The Censoring Problem of an Actuary’s Career Path – Have We Painted the Right Picture, or Have We Left Something Out?
For many years, the Actuaries Institute and universities teaching actuarial studies students have been launching marketing campaigns to attract prospective students and professionals to become actuaries.
These campaigns centre upon the fact that an actuary enjoys a high-paying rewarding career, relatively good work-life balance and low unemployment risk. Backing evidence includes salary surveys from leading recruitment agencies and industry-wide surveys on job satisfaction. I highlight the annual Careercast survey in the US which found that actuaries have ranked very highly as a preferred career, being the top career of choice for many years running (though we have slipped to fourth place in 2014). Such positive evidence from industry has fuelled our campaign success.
With six universities now offering Actuaries Institute accredited actuarial studies programs, compared to four at the turn of the millennium, the number of actuarial graduates entering the workforce each year has increased. There is also increasing doubt as to whether all these graduates are employed in a role they sought. Indeed, it is worth noting that there are whispers making their rounds in the grapevine about how actuarial studies graduates are being forced to continue onto postgraduate studies or change programs due to their inability to find a job.
Thus, the picture appears to be polarised. I pose two questions:
- What are the actual prospects of actuarial graduates when they complete their university studies?
- With what evidence do we back up our claims and have we got credible data?
The answer to the first question, to date, is based on anecdotal evidence from past personal experience or drawing from empirical industry data such as those from recruitment agencies. It is true that the currently employed actuaries, especially those with an established career and are now in senior or middle management roles, are faring quite well due to low supply and hence little competition. Being a high achieving profession with a high barrier to entry (think about the Part III examination pass rates), those who succeed may be few and far between. It is quite likely that these are the people we invite to speak in careers fairs, university recruitment campaigns and other marketing functions. They are likely to paint a rosy outlook as they speak of their experience, which has been smooth sailing. On the other hand, those who completed university in recent years may face more obstacles, either due to them being in the process of completing their exams or their facing difficulties in being employed due to the effects of the global financial crisis. They may be less positive about the prospects available to themselves and aspiring actuaries. However, we rarely hear about these experiences in marketing events. Thus, I believe the picture may be subject to selection bias.
I move now to the second question. I believe that the information on currently employed actuaries drawn from industry surveys are reliable and valuable. However, a gap exists in the earlier stages of an actuary, in particular their university stage and the transition between university studies and paid employment. Over 2010-2011, I conducted a survey, with Associate Professor John Evans and Associate Professor David Morgan, on UNSW actuarial studies alumni to gain some understanding of their perceptions on the actuarial profession. In this survey, we asked respondents about their career progression, including their experience in finding their first job after leaving university, their current role and perceptions about their future career progression. Our sample comprised 66 respondents out of over 300 contacted, with only 39 who provided information on their career experience. Furthermore, our sample was weighted more towards early career actuaries.
We found that 92% of these respondents were offered a job within one year of applying for their first role, with 73% gaining their first offer within six months of applying. 73% were working in an actuarial role upon leaving university. We also found that, in their current role, they were most satisfied with their company’s reputation and the workplace environment. Interestingly enough, remuneration and potential for career progression were ranked significantly lower, with work/life balance being the area they were least satisfied about. However, it is worth noting the satisfaction scores are all 70% and above so it is by no means doom and gloom.
The findings in our survey seemed to be consistent with the view that being an actuary is indeed a good career choice and the rewards are attractive. However, we also found that the career path to becoming an actuary is not as easy as it used to be.
Of greater concern is with respect to those whose information was not captured in the survey, as their responses may be less positive than those who participated. The low response rate in our survey points to our findings being subject to positive selection bias.
Thus, while our survey supports our current views, the unreported data may well be consistent with the voice of dissent, once an inaudible whisper but no longer so.
In light of this, I believe it to be important that the Actuaries Institute and accredited universities work together to collect better quality data so our marketing campaigns are better informed in order that we offer a more balanced view to our target audience. I also see it as being consistent with actuarial practice in making decisions and judgment using credible data.
To my knowledge, attempts have been made in the past to create a database to track the career progression of our members, albeit with limited success. Universities encounter the right censoring problem, as the alumni database is incomplete. The progress of these graduates is lost gradually over time when they move overseas or simply do not update their details. The Actuaries Institute faces the left censoring problem, as members join gradually and their history is unknown. Those who join the Institute are more engaged with the actuarial profession.
I see opportunities in developing a collaborative project between the Actuaries Institute and the accredited universities to combine their data to track the professional progress of our actuarial members and students. This database will not only yield valuable information to guide our marketing campaigns, but in policy setting and strategic direction for the Actuaries Institute and universities. We can better identify areas for improvement in social engagement, education programs and continual professional development. The Actuaries Institute may be able to track which areas of practice are growing or waning, thus resources can be effectively allocated to develop our footprint in the areas where more actuaries are being engaged.
This project is no small feat, by any means. The mission (should we choose to accept it) will involve us identifying our aims, formulating an operation plan and raising funds, employing the right people and technology and meeting research protocols. The ongoing nature of this project will require dedication, a clear vision and reliable administrative support to guarantee success.
To conclude, the future lies in our understanding of the past of our members, aspiring members and those whom we have lost along the way. Are we ready?
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