From Actuarial Scientist to Actuary

During my undergraduate years, I found it rather difficult to explain what an actuary is and what I would be doing post-grad. Sometimes people mistook it as a lab-related science major. Sometimes they thought I would become a math professor. Sometimes they thought I would be selling insurance when I told them I could be someone who comes up with their auto insurance rates. At a dinner recently, a friend introduced me as an actuarial scientist. I decided against explaining that the correct term was actuary as my meal had just arrived.

So, if a large portion of the population is not familiar with what actuarial science is, just how familiar are we as undergrads and recent grads? I can’t tell you what it’s like for an insurance actuary, a health and welfare actuary, or an actuary at another firm. But for anyone who’s looking for more insight into the life of working actuaries, I thought I’d take the opportunity to give you a glimpse into my world.

I currently work in the pension practice area of JPMorgan Compensation and Benefit Strategies. The senior actuaries translate several factors, such as the current market, into assumptions for our models. My job is to apply these assumptions and plan-specific factors to our actuarial software, perform valuation and projection, and prepare reports for our clients. It sounds simple enough. However, it is very important to be skeptical during these processes. I often ask myself several questions: Are the results in line with what we expected? Did we setup the system correctly? Does the participant count seem reasonable? Does it make sense to be incurring this much cost using our set of assumptions? How is it comparing to previous years?

My work is reviewed by the senior consultants before it goes to the client. Accuracy is key. Sometimes we receive requests from clients on benefit estimations. For example, they might want to know if their CEO retires today, how much benefit is he entitled to and how would it affect their plan’s funded status. I was recently assigned to help develop the forecasting process for a client team. Due to the Pension Protection Act and the market situation, there probably will be a lot of modifications. I expect to learn a lot from this project.

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An Attribute that Leads to Success

I was recently back at my alma mater, the University of Wisconsin – Madison, to attend a career fair and talk with actuarial students about JPMorgan. About half way through the evening a student asked me, “What skills are necessary to be a successful consultant with JPMorgan?”

I’m not sure that my little more than one year’s worth of retirement experience puts me in a position to say for sure which skills will lead to a successful consulting career. However, I’ll share my thoughts on a related, possibly more relevant question: what attributes are important for a student making the transition from school to the workforce? I feel that the most important attribute for new hires to possess is simply a drive to learn about their practice.

I know that students have mostly been spending the past two or three years drilling the basic actuarial mathematics foundation. If I were to bring one of these sharp students into the office with me for a day, there is a good chance that he or she might not be familiar with the majority of the things driving our conversations – Financial Accounting Standard Numbers (FAS) 87, 106, and 158, Employee Retirement Income Security Act (ERISA), the Pension Protection Act (PPA), nondiscrimination rules, and the alphabet soup that is the Internal Revenue Code.

I don’t feel that this is a fault of college actuarial programs, but rather it speaks to the depth of knowledge required in our profession. I believe this is true across all actuarial practice areas, not just employee benefits or retirement specifically. So schools work to build the common mathematical framework that can lead students into any practice.

The mathematics that you come out of school with is a great starting point, and can serve you well in your career. But if you really want to get a jump start in your career, you need to be a student of your industry. You should understand the context that surrounds the work you do.

Chances are no matter what practice area you end up in, you’ll spend the first several years learning about the particulars of your industry. What are companies currently doing or offering in practice? What are the regulatory rules and how are they changing? How does all this affect the projects you are working on? The more curiosity you possess and the more initiative you take to learn about the landscape, the faster the learning process will be and the better you will be at your work.

I suppose at this point you might be thinking, “Well how can I find out about the landscape of various practice areas?” Ultimately your coworkers are probably going to be your best resource. You can ask questions of more experienced coworkers and work through concepts together with your peers. In the meantime you can talk with past graduates, your peers who have had internships and other contacts you have made at various companies.

While I have shared an attribute that I think is important for making the transition from school to the working world, I want to leave you with something more tangible. Rather than digging up links to various Internet resources, I’ll share a resource that JPMorgan provides. Insight is a publication that our most knowledgeable consultants work on to keep clients up to date on the latest events in the employee benefits world. You may not be familiar with everything that Insight discusses, but if you have an interest in the industry, you will probably find the articles interesting and helpful for familiarizing yourself with common topics and terminology. You can access Insight at: http://www.jpmorgan.com/pages/jpmorgan/am/cbs/insight.

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2008 Analyst Training Program

After a two-hour flight delay, I finally arrived at JFK airport in New York. I was excited and energized about the beginning of my employment at JPMorgan. My work began in the 2008 Analyst Training Program for new hires. The program lasted five weeks and covered a wide range of topics from professionalism and communication to accounting and statistics.

When you think of training, you might think of a lecture hall. You enter a room, maybe collect some presentation print-outs, take a few notes and apply a fragment of what you heard in the real world. While this training program did include some lectures—you have to hear it from the experts first, right? —we actually got to apply what we just learned in case studies. Not only that, but as a part of a group of 150 analysts in the Asset Management branch of JPMorgan, I met an expansive network of colleagues and friends as I worked on these case studies.

Each week we covered one or two topics. Usually, we spent the morning hours in a lecture, and the afternoon hours applying this knowledge to real world case studies. At the end of the first week where we discussed accounting, we had to research a prospective client’s background, review their financials and current asset allocation, and provide a recommendation on whether to accept the client. We then presented our recommendation that afternoon. Needless to say, we quickly learned the importance of a deadline.

In the second week, we covered statistics and communication. Our case study included calculating return data versus a benchmark and creating an investment correlation matrix. We developed an uncorrelated asset allocation and provided information on ratios, including the Sharpe ratio and information ratio.

The third and fourth weeks followed much of the same format, including two-and-a-half days of Excel training. We were to become “power users” and were not to use our laptops’ touch pads. They brought in a dynamic specialist who taught us a lot of quick short-cuts and efficient keystrokes. For actuaries, knowing these Excel short-cuts is essential! Trust me.

The final week was dedicated to our case studies, where we worked in groups of five to eight. Our group was given a prospective institutional client looking to invest their pension assets. As a group, we decided on an asset allocation to meet the needs of their defined benefit plan and provided a list of possible investment choices we would make available for their defined contribution plan.

Of course, all work and no play makes for a dull analyst. We went to a Yankee game, an historic experience (even for a non-Yankee fan like myself) considering it was their last season in “the house that Ruth built.” Plus, on one Saturday night we went on a boat cruise around Manhattan with food and drinks.

Overall, the program, as well as the extracurricular activities, made for a great experience. The program showed us the reputation of JPMorgan, the importance of networking, and a basic understanding of Asset Management and JPMorgan as a whole. I do not know of another firm where a beginning actuary can receive this amount of quality training which will be beneficial in establishing a sturdy base for a great career.

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Interning 101: From One Intern to the Next

Without sounding too preachy, I do have some advice for aspiring actuaries looking to get the most out of their internship. First, no question is a stupid question…unless it is a question resulting from the fact that you weren’t paying attention. Never be too timid to ask questions, but don’t just ask a question to ask a question. Listen to the answer and draw your conclusions from them. The whole reason for an internship is to learn as much as you can about the profession and the full time employees are wells of knowledge that are waiting for you to let them tell you everything they know. Some of the most interesting conversations I have had are those that started with simple questions like how did you get to be where you are? I love to hear the background stories of the paths people took to get where they are because many are so different.

Second, take notes when people are assigning you a project. No one wants to be bothered over and over again for clarification or to restate projects steps because you didn’t take notes. In the same manner when you have questions about a project compile a list so that you can remember the questions you had in mind. Also don’t go for help for each question. Assemble a few questions with possible solutions that make sense to you and then take them to find answers. Sometimes you would be surprised to find out that you were on the right track and needed a few more helping hints to get what you wanted.

Finally, take initiative to balance your workload. You shouldn’t be spending 60 hours at work, but on the flip side you shouldn’t be taking off early to go to the beach. You should be able to prioritize when projects are due and how to schedule your time efficiently. That in itself is a tough lesson to learn when deadlines start approaching and you become overloaded. Basically you will get what ever you put into the internship. If you want to find your niche or do it all, you will get your chances.

My main professional goal for my internship was to discover what being an actuary meant, and I found out that it could mean a lot of different things besides the usual differentiations of consulting versus insurance, or life and health versus property and casualty. When I set out at the beginning of the summer I wanted to get my feet wet in as many areas as I could, and now looking back I don’t know if I could have had more of a variety of work. I always heard about the stereotypical boring actuary, but after a summer at JPMorgan I have to say that I don’t see how that can be true.
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Interning 101: After Hours

Outside of work, a summer in Chicago was extremely different than the summers I remember in suburban Wisconsin. There was always something to do and JPMorgan gets involved in creating events for you. JPMorgan organized plenty of activities including a volleyball league, baseball outing, bowling night, and a competitive game of whirly ball. Even if not company sponsored, I found that the full-time employees and the interns were always hanging out. Whether it be to play in a volleyball league or just to take a day trip to Six Flags, the summer was full of spur-of-the-moment events that I never wanted to miss. In some aspect I would say I learned more about the career path and actuarial field during these trips than I did when at work. Being able to speak candidly about the actuarial profession outside the work place with actuaries of all levels helped me draw the conclusions I was looking for from an internship, including resting my fears about whether I have what it takes to be an actuary, how studying cuts into work life and outside-of-work life, and how to make a name for myself in the industry and in the workplace.

No doubt the number one reason that I had a great summer was the people that I spent my time with, especially the other interns. Most of the interns lived in the same apartment complex, the “intern palace,” and most nights were spent hanging out together. We decided once a week that someone would cook diner for everybody, which could be the only times that any of us ever cooked a meal all summer. We learned together through everyone’s mistakes and successes and would not have had as meaningful a summer without each other.

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Plan Design: I Had a Lot to Learn

As you may have seen from my profile, I work as part of a group of dedicated actuaries who work primarily on retirement plans specifically designed for partnerships and other professional service organizations. (read more here: http://www.jpmorgan.com/pages/jpmorgan/am/cbs/products_and_services/actuarial_products/partner_parity_plan)

This specific type of plan we offer is called a Parity Plan, which is a type of high-income deferral plan. While there are a lot of similarities in the Parity Plan we design for different clients, each plan is customized to fit the specific demographics and other characteristics of the firm. And the process of customization makes these projects a great learning experience for young actuaries.

I was recently involved in a plan design project for a large law firm, which exposed me to a range of actuarial work. First, choosing the right design consisted of funding decisions and expense forecasts. Then, to help design the benefit formula, I also had to understand the demographics of the firm to determine the eligibility requirements and the partners’ desire for deferrals. In addition, we tested the plans to make sure that the formula satisfied regulatory requirements.

But the most unique opportunity that this plan design project offered me was the opportunity to learn about the interaction between different departments within the firm. In every day work, actuaries might typically deal with the benefits department, CEOs or CFOs at separate times, but these plan design and implementation discussions involved representatives from the benefits and finance departments, as well as key partners. With different views and concerns among the departments, it was critical to understand the views of each party and anticipate questions ahead of time to be fully prepared for meetings. We also needed to identify the decision makers as early as possible in our discussions as this helped us to communicate more efficiently.

So if you are thinking about interning at JPMorgan or joining us full-time, I encourage you to look for an opportunity to further learn about the Parity team.
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Interning 101

As the summer comes to the final stretch I thought it would be interesting to recap on the past few months at my first actuarial internship. My blog entries over the next few weeks will take you through the awkward first steps of my internship experience all the way to the final confident strides on my way back to school in August. I learned a little bit, forgot a lot, and made errors along the way, but now after three months of being submerged in the JPMorgan culture I am comfortable with the career path I have chosen and I have all sorts of stories to share. –A.J. Stoll

The Life of an Intern
So what is it that I did all summer? After arriving about a half hour early on my first day at the office I took an initial look around, realized I was overdressed in my tie and shirt, attended some basic welcoming meetings, and then sat at my computer and got to work. By the end of my first day I had already started two projects, met more than a dozen new people, forgot everyone’s name, met and talked with CEO Tom Terry, and felt like I was behind.

On my first day I also found out I was working on the Health and Welfare and Stock Option teams and I met my mentor. She and I bonded over going to the University of Wisconsin, liking the same restaurants, having the same classes, and any other topic that a nervous intern could think of. From then on, she became my go-to person for any question that I had whether personal or work related, and by the end of the summer I was her go-to person for many of the same questions.

Fast forward … I was able to get myself on a variety of projects spanning the different practice areas at JPMorgan. I researched and gave a presentation on health and wellness programs and how they affect health care costs; I worked from start to finish on a quarterly stock options valuation report; I created a spreadsheet tracking the total amount in individual employee accounts for a small defined benefit plan with highly paid employees, and worked on more than a half dozen other projects. My work flow was a little staggered, but I rarely worked over 40 hours in a week and I never felt like I was in over my head.

Being at work isn’t so different from going to school. For instance we have lunch training sessions every Tuesday and Thursday to discuss the current events in the industry. These sessions were great resources to get information and perspective on all the different practices and scope of work at JPMorgan. The presentations vary in complexity, and each intern is responsible for leading one training session. I was able to sit in on presentations given by some of the top actuaries at JPMorgan including Chief Actuary John Moore. Although sometimes the material went well above my head, I felt like the JPMorgan culture was geared toward continual learning and improving employee understanding of current events and issues.