Physics Physics or Actuarial Science: Which Path Should I Choose?

[kingwinner]

I am an undergraduate student. I love math, statistics, and physics. I am seriously interested in physics, but I don't think I like laboratory work very much.

I am struggling in whether to study physics or actuarial science. Which profession is better, a physicist or an actuary?

I now have 3 options in my undergrad degree, and I have to choose one:

1) Physics specialist + (pure) math major

2) Mathematical applications in finance and econonmics specialist + (pure) math major + statistics minor

3) Actuarial science specialist + (pure) math major + statistics minor

I have done tons of research on the internet, but still can't come to a conclusion. I just don't know what to do now. Any inputs or comments from you guys are welcome!

Thank you!

 

[will.c]

Actuaries generally make a lot of money for doing a job boring enough to make robots consider suicide.

Physicists generally make a modest salary for doing things that at least they find exceedingly interesting.

So, what are you looking for in a career?

 

[n0_3sc]

In my opinion:

1) is great if you're academically motivated. Ie. A simple undergrad physics degree is not appealing to anyone in the industry except teaching...That's why you need the motivation/incentive to pursue Masters/Phd.
2) Great idea if you just want to get out there as quicky as possible and apply yourself. Note that Financial mathematics gets very repetitive the longer you work for a company.
3) A lot of people are "misguided" into thinking how great actuarial is...It is a high paid career, but know that the industry already have software that actuarial scientists simply crunch numbers through. At the end of the day the work load is very exhaustive (in terms of labour not mentally).

Also, judging by your options you seem to favour Statistical Mathematics, so you should look further into 2) and 3).

 

[WhiteKnights]

How about Physics + Applied Math?
It takes a long long time to be a actuary(like 10 years)

 

[alligatorman]

I'm not an actuary, but I've done a lot of research on the career.

There are about 10 exams one has to pass before becoming a certified actuary. The first few may be easy for someone with a background in math and stats, but after that, it's more about memorizing laws and rules and definitions pertaining to actuarial science. Not as much math as they would like you to think.

The exams are said to be brutal. Most people will fail some, but they can take them over again. They aren't offered many times a year, so of course, this will take some time (~10 years). Firms will usually pay for the exams and give employees time off to study.

If I recall correctly, job security is nice and the job prospects are pretty good. However at certain times of the year, the workload can be overbearing.

In my opinion, if you're set on going after the $$$, then go into mathematical finance. It's more interesting, and can potentially pay better.

 

[alligatorman]

Another thing.. you don't need a degree (or specialization) in Actuarial Science to become an actuary. With a degree in math or physics, you should be able to handle the first few exams easily.

You would be better off taking some programming courses than specializing in Actuarial Science, especially if you decide it's not for you.

 

[leon1127]

You underestimate the bloody reality. First of all, it is hard to get a position without 2-3 exams.That would take 800-1000 hours of study time. With one exam, you might get a position in like IOWA, or Nebraska. The first exam is problem solving type of question in probabilities which is nothing trivial unless you practise a lot of question sets. First 4 exams are of similar type. And just for your information, my fd with 3 exams and a PhD did not get any offer in actuarial science after applying them.

Also, nowadays they tend to hire underwriter more than actuary.

Someone mentions about mathematical finance, it is very rewarding field if you have a graduate degree. However now they hire mainly CS ppl and the demand of maths and physics is dropping like rock.

 

[Locrian]

A few notes from someone who knows:

1) Actuarial science is absolutely not a math, science or statistics job. It is a business job with a strong mathematical leaning. An actuary's typical day involves little math. The reason for all the training is the occasional critical exception to this rule requires it.

2) The actuarial discipline currently has a critical shortage of experienced associates and fellows, and also has a surplus of entry level candidates. Both of these problems can be traced to the exam process - many people fail to pass the later exams, but the early ones are being offered more often and more schools are preparing students for them better. It is highly unlikely that there is going to be a surplus of experienced actuaries in the next 10-20 years (the profession is likely to grow quickly), but getting your foot in the door has become increasingly difficult.

3) That being said, most people from this forum who have the right attitude and who do their research properly could get a job in the field with 2-3 tests. Most people in this forum won't have the right attitude, and those with a PhD will have an extra hard time, for a variety of reasons.

4) The idea that actuarial work is boring compared to work in the sciences is somewhat amusing. Personally I might agree that low level actuarial work is less interesting than being a graduate student or postdoc in physics. However I think the day to day work of an experienced actuary can be infinitely more interesting than a professor's work or government work. Industry might be about the same. There's a lot of variance in all of them, obviously. And, of course, to each their own.

5) Mathematical finance is usually a very different lifestyle than actuarial work. Typical hours are much longer, pay is typically higher (but not necessarily proportionally to the hours) and work is more stressful. Whether it is more interesting depends on many, many factors, most of which are out of your control. Broadly speaking I think of actuarial work as a family man's job, and mathematical finance as a stressful but lucrative single-man's job. It isn't strange to hear about people working 120+ hours a week at a big investment bank. Of course, there are actuarial consulting jobs that put in tons of hours and small bank quant jobs that put in few, but I think my broad strokes are pretty accurate.

There are a few questions you should ask yourself that can help you choose between physics and actuarial work. Do you like business? If no, then don't go into actuarial work, period. Do you like universities? If not, that's a minus for physics - yes, there are lots of industrial jobs, but there's really not as much demand as many people make it sound like there is. If you are going into industry both physics and actuarial work suffer from one similar issue - the work is localized geographically. (This is probably more so in physics, where much of the work is Cali, MD and Colorado, but around 3/4th of all actuarial jobs are in about a dozen cities).

Goodluck with your decision and don't hesitate to ask more questions.

 

[Locrian]

5)Broadly speaking I think of actuarial work as a family man's job, and mathematical finance as a stressful but lucrative single-man's job.

Doh, sorry, this was embarassingly sexist. Or at least half of it was. There are lots of women actuaries who do very well. Mathematical finance may be a little different; the wall-street mentality is both elitist and sexist. This doesn't stop some women from being great quants.

 

[Locrian]

The exams are said to be brutal. Most people will fail some, but they can take them over again. They aren't offered many times a year, so of course, this will take some time (~10 years). Firms will usually pay for the exams and give employees time off to study.

Depending on the person and which side they go into, ten years is probably an outside limit. SOA, which deals with life and health actuarial work, has been working hard to reduce travel time, and I suspect most here could become a fellow in 5-6 years. CAS, which deals with property & casualty actuarial work, hasn't changed much, and the changes they're looking at may not help travel time, so they're probably still a solid 7-9 years. I don't know much about pensions and becoming an EA, and wouldn't really suggest that direction to someone due to the shrinking demand for pensions.

These numbers are a bit higher than the travel times they (SOA and CAS) are actually reporting. This is because they measure travel time from the time a test taker becomes an employee, not from when they take their first exam. Furthermore, there really isn't a great deal of data on the current SOA travel times because the new format using FAP modules is fairly recent. My 5-6 years is an estimate most actuaries agree with, but hardly set in stone.

Edit: But I forgot to add something very important - you're being paid during this process. And I don't mean like a graduate stipend; go do a web search for DW simpson's salary estimate. Many people out there who are still technically actuarial students, with no credentials at all, make almost as much as a full time professor, and someone who is an associate with a year or two left to go may well make more. The downside is the cost to your personal life can be pretty tremendous. Be willing to make sacrifices - lots of them.

The exams. . .

Describing the exams as brutal is accurate. I would call the early one's "nasty", personally. There's nothing hard about the content, but the exams are mean. The questions are designed to be tricky, misleading and otherwise troublesome.

I have a few examples of this. One of my favorites covers the time I couldn't get the answer. I had set the problem up in a way I thought was effective, but I just couldn't come to a solution. I tried several methods, even bringing in some tricks from physics (tried using a taylor expansion) but nothing worked. At the time I was getting about 20% of the problems correct on the first try, but this one was worse - I couldn't get an answer at all. It made me mad, to be honest.

Finally I gave up and turned to the solution. He set up the problem exactly as I did. Then he writes "Through trial and error. . ." That's one big step everyone taking those exams coming from a graduate education in math or physics has to take - they have to start treating it like the game it is, and stop worrying about the process they use to get the answer. I had let my ego get in the way of getting the answer.

The later exams are much worse. The first few exams are 2-3 hours each. The last ones are written, not multiple choice, and last up to 6 hours each.

 

[Howers]

I am an undergraduate student. I love math, statistics, and physics. I am seriously interested in physics, but I don't think I like laboratory work very much.

I am struggling in whether to study physics or actuarial science. Which profession is better, a physicist or an actuary?

I now have 3 options in my undergrad degree, and I have to choose one:

1) Physics specialist + (pure) math major

2) Mathematical applications in finance and econonmics specialist + (pure) math major + statistics minor

3) Actuarial science specialist + (pure) math major + statistics minor

I have done tons of research on the internet, but still can't come to a conclusion. I just don't know what to do now. Any inputs or comments from you guys are welcome!

Thank you!

You'd generally make way more money going the business route, and actually get a job. With physics, employment is hard to find - and even then pay is modest. If you want to do "physics with pay", then there is a field called engineering. Only pursue physics is you are ready to invest 10+ years of your life to school for pay that can be obtained with many other 4 year degrees. I.e you must really love physics and accept losing pay for your interest.

I don't know much about mathematical finance, but I have a friend who knows people in the quant section and he says its like any other business job - great pay and long hours. As for actuarial science, it is a lucrative field but one thing to keep in mind is the exams. They are really grad school in disguise. Each exam requires you to read like 2-3 textbooks and you get tested on the material in it. So 8 tests x 2-3 books = 20 books, or about equivalent to 5 courses over 4 years. Now mind you, a) the first 2-3 are covered in undergrad and b) you are working full time so you are getting paid. The downside of course is you have less time to study your "grad courses".

If you like stats a lot, actuary science may appeal to you as it is heavy with statistics. Physics has very little stats. Both are interesting sciences. Physicists attempt to predict events using mathematics. Actuaries use statistics and risk theories to predict property damage and the costs. In business though, you have to start off with mundane work so it may take several years to get to the interesting things.

 

[shoehorn]

I know nothing about actuarial work but I was a practicing quant/prop trader for a reasonable period of time; as a result, there are one or two things here I take issue with.

Typical hours are much longer, pay is typically higher (but not necessarily proportionally to the hours) and work is more stressful.

These are all broadly true, yes.

Whether it is more interesting depends on many, many factors, most of which are out of your control.

Whether it's interesting or not depends largely on whether you're interested in mathematical finance and have found a good place to work, little else.

Broadly speaking I think of actuarial work as a family man's job, and mathematical finance as a stressful but lucrative single-man's job. It isn't strange to hear about people working 120+ hours a week at a big investment bank. Of course, there are actuarial consulting jobs that put in tons of hours and small bank quant jobs that put in few, but I think my broad strokes are pretty accurate.

This is where I think you're hugely off base. The days of quants regularly working 80+ hour weeks for little extra reward are long gone. Personally, I never worked more than eighty hours in a week and neither did any of those with whom I worked. Typically, the working week was a standard 50-60 hours. Moreover, I have never witnessed anyone working 120 hours a week and I have never met anyone who would require their quants to work that much, principally because managers recognise that their talents' health and productivity suffer hugely when pushed beyond ~70 hours a week. Frankly, I doubt very much if it happens.

 

[Locrian]

Thanks for the clarifications shoehorn. Out of curiosity, were you located in New York? Also, are you only taking mathematical finance to only mean quant, and not other trading positions, and is that how it is typically understood?

 

[n0_3sc]

Locrian: Can you clarify what type of 'business' topics are involved in actuarial? You say, there is very little math involved. Does that mean it is more commercial law/rules of economics/financial policies etc etc..?

I'm just trying to further understand what actuarial really is.

 

[Locrian]

The days of quants regularly working 80+ hour weeks for little extra reward are long gone.

Also, could you clarify how long "long gone" is? I'm not trying to be argumentative, but I am trying to clarify. You have had experience in this field, and I have not. However, there is no shortage of threads at the http://www.actuarialoutpost.com/actuarial_discussion_forum/showthread.php?t=66321, many that have quants posting, that suggest otherwise. I've also read many times on Wilmott about these hours, but their search function is down. I'd like to reconcile what you're telling me with what they are - it could be that I am interpreting them too broadly, that you are interpreting me too narrowly, or that your experience simply differs from theirs.

 

[Locrian]

Locrian: Can you clarify what type of 'business' topics are involved in actuarial? You say, there is very little math involved. Does that mean it is more commercial law/rules of economics/financial policies etc etc..?

Firstly let me clarify that when I say there is little math involved, I'm talking about real math - there is plenty of arithmetic you do daily. Some of it is pretty complicated. However you aren't going to be standing at blackboards deriving new formulae. Accountants are impressed with the math actuaries do. Mathematicians are not.

The technical work actuaries do depends some on their field - those in life might be more closely involved in investments, while those in health might do more modeling, but of course both groups need to understand both. When I say there isn't much math, what I'm saying is that much of the work in the statistical and mathematical foundation has long been done, and honestly precious little new work in those areas going on in universities is ever used anywhere. Your tools are mostly made - the question is which ones to use, when and how.

As far as business topics, your list is a good start. Understanding corporate structure, how regulation deals with insurance, what the market for your products is like, and how the company financing works is critical. However it goes beyond that - many (some might say most) business skills are not taught in school. They include a professionalism and understanding of people skills that is difficult to teach and can be hard to learn. You'll most likely be wearing a suit and tie evey day, which reflects the culture you're operating in.

For a long time actuaries were thought of as personality-less fuddy-duds you wouldn't want to spend your time around. There has been a significant push to change this from both the societies (SOA and CAS) and the employers themselves. When you go to a job interview, your personality, character and ability to present yourself will all be judged, and to a greater degree than they would if you were instead applying for, say, a quality control job in a manufacturing plant. Some of these qualities are also judged if you are applying for a university faculty position, but in a different way.

Another way to describe the difference is this - ultimately in scientific research you must be able to present your findings accurately to people who know what you do - the other researchers who read the journals. Press releases require some translation, but really, how many professors deal with those and how often? Further, how accurate are most press releases, anyways? In actuarial work much of how effective you are depends on your ability to communicate your findings clearly and accurately on a monthly, weekly or even daily basis to people who often have forgotten even their high school mathematics. Remember that other people in the organization - the underwiters and salesmen - work in different roles, and it can be tough to square away what you've done with the job they have to do every day.

One thing I want to be clear about is that I'm not trying to convince anyone to be or not to be an actuary. I'm merely trying to lay out what I've learned in my career progress in a way others here might appreciate.

 

[kingwinner]

Thanks everyone for providing me a lot of useful information!

What kind of maths are involved in actuarial science? How are they different from ordinary math? Which kind of math is harder, the math in actuarial science or ordinary math?

Regarding physics, I have heard that it's getting increasing difficult to obatin a university position (e.g. professor) in physics. Is this true and why?

 

[kingwinner]

How about Physics + Applied Math?
It takes a long long time to be a actuary(like 10 years)

But to be recognised as a "physicist", I must get a Ph.D and it takes at least 10 years in university as well, so the path to becoming a physicist is not anything easier than becoming an actuary, right?

 

[Howers]

How about Physics + Applied Math?
It takes a long long time to be a actuary(like 10 years)

No it doesn't. Your an actuary right after your first two exams, which most people do while in undergrad. Your not a full actuary, but you're still making 60+k a year.

But to be recognised as a "physicist", I must get a Ph.D and it takes at least 10 years in university as well, so the path to becoming a physicist is not anything easier than becoming an actuary, right?

Its way harder to become a physicst

 

[Vanadium 50]

I keep reading the topic as "physics vs. actual science".

 

[will.c]

I keep reading the topic as "physics vs. actual science".

I've met a few people who think that current physics research consists of nothing but string theory, and well, in that regard...

 

[Locrian]

Thanks everyone for providing me a lot of useful information!

What kind of maths are involved in actuarial science? How are they different from ordinary math? Which kind of math is harder, the math in actuarial science or ordinary math?

I'm not sure there is such thing as ordinary math, and certainly actuarial science isn't an alternative. I'd say an understanding of algebra, linear algebra, calculus, probability and statistics is a good start. After spending a lot of time in physics I found financial economics to be just weird at first, but it's straightening out pretty quickly.

Regarding physics, I have heard that it's getting increasing difficult to obatin a university position (e.g. professor) in physics. Is this true and why?

The general consensus is that this is true. The reason depends on who you ask, but there's little doubt that there has been many, many more physicists produced over the past thirty years than can possibly get university jobs. Luckily industry helps some, but in many areas of physics there is little to no industry, thus leaving a lot of people stuck in postdoc limbo, or worse. My experience was that if you go into an area of physics that is applicable and has a healthy private sector, your options improve.

 

[Locrian]

No it doesn't. Your an actuary right after your first two exams,

That's absurd. Lots of students have passed two exams before leaving college, and no one in their right mind would call them actuaries. Where the line is drawn depends on who you ask, but most people will say that becoming an associate and having at least some job experience is necessary to be called an actuary.

Its way harder to become a physicst

This seems a difficult thing to demonstrate. Out of curiosity, how many actuarial exams have you passed, and what graduate degrees do you have in physics?

 

[Howers]

That's absurd. Lots of students have passed two exams before leaving college, and no one in their right mind would call them actuaries. Where the line is drawn depends on who you ask, but most people will say that becoming an associate and having at least some job experience is necessary to be called an actuary.

My point is you are employed full time. You don't count working full time after your bachelor and studying part time, often at work, as "time devoted to becoming an actuary". Its more like getting experience, with some reading.

This seems a difficult thing to demonstrate. Out of curiosity, how many actuarial exams have you passed, and what graduate degrees do you have in physics?

Not as much as you, if that is your point. 2 and none.

By harder to become a physicist I mean more schooling is necessary and employment is scarce. It is harder to find a position that is not in demand. As for subject content, I'd still imagine physics is MUCH harder than actuarial science. But maybe you can tell me about that? It sounds as though "kingwinner" has been informed that actuarial science may be too hard for him, and that he should consider a physics PhD instead - which I find absurd.

 

[kingwinner]

Does anyone have more to say about having a degree in "mathematical applications in finance and econonmics"? What are the kinds of jobs I can do?

 

[kingwinner]

There are a few questions you should ask yourself that can help you choose between physics and actuarial work. Do you like business? If no, then don't go into actuarial work, period. Do you like universities? If not, that's a minus for physics - yes, there are lots of industrial jobs, but there's really not as much demand as many people make it sound like there is. If you are going into industry both physics and actuarial work suffer from one similar issue - the work is localized geographically. (This is probably more so in physics, where much of the work is Cali, MD and Colorado, but around 3/4th of all actuarial jobs are in about a dozen cities).

Goodluck with your decision and don't hesitate to ask more questions.

I am not sure if I like business, but I enjoy working in an office environment.

I like universities, but I do not enjoy labortary work very much, and I wouldn't prefer an industrial job. I don't like getting my hands dirty. However, I love and I am good at the theoretical aspects of physics.
Is physicist not for me?

 

[alligatorman]

Well if you're good at and like theoretical physicist, then I would say it's for you. Just be aware of how difficult it is to become one these days.

 

[mal4mac]

Read:

My Life as a Quant: Reflections on Physics and Finance
by Emanuel Derman

 

[Locrian]

I might be in a unique position to compare physics and actuarial work, but I'm still new to the field. Thus if anyone is looking for more and better information on the work actuaries do, job opportunities and other useful information, I'd highly suggest http://www.actuarialoutpost.com/actuarial_discussion_forum/showthread.php?t=9931on the Actuarial Outpost.

 

[n0_3sc]

I am not sure if I like business, but I enjoy working in an office environment.

I like universities, but I do not enjoy labortary work very much, and I wouldn't prefer an industrial job. I don't like getting my hands dirty. However, I love and I am good at the theoretical aspects of physics.
Is physicist not for me?

EDIT: Sorry, I understood that you were a beginning undergraduate student. Am I mistaken? From first year studies you may consider yourself "good" at theoretical physics, but graduate theoretical physics is FAR different. It is an entirely new language.

Locrian:
Thanks for the very informative description of actuarial science.

 

[avant-garde]

So, if I get a degree in actuarial science, is that too narrow to be able to pursue something like mathematical/computational finance, statistics, etc? (in case I end up deciding that actuarial is not for me)

 

[yoyo100]

Hey,

Are there any actuaries on this forum? If so, can you tell us a little bit about your background and about how you got into the actuarial profession. I am seriously considering pursuing a career as an actuary, but I would like to learn more about the job and what kind of people like it.

Thank you.

 

[lubuntu]

Wow, talk about a enough with the euphemistic language, I mean actuarial science, SCIENCE?, really?

Excuse me I have to get back to my job as Ancillary Ground Bovine Technician.

 

[Locrian]

Are there any actuaries on this forum? If so, can you tell us a little bit about your background and about how you got into the actuarial profession. I am seriously considering pursuing a career as an actuary, but I would like to learn more about the job and what kind of people like it.

Have you read through the actuarial outpost FAQ thread I posted earlier here? It is invaluable to someone considering the profession.

I'm an actuary (well, actuarial analyst is more accurate, which denotes that I'm early in my career). My background is a BS and MS in physics, with a couple of years experience working for a private company doing research.

I got into the actuarial profession by taking Exam FM and contacting a recruiter. I've had my job for less than a year now, and have thoroughly enjoyed it so far. This is the most satisfied I've ever been with my career, though there is still plenty of time for that to change ;)

As for what kind of people are actuaries, well first and foremost, you need to understand (as I've mentioned earlier in the thread) that actuaries are business people first and anything else (statisticians, mathematicians, researchers etc.) second. The culture in an actuarial department is very different from, say, the sales department, but it is also different from a university or private research department.

I also have some bad news - it is currently very hard to get an entry level job as an actuary. There is still a shortage of credentialed actuaries, but firms just aren't hiring new entry level people. It's always been a bit harder to break into the career than it is made to sound, and the economy has exacerbated that. However, if you are still a year or more from looking for a job, things could be very different by the time you do.

To be honest, the question of what kind of people are actuaries is hard to answer. If you can narrow it down any, or have other specific questions, I'd be happy to help.