Quant vs Actuary
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- เผยแพร่เมื่อ 29 ก.ย. 2018
- A lot of people have been asking what is the difference between Quants and Actuaries. Some have tried claiming one is nested inside of the other curriculum however this is wrong. In simple terms, quants are very focused in derivatives, financial risk management, and statistical arbitrage with heavy focus on programming as well. They require a minimum of a Masters (1-2 yrs) but prefer a PhD (5-7 yrs). Actuaries specialize in the insurance, pension, and health care industry with a broad range of topics covered including statistics, probability, finance, economics, and financial mathematics.
It is very hard to jump from one (quant or actuary) to the other. Actuaries require exams which prevent quants from entering their industry. Quants require a Masters or PhD and prefer specific majors over others which prevents actuaries from entering the quant realm. Yes, there are people who go from one to the other but it is not very common due to the barriers.
Compensation is similar given experience and education (see link below).
How Many Actuary Exams:
etchedactuarial.com/how-many-...
SOA Requirements:
www.soa.org/Education/Exam-Re...
CAS Requirements:
www.casact.org/admissions/pro...
Chartered Enterprise Risk Analyst - CERA (SOA):
www.soa.org/education/exam-re...
Financial Mathematics Exams Details:
www.soa.org/education/exam-re...
Actuary Compensation:
www.dwsimpson.com/actuary-sal...
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It is true that formal actuarial education through exams has broad focus but most jobs will require an actuary to specialize in a narrow field and be an expertise in it. I work in P&C, within P&C there are many sub fields that one can become an expert in. Large companies usually have a rotation program where a student actuary would change positions (or rotate) every one to two years from one sub field to another until they pass all exams. Then they would choose a sub field and will become an expert over the years. Lot of actuarial quantitative techniques and decision making skills are not in published books, they are unique to the company, team or colleagues you work for.
Hi Dimitri, excellent analysis! I work as a life and annuity actuary, and agree with your assessment. I would agree that actuaries would need a stronger background in financial mathematics to make the switch to non-traditional actuarial areas. The actuaries who already have masters or Ph.D. degrees would obviously be more comparable in terms of financial mathematics or financial engineers than actuaries who only have a BS degree.
Thanks for your perspective!
Hi Dimitri, it was extremely informative, thank you so much!! I am in the middle of choosing a college course to take, so it was very useful.
I believe the SOA Fellowship Quantitative Finance &Investment Path contains several rigorous exams ( besides the one Dimitry mentioned) that prepare a qualified investment risk actuary to a similar level as a MFE/M.Fin Math less The crucial programming portion.
Thus in my opinion it makes this a viable route for someone (an actuary )who has sound programming skills such as in c++ to switch to become a quant (or an actuary who can develop computational risk models ). Also several MFE programs have begun offering integrated programs with Actuarial science due to the overlap the two programs have: ie Risk modeling
Good video. I think, however, if you were to put the differences simply, a quant is much more of a computer programmer than an actuary, while an actuary is much more of a traditional businessman (who focuses on insurance) than a quant. Actuaries and quants study similar material ( with varying degrees of breadth/depth) when it comes to the mathematics / statistics. A quant though, is much more of a software engineer/programmer while an actuary is much more of a businessman. An actuary has more in common with an accountant/ typical corporate type when it comes to the actual job. They have to attend meetings, conference calls, pay attentiom to quarterly earnings, and do anything else a typical corporate executive does. A quant, on the other hand, is much less so a corporate type but more of a research engineer who creates/innovates with their computer code/algorithms.
S tier comparison, imma use this when they ask why I switched
@@Philgob yes I'm an actuary who interacts with data scientists and "quants" frequently at my company so I know the differences well.
If it's possible, can I have a convo with you, if possible in what social can i find you ? Thank you @@jms974
Dimitri, your presentation is good and to the point. You have cleared some of the points i have been struggling with. Do you have a "dedicated" site perhaps, where all that you have explained is jotted down? Can't wait for your next video.
Unfortunately I don't have a site but if you have questions you can message me through LinkedIn. www.linkedin.com/in/dimitri-bianco/
Hey Dimitri, frequent viewer here - thank you for your potent content.
I am curious to watch a video where you elaborate more on the future demand of quants & where the industry trends are heading. You touch on it briefly durring the middle of this video, but it would be awesome hear your full analysis on the matter.
I am currently planning my trajectory into the field so some reassurance on the career's sustainability would really ease alot of uncertainty.
Nothing will be replaced but Industry trend = Heavy usage of Machine Learning & Data Science.
I'll make a video on the quant market and direction as I just recently had a discussion on this with someone else.
Hey Dmitri what are some good sites for quant news? news that give you a glimpse of whats currently happening in the quant industry and what not.
Also, what's your opinion on the quant market nowadays? I keep hearing that the quant market isn't as big as it used to be and finding a job isn't that easy. You would think that an industry that has so many pre-requisites just to get an MFE would translate in finding a job way easier.
Finding quant news is challenging. I have not come across a site that covers what is going on in the industry/area of finance. The reason is somewhat due to the fact that quants are just a portion of the finance industry who are usually tucked away in a back office building. A lot of quant recruiters are even blind to the industry as they don't really understand quant market trends.
As for what is currently happening, risk departments are shrinking because regulations in the US have lightened up a lot over the past year or two. I just read a book on HFT issues which I will post a book review on soon. In summary, the equity markets have been a toxic place to do business and a lot of the big institutions have resorted to off exchange trades such as dark pools. On the bright side, a lot of quants are pushing banks and other financial institutions to use data science/ML/AI techniques. This area is growing and most data scientists don't have the background to do the daily work of risk, research, or trading which means we have some job security. Credit and market risk are still good areas to work as they are both understood well by banks and financial institutions.
As for quant job markets...they have been ruined by a bad economy and other degrees claiming to be quants (business analytics, statistics, data science, actuaries, MBAs, and etc.). The economy was booming before the 2008 crisis because options were a large part of the market. After the crisis a lot of option trading went away as the mortgage market crashed. To top that off, every school these days has some form of financial engineering program. This has flooded the market with a lot of people who are unqualified due to the poor education and structuring of these fake quant programs. To find a good hire is very challenging as everyone lists skills they barely know and have degrees from fake quant programs. If you can find a solid quant job, the pay is still fairly good and the industry is very mentally stimulating. In summary it's competitive but worth the effort if you really enjoy it.
I'm an actuarial analyst in a somewhat entry level role for the past 3 years and i've been interested in being a quant . thanks for the comparison to help me decide thus far
But I still need some guidance. I'm looking for a more quantitative role
Nice comparison! I also want to clarify that the CERA designation stands for the Certified Enterprise Risk Analyst (not Actuary) and I would also add that the designation is borderline pointless if you want to do risk management for an insurer because the insurers can just get a FSA/FCAS to do the job. Also, I know I'm probably being super anal about this, but most actuaries in the industry would never regard a person as a qualified actuary unless they have a FSA/FCAS (regardless of their work experience). Finally, I would like to point out that most actuaries do specialize in specific insurance/insurance-like products once they've obtained their FSA/FCAS (especially if they're working in a traditional actuarial role). This note regarding specialization is very important because there's actually professional liability associated with the FSA/FCAS designations. For example, if an actuary under-priced a group of insurance contracts on purpose and their actions were exposed, their employer/client can sue the actuary directly and the actuary can lose their license and be barred from the profession, 🤣🤣🤣.
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Hi Dimitri, love the content. Question though, how difficult would it be for a data scientist to transition Quantitative finance? Any tips? Advice? Is it worth it?
It's not impossible but it would be difficult. Quant finance requires a lot of math and statistics.
If you want to switch over I would be prepared to answer detailed statistics questions. I've interviewed a few data scientists however they couldn't answer basic statistics questions or basic questions about the math behind data science models.
Is it worth it? It depends. If you want to make more money...I think you can make similar wages in tech. If you would prefer to do deeper analytics then it would be worth it but you'll have to cover everything from data science to math to statistics at great depths. To really succeed in quant finance you have to be constantly learning. Many just get in and do the bare minimum though.
@@DimitriBianco Love the statistics, "hate" the math (maybe that will change as I get exposure to more advanced math). I feel as though in my current and past role as an analyst intern/data scientist, I'm always learning and reading up on new techniques, algorithm, processes, etc. Though I am also extremely early in my career so maybe that's normal. As I prepare for grad school though, I want to ensure that I know exactly what I should be focusing on in terms of course work and side projects
This is very specific to America. In Europe, actuaries are typically required to have a Master’s degree, Ph.D. preferred. In Germany, a Master‘s degree in Math/Statistics/Physics is the minimum requirement to get even admitted to take the actuarial exams.
true but bachelor only takes 3 years to obtain. a masters is 1 year. in the usa a typical undergrad degree is 4
@@vladm.6859 masters are 2 years
Firms hire Quants with bachelor's in technical fields (math, physics, CS etc).. Masters or PhD isn't always a must
It depends on your country.
The US requires it. There is one bank hiring undergrads now but they give you the menial tasks and hire consults to do the heavy lifting. I wouldn't consider these hires quants though.
I would imagine that Actuaries could maybe contribute a lot to finance, an experienced actuary knows risk inside and out
what is the future of actuaries especially when you take into considerations things to do with tecnology and other courses taking the jobs for actuaries
Like quant finance, actuaries will adapt by learning new tools.
This is the ultimate comparison, very accurate, thanks one more.
There is a curious fact about actuarial certification and salary correlation I'd like to ask. In Italy for example we have an actuarial education which is more like quants: we must bring a master degree in actuarial science and then we pass one state exam which is about all topics together. Before that exam we aren't considered actuaries at all, and in countries like USA we would just earn as a new SOA student even if we already carry our MSc. After certification instead, we are fully qualified and fully conventioned with the SOA as well. The main difference is that SOA students usually have from 4 to 8 years of experience after passing all the exams while we Italians start our career fully qualified with no experience. What could our salary be like first years in that case?
Unfortunately Italy looks to have low compensation (25,000-35,000 euros) if you look around online. I think this has more to do with Italy's bad economy than the job of being an actuary. Oddly enough the UK pays really low for quant as well. The supply and demand might just be lower in Europe.
@@DimitriBianco I just got the notification, sorry. Yes, in italy we have so bad compensation, in fact I meant what happens if an Italian actuary comes to USA and start his career with no experience but fully qualified. It is really weird actually
@@andresrossi9 So I've actually had a colleague that was in the same situation as you (i.e. MSc in Actuarial Science + state exam) and she was from France. First of all, I don't think your qualifications would transfer over completely because in my colleague's case, she had to write an additional exam in order to get her ASA. Even with an ASA, you aren't really considered a qualified Actuary by the general industry. Regarding your salary expectation in the US if you did decided to move, it would heavily depend on the industry that you're working for, your prior experience, and the city that you're working in.
For example, if you're working at a life insurance company in NYC with just 2 years of experience, you're probably looking at ~75k-90k/year (and that's just salary, bonus would also vary). That's not really a lot of money because you're living in the NYC area. However, if you're working in a consulting company as a near-ASA with 2 years of experience, generally your salary would be higher because you're working more hours, hence I would say your salary expectation would be ~80k-100k/year. The reason why the salaries are so similar is because in both instances they're entry level jobs. So, I guess to answer your question, broadly speaking, given your qualifications, you can expect to make 70k-100k/year in the US.
Heyyyy chess is my jam. Thanks for the thumbnail :p
@Digital Nomad happened upon this video by accident again, apparently I don't get alerts when people leave me messages lol. I'm at 1730 right now (uscf, not fide). By jam I meant that I like chess a lot, not that I'm much good.
You didn't cover exam MFE for actuaries, there are asset pricing models and stochastic calculus. But I wouldn't think it's that deep as a masters in quants
Yes I have seen the MFE exam and you are correct in that it isn't deep enough for actual implementation.
All these jobs/paths seem incredibly difficult and stressful. I have an MS finance and work for the government but am not enjoying the role. Would you think it be rewarding for someone to pursue these roles even if they’re not interested in the subject? I’m more interested in finding a finance role with extreme flexibility so that I can pursue sports.
This questions has a lot of different parts to consider. Any job will be stressful and unpleasant if you don't like the subject. To get into quantitative finance you will need a masters other than finance. Actuaries require similar math and stats backgrounds which a finance masters would not provide. I would encourage you to find a finance job in a sports company.
@@DimitriBianco Hey Dimitri thank you for the thoughtful response! I will keep doing some exploring and see if I can take action on your advice. Keep crushin it bro you have some good content.
@@DimitriBianco 8
I’m kind of similar, I just want time off to spend with my family and don’t rly have much interest in anything else.
Studying Actuarial Science Bach
My Plan is to do an MSc financial Maths while taking some actuary exams. Do u think that is possible to deal with it? This is because I cant tell now which field is gonna be great for me
This can be a good strategy depending where you are. It really depends on what country and city you want to work in. In the US (NYC, Chicago, San Francisco, and Dallas) the job markets are so competitive that those who are very specialized get job offers where those who know a little of everything but not a lot in one topic struggle to find a job. The competition is so strong here that many students get a $70,000 degree and end up in other industries besides quantitative finance making far less than they expected.
Im doing an MS in actuarial science with a lot of CS/DS under my belt, considering that I might not follow through with the profession in the long run. I have 4 VEE courses and the 3 preliminary exams (P, FM, IFM) passed. Personally, I think that if you're not sure about your route, the actuary path may not be the best field. It can get extremely niche and moving from different industries will almost always require a significant pay-cut, since your expertise is so particular.
Hey, dude. If I get lazy and only take the first two exams from SOA can I still be hired as an underwriter instead? Like, as a back up plan or something
Yes, that's what I did
@@blairmclaughlin2680 hey, thanks
Oh definitely.
I mean you can still study actuarial science for bach and do a master in quant fin.
That would be a good route.
That’s what i am doing
same
Whether you are an actuary or MFE, you can't learn to be quant via Uni or Exams, only was is through getting work experience. Either way both have basic skills to be entry level quants.
Can phd economics with focus on financial economics, econometrics and macroeconomics from a good grad school work as a quant?.. I recently started following your channel.. I am in masters of economics programme from India.. and wish to be a quant..
Yes a PhD in economics and econometrics is enough to be a quant. A few colleagues and a boss has had a PhD in economics and econometrics.
Thanks a lot for your reply... But often i have seen that graduate schools offer academic placements.. How can one break into quantitative finance? Also in which universities can i pursue mathematical finance phd with an economics background..
After you graduate with a PhD you just apply online. Financial mathematics PhDs are rare as most schools don't have them. A lot of quants have PhDs in mathematics, statistics, and econometrics.
You need to look up CM2 and SP6
These are breif overviews compared to top financial engineering programs. Actuaries are more generalists while quants are usually super focused in one area. There is nothing wrong with being either.
Now i understand whats actuary clear as day, but im still struggling abit to grasp whats quant. If you are quant yourself, can you give me any exact example of what are you doing, in what kind of field, for what kind of business do you work, what product are you trying to improve, i want atleast one very specific example.
In South Africa. Actuaries are hired for Quant jobs. But Quants are not hired for Actuarial jobs. So more career options are available for Actuaries. It’s pretty clear here. So I guess it’s different for every country
That's a good point. It's very challenging to give advice in multiple countries. I've started to mention in more recent video the advice is US specific. Even in Europe the industry and education is very different.
Yes Lesibe I wanted to mention this. Actuarial candidates in South Africa tend to be the best talent and hence can access a variety of jobs which require mathematical or statistical backgrounds. I would say the actuarial curriculum goes very in depth with regards to statistics and financial mathematics.Its not as broad as Dimtri points out. But then again countries do differ.
@@achumangelanga6299 So tell me am currently in my final year in chemical engineering NDip,recently enrolled for BCom Economics & Statistics with UNISA and will be adding the Mathematics Modules later on to graduate also with a Bsc Math n Stats degree but the thing is i want to move to either quant or actuary field so i dont know if am in the apropriate route or am still away from the right route, please share some helpful views.
@@duckieduckie8307 if you want to be a quant you are on the right path but if you want to be an actuary you are also on the right path but will need to do board exams.
@@achumangelanga6299 so will i have to register to write the board exams after having the two degrees or will i be required to take some few modules prior to registering for board exams
11:47 what is "PDS... double the odds"?
PDOs, so yes, points to double the odds.
Hey can you do anything about the audio? New subscriber from India.. I find audio very noisy and loud in delivery. Am sorry you have many useful information that needs to get thrugh all 😐
Sorry, I have a fairly small room that has some echo. Even audio editing doesn't reduce this much.
How do I get a Master's in Financial Engineering from a traditional finance degree background?
It's a very challenging progress. Educationally you'll need to learn a lot of math, statistics, and computer science you get started. I'll add a link below to a book that helps you cover the right topics. Getting into a masters program is another challenge as the good programs typically only take math, cs, stats, science, and engineering undergrads. One way to help improve your odds is to write a good statement of purpose that indicates how you've closed the educating gap as well as why you want to study quantitative finance.
A math primer book:
www.amazon.com/gp/product/0979757622/ref=as_li_qf_asin_il_tl?ie=UTF8&tag=fancyquant-20&creative=9325&linkCode=as2&creativeASIN=0979757622&linkId=a65a705d6a323bd8f18f8ea6eaade150
@@DimitriBianco thanks dimitri
What if an actuary has the FRM too, can she flip to quant?
It is always possible to go from actuary to quant however you have to be able to show you have the skills the hiring manager is requiring. The FRM is good for a high level view of risk however it will not cover the more technical topics. It's possible an actuary masters would cover some of them though.
Do you have a career pathway for quant? I know it is very hard to find an entry job for a quant job. Do you have a suggestion for quant students?
Have you seen this video?
th-cam.com/video/ptd4XicBUnY/w-d-xo.html
@@DimitriBianco Thanks, I am new to your channel. I sent to connect with you on Linkedin.
@@phuongdongcompany thanks for watching! I'll add you on LinkedIn.
I fucking love that tshirt
I do love the shirt. It's a soft stretchy material. Below is a link to where I bought it on Amazon.
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Read the reviews for sizing though.
@@DimitriBianco Thanks, I'll pick one up for myself
Why would a quant need to know physics?
You don't however there are cross over in skills such as math, stats, and programming. For example the heat equation is the same as the Black-Scholes. Other topics such as the Feynman-Kac are used in both fields. That being said quant finance is a merger of many fields so there is cross over with many fields of study.
Im not understanding this assumption you keep mentioning about getting an Actuarial degree will be a hard transition because you need a masters? Why are you saying this as if someone with a Bachelors in Actuarial Science is any different than someone with a Bachelors in Statistics, Comp Sci, Applied Math, Etc...? They all still need to get a masters in Financial Engineering/Computational Finance/Quantitative Finance/Mathematical Finance.
An Actuarial major could just as easily go for the exact same masters. I don't think people are thinking a Bachelors in Actuarial Science is all they will need.
When I called around various universities offering Financial Mathematics as an Bachelors. Every single school said they do not allow double Majoring with Actuarial Science but the two majors have far too much overlap in courses.
This narrative that Actuarial is just about Insurance is incorrect. Many actually work for Banks, Treasury Department, Social security, Finance or Economic Consulting Firms, and many other corporations managing their Investments. Yes the bulk are employed by Insurance companies. I work for one of the biggest. Actuaries have a lot of flexibility to move around within these companies in Corporate Finance, Accounting, Investments, Product development and pricing, corporate risk management, etc..., and they do take advantage of that.
I think acknowledging biase and actually doing something to address that biase so that you are presenting more objectively are two different things. Still i love your videos, but this one could use a little more researching beforehand.
Doesn't the very existence of this career, invalidate economics as a science on the whole. It's like saying basketball is a science. Yes there is bb science, and learning it might improve your game, even give you an edge, but it wouldn't improve someone who is not very good so much as to propel them into the pros. As evidenced by the scientific prowess of the current NBA roster. K, maybe this, why aren't some working for the fed, maybe they are, but shouldn't we be coming up with all kinds of magical management models for public budgets, and avoiding housing bubbles and county bankruptcies, corporate lawsuits against dying cities for, well, for dying. Honestly, supply and demand doesn't even play on the sm. 400 lots bidding, 23 lots asking, and it trades at bid price, then lower, give me a break. I'm just doing my own analysis, not knocking you.
Are you guys born to be 'quants', or dream of finding the 'theory of everything', like 'quant'um physicists, lol. No. i'm kidding. But is there a race to finding the magical equation that once you click the EXECUTE button, the pc just sits there and earns any portfolio 50% for eternity? lol. actually, I just remembered reading a story about 2 months ago, a guy did just this, but for horse racing. He has been running the same algos for 30 years, successfully. Billionaire I believe. You prob know him. Now I doubt everything I just said, lmao. ANyway.
Peace
big brain vs little brain
actuaries work with data architecture and are involved in ETL and can much of the models are based from computer based modeling. i think you might have been a little too kind to actuaries as a whole as many can just be excel monkeys.
with the breadth of the areas of expertise, it's nice that actuaries can find more of a home to fit their skillset. personally i like the bigger view, i think that the era of traditional statistics is on the decline, obvs, so why spend so much time on traditional methods of regression when you can fit a randomforest or GBM, and to learn their complexities, the variance of the predictor trade off between bias and variance, and how adding trees reduces your variance between ( f and f hat ) and will most likely provide a more robust model and all that - had to add so i wouldn't look like i was arguing for blindly fitting a model.
i mean meh if you want to talk OOP and frameworks, and java and haskell, i mean i'm pretty sure i would do pretty well to your average quant. but broadstrokes, an actuary 10 years ago would have only done excel, in health and casualty, the competition is a bit more forward looking, and thankfully we finally have R on the syllabus ( big first step ).
ps MFE which is now IFM (exams for actuary) is what was used to study finance, dz**2 = dt, ito's lemma, intro to martingales, risk neutral pricing ( basically everything to be able to analyze the black scholes ) was both our entry into stochastic processes, pde, and finance course lol.
overall wayyyy too respectful, i'm sure if you were to say OOP, mention the heat equation, or SVD, for the average actuary they would be lost. but then again we don't necessarilly build software, mathematical model, and SVD is just linear algebra laziness which is unforgivable ha!