Growing up, Mike Boot was the guy you wanted to sit next to in maths class.
“I would be that curve buster in the class,” Boot says. “I scored very well in national tests, very much at the top and I loved the challenges that went along with that.”
At the end of his freshman year at Calvin College, Boot, who studied mathematics, learned about the actuary profession with the help of a professor and became intrigued. The job would allow him to combine his analytical background with a business thought-process.
Three decades since his freshman year decision, CareerCast.com also thinks Boot made the right career choice — the job search site recently ranked actuary as the best job in America based on physical demands, work environment, income, stress, and hiring outlook. In short, after examining data from the BLS and other government agencies, CareerCast determined that there is little risk in a job that exists solely to put values on risks.
So what do actuaries do?
Basically, they evaluate the financial consequences of the variety of risks that people take in life. This could be anything from financial risks to operational risks; for example, what happens when a hurricane destroys a building. They also evaluate reputational risks — or the way customers view companies and brands — and longevity risks, which is what happens when people run out of money because they didn’t expect to live to be 100 years old.
But how do you come up with a price for something that’s so unmeasurable? Boot, who worked as an actuary for 25 years — first at Principal Financial Group, then at Allstate Financial — said he did a lot of research, made a lot of assumptions and ran “a lot of numbers through a whole range of interest rates.” When he had to come up with a price for someone’s premium rate on their life insurance policy, Boot had to make sure that “everything aligned,” meaning that the person’s pension plan is “appropriately valued” so that they will have enough money in retirement. After crunching and analysing, Boot came to a mathematical conclusion for the options that would best suit his customers — usually corporations (most actuaries work for corporations).
Nearly three decades after starting his career, Boot — now the managing director at the Society of Actuaries — still finds his job exciting because he says it’s constantly evolving and changing.
“A lot of our work is very much impacted by [government] regulations, which change, and as they change you need to be able to recognise that and do the best for you and your company,” Boot tells us. “The challenges people face today are different than five years ago — in some regards, the economic environment is different, technology is different and so is big data.”
As the Baby Boomer generation gets older (and rates for insurance policies are needed) and big data becomes readily available, the actuary profession is booming, says Tony Lee, publisher of CareerCast.com.
“Quite frankly, there are relatively few actuaries, and people in our profession are well compensated for their jobs” Boot tells us. “It’s typically an office environment so it’s not physically draining and there are opportunities to advance” (In 2010, the median salary for actuaries was $87,650, according to the labour Department).
In the past decade, Boot tells us he’s seen a rise in actuaries working in life insurance, pensions, and enterprise risk management (ERM) which means you’re looking broadly across an organisation for risks.
Although the pay is good and the stress is manageable, Boot says he would be cautious in recommending this job to someone because of the “very challenging and rigorous program” you need to go through to become certified.
“You’re competing against other people who are equally bright and I didn’t pass every exam that I took” — not unusual for those studying to become an actuary — and sometimes, these people who have received good grades their entire lives, it’s the first time they’re faced with failing, so “you need to have a willingness to be a lifelong learner.”
To become an actuary, you need to pass a series of exams offered by the Society of Actuaries or the Casualty Actuarial Society, although there are several universities who have launched actuary science programs.
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