Applying actuarial skills beyond the walls of an insurance companyOctober/November 2018
I decided, somewhat ambivalently, to become an actuary in 2008. It’s not that I had another career path in mind, it was just that I’d need to tell my dad, who is also an actuary, that he had been right all along.
At the time, the reasons for me to become an actuary were numerous. I had the right skill set. I loved probability and risk. The job security was unparalleled. Salaries were great. I enjoyed preparing for exams … and so on. However, the profession was missing something that I felt I would have if I were to become an investment banker instead: the cool factor. Being an actuary just wasn’t cool—at least that’s what I thought back in 2008. Still, from 2009 to 2015 when I was happily employed doing actuarial work at New York Life, I felt the same way. The job was great, but it wasn’t fun to talk about what I did.
Today, I feel very different. I’m an actuary working at a retirement pension startup. In that environment, it is very cool that I’m an actuary. Before I tell you why, let me complete the picture about myself.
A Bit of Background
After graduating from Columbia University with a degree in Operation Research and Financial Engineering, I joined New York Life’s actuarial student program in 2009. During my six years there, I completed all of my exams and got work experience in life insurance pricing, financial reporting and financial projections. In my last role at New York Life, I worked in annuity competition and analytics, which was the jumping-off point to my future role at a startup.
I left New York Life in 2015 in search of more opportunities for personal growth. I felt great about having become a professional actuary, but I knew that I needed to work in a different type of environment going forward. I spent one year traveling and hosting language exchange events in New York City before looking for something new. Then I turned to the InsurTech world for opportunities to use my actuarial skills in a different environment.
While searching online for startups in the insurance space, I discovered a team—at the time called Abaris Financial—that had created an online marketplace for income annuities. Anyone could come to the site, enter his or her personal information and get real-time quotes from 15+ insurance companies. In the annuity world, this was a big deal! If you go looking for an annuity from an insurance company, you eventually hit a dead end on its website where you’re forced to enter your phone number to receive a call from one of the company’s agents. It could take you weeks, if not months, to get income annuity quotes from multiple insurers. But Abaris let you do it in 30 seconds. The company took care of the tedious task of lining up the income annuities from different companies, all with divergent and confusing terminology, so you could compare them on an apples-to-apples basis. Once you chose which annuity you wanted, Abaris took care of the application process and placed the business. They were quickly becoming the go-to place for the DIYer in the market for an annuity.
But there was one thing Abaris didn’t have: an actuary! So I joined the team in 2016 to advance the company’s understanding of the product and its pricing, deepen the relationship with annuity providers, work on customer education and the online experience, build new retirement tools and contribute to the business strategy.
A Blueprint for the Personal Pension
This year, Abaris rebranded as Blueprint Income and introduced a new product called the Personal Pension. Abaris had made it easy for anyone already in the market for an income annuity to get one, but the company’s mission is much greater than that. Its mission is to make it easy for anyone to retire with a guarantee, which is hard to come by now that employers aren’t offering pensions. Innovations to the annuity space could make getting guaranteed retirement income as easy as investing in a mutual fund. In doing so, we hope to turn today’s annuity into an asset class that becomes the pension of the future.
With the launch of the Personal Pension, we were able to address a few of the weaknesses holding the annuity back. First, the Personal Pension is a subscription-based purchase that requires a much smaller upfront commitment, and then it is built up over time. Second, it’s an account of multiple insurers’ annuities, eliminating the need for a customer to select a specific insurer. Third, you can apply for and manage it online, making it a suitable product for a digitally minded consumer.
Our future plans include creating third-party application programming interface (API) connections to make it possible for people to purchase annuities wherever their money is today, and adding direct API connections to our insurance partners to speed up and reduce the cost of the application process and policy management.
Living My Dream
My job at Blueprint Income is a dream job. I get to play with spreadsheets and put together reports, but my audience members are customers instead of others within my company. I’ve learned to put aside my ego and spend my time doing what the customer says he or she wants versus what I think the right thing to do is. I’ve learned to communicate faster and more simply, and to be more engaging, since customers have endless choices for how to spend their time. I’ve learned how to build something from scratch with neither a foundation nor more experienced people upon whom to lean. I’ve experienced being responsible for real numbers—web traffic, users, sales—and needing to be very careful about how I spend my time.
Being at a startup has transformed my perception of “work” and has turned me into a much more effective team member. It has also changed the way I view myself as an actuary. Unlike back in 2015, I now feel both proud and cool to say I’m an actuary. There are three reasons why.
- The Actuarial Skill Set and Reputation
I’ve found that being surrounded by people similar to you clouds your understanding and appreciation for your skills. Are you really good at building a financial model if everyone around you can build them, too? Do you really have an outsized understanding of actuarial math if everyone else around you can also do a mortality-weighted present value calculation.
Venturing out beyond the traditional actuarial community allows your actuarial skills to shine. Because fewer people around you have those same skills, they become that much more valuable. And, thanks to the reputation of the actuarial profession, people tend to assume you have those skills before you’ve even had a chance to prove them. It’s very cool to be viewed as having important and unique skills, even by those who don’t know you well.
- A Risk-oriented Mindset
It’s very rare outside of the actuarial community that people make risk-weighted decisions. In fact, many people tend to discount risk and not take it seriously, or they don’t properly weigh the potential for gain versus loss. They most certainly don’t consider the tail scenarios.
Thanks to my actuarial education, I see risk everywhere, but in a good way. Being risk-minded has helped me make big decisions that others can’t wrap their heads around—for example, my decision to quit my job back in 2015. To make that decision, I thought through the upside and downside potential. I defined what I thought would be the worst-case scenario, and because I was OK with it, I could then make the decision to quit.
A risk-oriented mindset is empowering, both at work and at home. As actuaries, we’re able to bring fresh perspectives to new environments simply because we’ve been taught to evaluate situations differently than the average person.
- My Confidence in the Profession
Before quitting my job at New York Life, I decided the worst-case scenario was a number of months of lost income and then going back to the same type of job I had before. That is a pretty good worst-case scenario, made possible by the Society of Actuaries (SOA) and other professional organizations. Our actuarial credentials and the demand for those credentials have given me the confidence to take risks with my career. In fact, some might say that my ability to hop off the traditional career path but still feel confident that I’ll be OK is pretty cool.
As a good actuary, I should end this article with some disclosures. My decision to share my life decisions, including quitting my very good job at New York Life, should not be taken as advice or a recommendation to do the same. These types of decisions offer no guarantee of success or favorable performance in the future. But, for me at least, it has spiced up my life journey, given me newfound appreciation for my profession and made me very excited for what the future may hold.
Copyright © 2018 by the Society of Actuaries, Schaumburg, Illinois.