Why actuaries hate CFA's ?

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supersunny138

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I have noticed and observed this thing personally that usually acturies don’t like and they don’t appreciate CFA as a finance / investment oriented qualification (Significant number of them atleast some of them i have been in interaction with)… I been reading forums and I have very close 2 friends who are actuaries they always and always complain about the skills of complex financial modeling CFA curriculum lacks and they brag that it should be more quantitative based…. Though they both took the exam and failed :D
Myself since first year at undergrad I read Fooled by randomness and then The black Sawn and after reading these books plus letters from buffet and some value and fundamental stuff like benjamin graham, Mark Tier , George Soros, joel greenblatt, and peter lynch.. an additionaly what this securitization brought us (credit crunch) I have a strong dislike for mean/variance portfolio optimization and GARCH ARCH etc …. and I also beleive that we need other parameters for risk indicators instead extreme reliance on factors like standard deviation
So do u think that they are better equiped when it comes to investments and risk handling
Compared to an CFA charterholder …..
Atleast we can do better credit analysis …
 
I think actuaries are better at sitting in a cubicle being one dimensional nerds and thats about it. What an awful job, I wont even call it a career. Anything that comes out of their mouth is skewed with apathy and depression that somehow they ended up being actuaries.
 
They may not be as smart as CFA chartholder, their jobs are dull, however, very useful. I have few friends work for Watson Wyatt, they work in DB consultanting area, CFA charterholds and actuaries got along just fine. Myself is conserding moving to investment consutlanting area too.
 
tvPM Wrote:
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> I think actuaries are better at sitting in a
> cubicle being one dimensional nerds and thats
> about it. What an awful job, I wont even call it a
> career. Anything that comes out of their mouth is
> skewed with apathy and depression that somehow
> they ended up being actuaries.
The actuaries I know love their job. A certain type of person (re: nerds) are very happy playng with numbers/stats all day. These are the types of people who do baseball sabermetircs in their free time. I know a guys who is smoking the stat based actuary exams but can’t get past the finance exam (this guy is a math all star) so he def respects the CFA.
 
i have two actuary friends that have been actively seeking work in Austin for the past 8 months. no jobs to their liking so far.
 
I work in the DC plan department at an insurance company. My boss has both the CFA and FSA (acturial designation). He swears up and down that the FSA exams were harder than the CFA.
 
I won’t dispute that. However, it’s easier to prep for the actuary exams. Actuaries don’t work the kind of hours finance people do. Also, a lot of actuaries are allowed to shut down for the day a little early to prep for the exam. A lot of people doing the CFA are working 60+ hours a week.
 
It may be easier to prep. The actuarial students I know are provided work time to study. And since there are more exams, there may be less breadth of material. Still, the tests are not easy by any means. We shouldn’t get into the mindset of “if it’s not CFA, it’s crap!”
 
monger187 Wrote:
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> We shouldn’t get into the mindset of “if
> it’s not CFA, it’s crap!”
+1 No point in knocking any of these things.
 
People love to justify why their designations/choices in life are better. CFAs and Actuaries are not immune to this behavior.
 
+1 People love to justify why their designations/choices in life are better
Agree with you wutsaCFA
 
I am doing both now, and I do think the actuarial exams are harder. Though I am given company paid time to study for the actuarial exams, I study above and beyond that alotted time because the time required is much greater than the time given. With that said, overall I studied less for the CFA exam (I have only taken and passed level 1 so far). But that is partially because there is some overlap, partially because I am just “good” at studying for professional exams at this point.
As far as actuaries having easier jobs than finance people in terms of working long hours, it really depends on the analyst level and in what field they work in (I think both in the world of finance and the actuarial profession). In both professions, earlier in your career your responsibilities are going to be minimal compared to a few years+ down the road. A lot of people do not start sitting for the CFA exams until they are further in their career, whereas actuarial students typically start the exams in college.
Overall, I think the two exam systems are completely different methods of testing people and it really depends on what you are good at. However, some of you should know that the pre ASA/ACAS exams are much more mathematically involved, whereas the FSA/FCAS exams (post ASA/FCAS) are more analytical and essay based.
As far as actuaries personalities, I really hate the stereotype because I know more who are not the stereotype than those that are (myself included). I also dont know any who dont value the CFA, or completely undermine its value just because they are an FSA. I really do not think the two exam systems can be compared, but there are less CFA exams so getting through the process is inherently “easier”. There is also a considerable amount of overlap, especially if an ASA decides to take the investments or finance track for their FSA, except the actuarial exams require more mathematical depth for those topics.
 
I have two actuaries in the family (my sister and my wife’s brother-in-law). The Brother in Law is a finance guy. He prices the mortality risk associated with the death benefit guarantee in variable annuities (basically a long-lived put option with exercise based in part on the mortality exposure of the annuity holders). Both passed all 10 exams first on try. He runs an actuarial consulting firm, and my sister works part-time for him. But before that, they both worked for a major insurance company. Here’s my observations from talking with them (and with a lot of their actuarial friends):
1) Actuarial exams are much more quant than CFA exams - the FIRST exam used to cover a year of calc plus prob and stats (and maybe some linear algebra). There are also many more of them (10 vs. 3). So, the discipline needed to pass all 10 is pretty impressive, and likely much greater than needed to pass 3 CFA exams.
2) CFA curriculum covers more “soft” material (i.e. stuff that’s not as quantifiable, and more open to interpretation) As an example: everybody’s favorite section - Porter’s 5 forces).
3) On average, I’d say the actuaries were better students in college - the math requirement is a big sorter, and the discipline needed to hang in there for 10 exams is a bigger sorter. So, anyone who’s passed all 10 exams was probably a pretty good student in college (some combination or really smart and really disciplined)
4) CFA curriculum is a bit broader than the actuarial one.
My sense is that a 10-exam actuary would have an easier time passing all 3 CFA exams than a Charter Holder would in passing the actuarial exams.
Finally, from my relatively small sample (about 20 or so actuaries), I think most charterholders working in the profession find their work more interesting than most actuaries do. But the actuaries on average are less stressed (it’s more stable and lower hours).
 
It is unfortunate the stereotypes that come with certain professions. I was a DB actuarial consultant for 10 years and now I serve as a investment advisor for institutional money. The ratio of individuals with strong personal skills to introverted nerds is no different from the actuarial shop to the investment shop. I’m surrounded by CFAs and many are just as nerdy as some of the actuaries I used to work with.
I found the actuarial exams much more challenging then the CFA exams. They are just an overload of information. The actuarial quant exams were of course very difficult and it seemed like they were always trying to trick you by modifying the questions slightly from the exam prep material so to make sure you truely understood the question. After the quant exams, the essay exams required an insane amount of memorization.
I enjoyed the CFA but I did not find it all that challenging. I’m not saying I didn’t study. I studied fairly hard for level II and III but the amount of time I would need to study for an equivalent actuarial exam (6 hour exam) would have been at least 50% more.
Not all actuaries get free time to study for their exams. I worked 50-70 hours a week while studing for my exams. That is the main difference in working at a consulting firm versus an insurance company.
Finally, I don’t know any CFA’s that hate actuaries. If anything, I have found both groups respect each other for the paths they have taken. The grass is always greener on the other side. The actuaries think the CFA path would be more fun and stable (DB consulting is struggling) and the CFA’s respect the dedication to pass the actuarial exams and my company has hired a couple of actuaries to work on our Quant funds.
 
Thanks for the info, IHeartMath. I agree with most of what you say. However, having fewer exams makes the process inherently more difficult, not easier. For example, in college we took dozens, maybe hundreds of exams, each of which covered a limited set of information. Thus, we only had to learn what we were being tested on. Imagine how difficult college would be if there were only one exam per year that covered everything we learned throughout the entire year. Having fewer exams means we need to remember more.
 
i took and passed all sorts of exams and actuary exams (as the muggles call them) are much tougher than CFA exams, but CFA exams are probably more relevant to what the finance people do than actuary exams are to what actuaries do.
 
monger187,
not when each individual exam requires the same amount of studying and quantity of formulas, facts, relationships, and nuances to remember….. and there are more actuarial exams…..
 
IheartMath Wrote:
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> monger187,
>
> not when each individual exam requires the same
> amount of studying and quantity of formulas,
> facts, relationships, and nuances to remember…..
> and there are more actuarial exams…..
True, if each exam is of equal difficulty, then obviously more = harder.
 
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