Quants, Investment Actuaries?

[obri600]

i'm not trying to suggest that actuaries are not capable of doing some "quant" work, but to get to a front desk position, there's an entry barrier - a phd.

the banks seem to be pretty obsessed with it from what i experienced speaking to headhunters a couple of years ago - maybe this is reasonable since quants are usually experts in solving pde's etc, which is not our usual area of expertise.

Can you suggest any possible routes to getting a quant position without a PHD? I have no investment experience to date but have sat ST5.

 

[Gareth]

you will need to find a good headhunter. Might be worth talking to Dominic from http://www.wilmott.com/index.cfm?NoCookies=Yes&forumid=1

(his nick is DCFC and he runs a recruitment agency associated with Paul Wilmott).

If you want to stand a chance at an interview, you will need to know the contents of Hull off by heart (hint: ST6).

 

[AKT]

i'm not trying to suggest that actuaries are not capable of doing some "quant" work, but to get to a front desk position, there's an entry barrier - a phd.

the banks seem to be pretty obsessed with it from what i experienced speaking to headhunters a couple of years ago - maybe this is reasonable since quants are usually experts in solving pde's etc, which is not our usual area of expertise.

I have done some research since last time and my findings (maybe naive!!!) are that there are load of people working as "Quant" from a purely Financial background, some with CFA's other with Financial degree and work experience + CQF from Paul Wilmott's 7city,etc...I mean not all quant are "die hard" Maths or Physics Doctor's. Any MSc in Mathematical Finance (Financial Maths whatever...), Quantitative Finance or Financial Engineering with good C++ content look adequate. Also the content of ST6 seems to (at least) match part of those programme.I believe a Part-Qualified actuary with ST5 and ST6 stand a good chance of landing a good Quant jobs (after few month of CQF or equivalent, of course!)

 

[Gareth]

I don't think you would stand a good chance of getting a decent quant role with that background - all the main banks have phd as a pre-requisite for a junior quant role.

you might get into a code monkey role, which allows you to move into a proper quant job after time, but not directly unless you are a star.

 

[veeko]

I don't think you would stand a good chance of getting a decent quant role with that background - all the main banks have phd as a pre-requisite for a junior quant role.

you might get into a code monkey role, which allows you to move into a proper quant job after time, but not directly unless you are a star.

The IoA website describes the routes some took into investment banking. Whilst this is not pure quant work, it does make interesting reading:

http://www.actuaries.org.uk/Display_Page.cgi?url=/finance_invest/careers.xml

 

[Cardano]

At the moment there are going to be plenty of quants looking at their models and looking at their losses, and wishing they knew a bit less about mathematics and a lot more about economic history.
In finance half the expectancy is often found in one outlying event that occurs once every generation or two.

 

[samuel_von_gudmange]

model should be fit for purpose
actuarial judgment to choose parameters etc
***model should not be overly complex so that is long/expensive to run and difficult to interpret/communicate.****

....

clients of actuaries would never understand the literature written by quants (plus quants dont need to worry about communication to the same extent when assisting internal clients like traders)

plus would predictive power of more complex justify savings etc

I know this is the kind of stuff we hear from the profession all the time, but I just don't buy it.

There's no problem in using a simpler model if we decide that it's worth sacrificing accuracy for the savings in time and money - but this decision still ought to be made by someone with the appropriate knowledge and skills.

Are actuaries really able to do this - are they really using the models they use because they think they give the correct trade-off between accuracy and cost? Or is it because they're the only models they know and the only models that are covered on the actuarial exams? To me it looks more and more like the latter.

And it seems that the profession sees the communication issue like this:

1. We're employed to use our skills to value liabilities more accurately than a non-professional could.
2. but we don't want to use models that are too hard to explain to non-specialists
3. so we don't bother learning about more complicated models and just use the simple ones
4. then we take credit for being good communicators when in fact we were only able to explain it so well because we deliberately chose a model that was easy to explain in the first place.

I'm starting to feel a bit disillusioned with actuarial life to be honest. The exams are hard, but for all the wrong reasons. And if you read an article or go to a talk titled "issues facing the actuarial profession" it's much more likely to be about whether the faculty and institute should merge or about how to assess work-based skills, than it is to be about the actual issues in finance and insurance that actuaries should be dealing with at work every day.

 

[Gareth]

Ah don't fret too much about the poor actuarial profession. Remember there are a few good actuaries out there who can use more realistic models, think of people like Andrew Smith - he's certainly more than capable of keeping up with the quants and the IB's models.

Ah...but wait, he's not qualified and is frequently critical of the exam system.

Oh well. Seems a prerequisite to been a good financial modeller is not being an actuary