Saturday, March 18, 2006














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Saturday Feature
Why actuaries count themselves lucky not to be accountants
Sathnam Sanghera

          This may sound like ranking Michael Bolton above Celine Dion in terms of musical merit, or expressing a preference between contracting bubonic plague and Ebola, but, on reflection, I think I would rather be an actuary than an accountant.
I realise this is a controversial viewpoint. If there is one thing we all know about actuaries, apart from the fact that most of us do not know very much about them at all, it is that they are the dullest people around by some distance. Everyone has heard that joke about an actuary being someone who rejected accountancy on the grounds that it was too exciting.
For a long time, my views of actuaries went along similar lines. And when, last October, I spotted an advertisement in a newspaper recruitment supplement depicting an excited young woman exposing a section of midriff above a slogan that said "The Actuarial Profession: making financial sense of the future", I laughed until my sides split open.
After stitching myself back together, I asked the trade body behind the advert to put me in touch with this new generation of sexy actuaries. I cannot say I was all that surprised when, four months later, the number of names they delivered -- to borrow some accountancy lingo -- summed up to zero. Instead, to establish whether the reality matched the reputation, I made my own arrangements and went to see three senior actuaries at Mercer in the City early last month.
To be honest, I was looking forward to meeting Dick Strattan, Charles Cowling and Jeremy Hill about as much as I look forward to having my prostate examined, and I made sure I drank a gallon of coffee beforehand, to prevent myself from passing out through sheer boredom. And when I met them -- sombre suits all round -- while grateful that none of them had their midriffs exposed, a shadow passed across my heart.
However, an extraordinary thing happened when they started telling me what they did, beginning by explaining that while many actuaries worked for pensions and insurance companies, they operated as consultants, advising a range of clients. In short, I was not bored. I had not realised that:
l Many of the traditional areas actuaries operate in -- evaluating statistics on things such as death, illness and accidents for pension plans and insurance policies -- are actually very interesting. After all, the pensions crisis is one of the most important issues of our time. And who is not interested in mortality? We all want to know how long we might be around for.
l Many of the new areas that actuaries work in -- executive compensation, pricing energy, forecasting the growth of forestry, analysing the decommissioning of nuclear power stations, and so on -- are not exactly dull either.
lNot all actuaries are the dour merchants of mathematical probability they are renowned to be, not least because computers now do a lot of the number crunching. As Mr Strattan explained: "When I started 35 years ago, we used to get an undergraduate in for a summer to calculate one table of factors. Now we just press a button. Which leaves us more time to interpret figures and offer advice."
Indeed, the actuaries I met were some of the most interesting and intelligent professionals I have ever come across, which is not surprising given that it can take up to six years to get through the professional exams, and that some stages of qualification have a pass rate of only 30 per cent.
My view of the profession improved yet further when I was told that senior actuaries can earn more than 100,000. I nearly coughed up my gallon of coffee when Dick told me what he earned.
I am not recommending that all the kissograms and professional acrobats out there retrain as actuaries. All I am saying is that not enough people know what they do -- as the joke has it, an actuary is a place where dead actors are buried -- and the (small) profession is more interesting than others.
But before I go any further, a caveat. A year ago I trashed an effort made by the accountancy profession to glamorise itself and got several violent e-mails in response, not to mention an actual thump from a friend who trained as one. So, this time I would like to stress that: (a) I once wanted to be an accountant; (b) I make a living out of writing about accountants and actuaries, among other things, so hardly consider myself superior; and (c) I realise I am making a huge generalisation, and that there are boring and interesting jobs/people within every profession.
Nevertheless, despite the jokes, it seems to me that what actuaries do is more interesting than what accountants do. Mr Strattan put it best when he said: "I did have interviews with firms of accountants when I graduated but I found it was not for me. Being an actuary is about judgement -- there are no wrong or right answers. Accountants tend to look at what happened within a very fixed framework."
Prognosticating, in my view, is intrinsically more interesting and more of an art than looking at what has happened already -- the art of the actuary being demonstrated by the fact that the profession failed to pre-empt the solvency crisis that has engulfed savings providers such as Equitable Life.
And that is why, if it came down to a choice between being an actuary or an accountant, I would rather be the former. How much would I prefer it? Well, if you want to be actuarial about it: by 63.562 per cent.


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