different, but the group of people are different, too. To be an actuary, you not only have to be very strong mathematically (statistics and finance), but you really have to enjoy studying it in its theory and application–each exam is mathematically rigorous. You can find the syllabus of the nine CAS (Casualty Actuarial Society) here:
http://www.casact.org/admissions/syllabus/
The first four exams are the same under the SOA (pension/life/health) and CAS (Property/Casualty–I did these, I’m an FCAS), the upper level take their own track.
Exam 9 under the new system has a lot of overlap with the CFA exams:
http://www.casact.org/admissions/syllabus/exam9.pdf
Of course, the focus is more insurance related. Much of the accounting looks at SAP as well, which is statuary accounting for insurance companies–focused on solvency, rather than GAAP’s going concern.
 
Comparison to CFA Exams:
The upper level CAS exams are 4 hour long essay exams (ALL written out) offered just once each year, but alternating spring and fall. That is, for example, exam 8 is only offered in the spring, but exam 9 is offered in the fall. There is no set order in which you have to take them. But if you only have, say, exam 9 left, and you fail it, there is no taking until the next year.
CFA exams, to me, are a mile long and an inch deep. Whereas actuarial exams are a mile long and a mile deep. Each takes an exorbitant amount of study time. The actuarial exams probably take more (300-400 hours) for a pass, opposed to CFA, which I think closer to 250-300. However, like I mentioned, there is some overlap in the economics, accounting, and option/derivative stuff.
Most actuaries take 7-10 years to get through all the exam. Each exam only has a 35-45% pass rate. You generally need 65-70% to pass any given test, but it has varied. Keep in mind you are taking math-like exams against math majors (some with PhDs) and a group of really sharp, hard-working people. It can be a struggle.
A good resource forum for people wanting to learn about the profession is at www.actuarialoutpost.com Check out the career section.
Any more questions, and I’m happy to answer them here. Keep in mind I’m just one guy with my own personal experiences; I’m sure other actuaries would argue with me with about every point and opinion I’ve made.
 
Are the books suffecient enough to teach someone with weak math background but very strong math ability and smarts?
ie I attended a very crappy school, but I always liked math.
How does one go about registering for these exam? I once heard there are several organizations that do actuary certifications. Which is the gold standard?
Anything you add is highly valued.
Thanks.
 
The books are enough to teach you all the material you need. There are many study aids available as well, which help. Check out the syllabus for each test, the first few are pretty narrow in scope.
You register through http://www.soa.org/education/exam-req/registration/edu-registration.aspx for the first four exams. The only organization are SOA and CAS, and the exams are the same for the first few tests. The only difference is the type of work you end up doing, life/health/pension or property/casualty.
 
great initiative SeesFA
I was contemplating to register for SOA or CERA , While I was in a reinsurance firm , but after getting a post grad in securities markets I landed up in an equity analyst job and I took up CFA , after I cleared FRM exam last year I was motivated to take up CERA but I figured to stay in Investment management probably private equity later in my career so I didnt take up CERA .
I found www.actuarialoutpost.com to be a great forum ..like you have mentioned
 
Gulf are you 100% nuts or just 50%? Your girlfriend will dump your ass if you take more exams
gulfcfa Wrote:
——————————————————-
> Are the books suffecient enough to teach someone
> with weak math background but very strong math
> ability and smarts?
>
> ie I attended a very crappy school, but I always
> liked math.
>
> How does one go about registering for these exam?
> I once heard there are several organizations that
> do actuary certifications. Which is the gold
> standard?
>
> Anything you add is highly valued.
>
> Thanks.
 
I will contribute a little to this thread.
I am two months away from receiving my fellowship on the SOA side; also a level II candidate. I want to mention that the SOA upper level exams are track specific - there’s the investments track that requires a huge amount of studying effort in portfolio management and financial economic theory. Each of the advanced portfolio management (APM) and financial economic theory (FET) exams has about 3000 pages of technical material on the syallbus (links posted on the bottom).
Both exams are 6.5 hour written exams that test your understand of the principles, theories and calculations. Anything from any page of the syllabus can be tested. In an essay question with multiple sections, they can ask you to derive the formula for a derivative instrument using a stochastic equation in part 1 of the question, then ask you to compute the fair value of it and compare to current market value of it in part 2 given observed market factors, and ask you to write about implied portfolio management or arbitrage trading strategies in part 3. The testing format is very different from how they test your knowledge of financial instruments on the CFA.
All the CFA level II topics are covered in the upper level investment track exams in much depth, except for Ethics, Financial Reporting and Equity valuation (FR and Equity are not tested, ethics is covered elsewhere). The other asset classes are covered in greater depth on the actuarial syllabus. Many of the actuaries who did the investment track work in an asset-liability management role where in-depth knowledge from both the asset and liability (traditional actuarial) sides are required. A couple of my buddies work in asset management roles in banks where institutional clients include insurers and pension funds, and understanding of the actuarial liabilities besides assets are critical to fund management.
Advanced Portfolio Management syllabus:
http://www.soa.org/files/pdf/edu-2011-spring-exam-apmv.pdf
Advanced Financial Economics Theory syllabus:
http://www.soa.org/files/pdf/edu-2010-fall-exam-fete.pdf
 
Thanks, Pennyless, I didn’t know that myself!
You forgot to mention that SOA exams are still easier to pass than CAS exams; otherwise, perfect insight!
 
Thanks pennyless
I didnt know that people actually go to investments, asset management side .
sorry for being lazy to not check it out from SOA website(will do my homework after CFA exam) , however what is the starting point for a beginner ? does one have to pass all the other exams before reaching the specific track or one can start from the specific track ? I am interested in investments track .
 
@SeesFA - the travel time on the SOA tend to be shorter than on the CAS side due to the use of modules that replace some of the older exams, but the exams themselves are not easier. The upper level exams that are each 6.5 hours each take a greater amount of effort than CAS upperlevels. I would agree though that overall travel to fellowship tends to be longer on the CAS side, thus FCAS requires more overall effort.
@Factor hedge - people usually start on the track-specific exams after they are done with the preliminary exams (there are five - P, FM, MFE, MLC, C) or having reached associateship (preliminaries + e-learning modules). The uppler level track-specific exams will require some analytical backgrounds built up from the premlinaries. P (probability theory), FM (financial mathematics) and MFE (models for financial economics) are the main building blocks for the investment track.
 
AndrewUNH Wrote:
——————————————————-
> Gulf are you 100% nuts or just 50%? Your
> girlfriend will dump your ass if you take more
> exams
>
>
Hey its gona happen sooner or later, so why give up an exam over it…
 
I’ve taken and passed both actuarial exams and CFA (Level I & II - failed II).
I agree that CFA is a mile long and and inch deep (maybe level II is a couple inches).
I disagree that actuarial exams are a mile long and a mile deep. I believe they are a couple feet long and a mile deep. From my experience the sections in each exam build on each other much more than the CFA, and the topics aren’t that far removed from each other.
I find the actuarial exams harder because they are sooo much deeper and more intense mathematically (alot of theory, less real world). CFA material makes more real world sense to me). Plus, on the exams the actuaries tend to try to trip you up far more than the CFA does. With the CFA, no particular topic is difficult by itself, its just when you mash them together it becomes ALOT of info.
 
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