The Actuarial Exam Process

To become an Actuary through the Society of Actuaries, you must pass a series of actuarial exams and E-Learning Modules.  Let me explain the entire process.

When you come to the realization that yes, I want to pursue becoming an Actuary, you must take your first Actuarial Exam. Typically people take Exam 1/P, which is in multiple choice format covering the topics of probability.  Knowing that you have a 50% chance of landing a heads on a coin flip sounds like a cake walk, but this exam gives a lot of people trouble.  Typically in order to pass this exam, you must get 65-70% of answers right.  The SOA then assigns you a grade from 0 to 10 where 6 and above passes.  This grading applies to all the multiple choice and written exams later on.

The second exam is Exam 2/FM which covers financial mathematics.  This test is based on the Theory of Interest.  For instance, if I had $100 in the bank today, and the savings rate is 1% per year, how much would my $100 grow in 10 years?  Exam 1/P and Exam 2/P are totally independent so you can take Exam 2/FM first if you want to.

After these two exams, there are even more preliminary multiple choice exams you must take which includes Exam 3/MFE, Exam 3/MLC, and Exam 4/C.  MFE stands for Models in Financial Economics. Here you learn about Option Pricing Theory which is all great stuff to know if you play around in the Stock Market.  Exam 3/MLC stands for Models in Life Contingencies.  This is the heart and soul of the insurance industry.  You learn how to price and reserve for Life Insurance, Disability Insurance, and Annuities just to name a few.  Exam 4/C stands for Construction of Actuarial Models.  This is where you learn about Loss Models, Actuarial Statistics, Credibility and other topics.

You also need to pass what we call VEEs which is Validation by Education Experience. There are three requirements for that: Applied Statistics, Economics, and Corporate Finance.  You can earn credit if you took University coursework on this topic.  Check out if any of your courses qualify here (http://www.soa.org/education/exam-req/edu-vee.aspx). If not, you can earn credit through online courses such as Actex.

So at this point, you are almost there to becoming an Associate of the Society of Actuaries (ASA).  But now, you need to go through the Fundamentals of Actuarial Practice (FAP).  This is a series of E-Learning modules that continue to give you practical knowledge of what it means to be an Actuary.  There is an Interim Assessment that you must pass after module 5 and a Final Assessment after module 8. In addition, after each module, you must complete an End of Module Exercise.

You are almost home free.  Now you qualify to attend the Associate Professionalism Course where you learn of the ethics of being an Actuary.  Show up on time and you will now become an ASA.

At this point, you are at the halfway point of the SOA exam process. If you decide to continue on to become a Fellow of the Society of Actuaries (FSA), you must take a few more exams and modules.  First you begin by selecting an FSA track which includes Group Insurance, Finance/Enterprise Risk Management, Investments, Individual Life and Annuities, and Retirement Benefits.  Each track has its own set of FSA level exams. The FSA level exams are written answer not multiple choice.  Not only will you be doing mathematics, but you have to write down bullet point lists, and make recommendations based on your analysis.  When I took the FSA exams, they were 6 hour exams, which really will make your hand hurt! In the current system, there are 3 FSA written exams.

In addition to the written exams, you must also pass FSA modules (3). These are very similar to the FAP modules but a bit longer and more indepth.  Then you complete a capstone project called DMAC which stands for Decision Making and Communication.

Once you are all done with these requirements, you can now go to the Fellowship Admissions Course where you learn more about Ethics and Professionalism to uphold our profession.  Then you get to party and get your FSA Diploma.  You might cry once you get that piece of paper because you literally just spent years trying to get to this point.  The SOA Actuarial Exam system is constantly changing, so continue to check out their website for the latest updates (http://www.soa.org/Education/landing.aspx)

You really can get someone to pay for you to go through this entire process.  This someone is called an Actuarial Employer where they will typically pay for your exam fees and give you raises when you pass. But you must get an Actuarial Entry Level Position first.  For that you need some technical skills to show you can do great Actuarial work for them.  Sign up for my Technical Skills Course and you can learn those skills.

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