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  #1  
Old 12-22-2018, 05:19 PM
thatactuarialguy thatactuarialguy is offline
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Default ILA vs CFE Track

I have been searching on this forum for a while about which FSA I should be pursuing. The posts I have come across are either very outdated or don't seem to provide more insights, so I figure I should create a new post for folks to chat about it.

Here is a snippet of my background. I have been working at one of the largest life insurers in the U.S. for about 2 years now. I just finished my first rotation in experience studies and had some level of exposure to life pricing (since we work together very closely). I just started my second rotation in life valuation and modeling recently. Although I have been working in the traditional actuarial space for a while (mostly for a solid foundation), I do not plan to stay in pricing or valuation/modeling in the long-run. I think I'd like to work in capital management or some kind of ERM role.

Pension, group health, and general insurance are pretty much out of the game for me due to many obvious reasons (e.g. pension is dying out, group health regulations are constantly changing and they don't really apply to my work (nor do I have the interest of going into heath), SOA-GI track isn't really recognized in the industry yet and I don't see myself working in P&C either, etc.). QFI is way too theoretical and I'd rather get a CFA designation if I want to go into the investment world. That leaves me with CFE and ILA. For anyone who has gone through a similar process, I'd love to hear your thoughts!
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  #2  
Old 12-22-2018, 10:36 PM
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Hello,
I'm a little biased, because I teach the CFE Track and it was the track I took (or, its equivalent back in the day) when I got my FSA, but let me tell you why I like that track better.

First, CFE is a slightly "softer" tracker then ILA or QFA, but I find that it has helped most in the "real world" actuarial problems. ILA has lots of technical details and calculations, and while those are important, often your job as an actuary is going to be analyzing problems and recommending solutions. That is the heart and soul of CFE. Yes, you don't learn the details of FAS60 or FAS97, but you get those details in your day-to-day if you need them. I loved CFE because it teaches you to think through a problem, consider the pros and cons, and then provide a rational. It will often feel like your answers are emails to your boss, which is a good habit to get into.

Second, CFE doesn't box you in as much. It's true that your track doesn't matter a ton, but CFE gives you a nice broad overview that is applicable to a lot of different topics. It makes you a jack of a lot of trades, even if you don't end up mastering any particular reserving methodology.

And lastly, CFE leads into Exam ERM most naturally, so students who take CFE tend to do better on Exam ERM; Exam ERM and CFE are much more similar than Exam ERM and ILA. The upside of this is that it makes it relatively easier for you to get your CERA designation. While this is not the MOST valuable of designations in the world, it can be a nice feather in your cap.

Just my thoughts! Take a look at the syllabuses and pick the one that is best for you. At the end of the day, the best track is the one that you think you can pass most easily. And the one you can pass the most easily is the one you find most interesting. In 10 years, it likely won't matter too much which you choose.

Please let me know if you have any more questions!
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  #3  
Old 12-23-2018, 07:43 PM
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110PercentWahoo 110PercentWahoo is offline
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I'm currently pursuing the CFE track. I like to think of the CFE track as a quantitative MBA program that emphasizes risk management and insurance. You don't learn onerous regulation, actuarial guidelines/ASOPs, formulae, or products like you do on the Health, Life and Retirement tracks, but instead general business concepts (marketing, corporate structure, cost of capital, managerial accounting, decision-making) and modeling techniques for quantifying risk (stochastic models, copulas, EVT, model validation practices, value of information, etc.).

I find the material much more enjoyable to study than the other tracks (for reference, I studied for and failed GHCOR-US with a 5 at one point and my day job is in Life). The exams for Life, Health and Retirement are so boring and teach non-transferable skills. Like, how many companies outside of life insurers and reinsurers require life pricing and valuation knowledge? In theory, the CFE track should make you an actuarial generalist and the outward face of the profession - the Actuary that can break into other industries or continue to work in Life, Health and P&C in a risk management capacity if they choose to.

In reality, no one hires Actuaries for general knowledge, they hire them for specialization. Pursuing the CFE track instead of the line of business specific tracks will put you at a disadvantage relative to your peers pursuing their practice area specific track.

Reasons for this are:
  • Your peers will formally learn the regulations/niche knowledge required to rise in the ranks of the traditional actuarial department (AG38, Stat reserves, Dukes-McDonald, FAS-97, ACA, requirements of LTC, and all the other stuff no one cares about outside of life/health insurance).
That type of knowledge results in your peers getting promotions because they know what they're talking about in a traditional actuarial setting whereas you'll be sitting there going 'idk' to a lot of product-specific questions at the mid-career level. In contrast, you'll understand how to run a business (e.g. how to raise capital, please stakeholders, see the big picture) while most of your co-workers will be clueless on these fronts.
  • The exams for Life, Health and Retirement are also easier based on pass rates.
This means you'll likely take longer to attain your fellowship on the CFE track and fall behind your co-workers in the corporate rat race.
Finally, it's worth noting that MBAs and/or Master degree holders are preferred for roles that CFE track FSA, CERAs are designed to fill. Said roles also often pay less than the salary you'd ideally want as an Actuary.

That said, I'm still happy I chose to pursue the CFE track. I really feel like I'm improving my business acumen and learning things that are transferable outside of the actuarial world. It's a pivotal part of my education and it's helping me become a stronger business analyst and strategist.

TLDR: CFE track is a holistic skill set, not a specialized one. The CFE track (or CERA for that matter) is not worth it if you want to be a traditional Actuary forever and maybe (but probably not) worth it if you are hoping to leverage your learnings into a non-actuarial role. I like it and think it's good-to-know knowledge, but at the end of the day, I'm a masochist when it comes to studying for exams and I like having fancy letters after my name.
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Last edited by 110PercentWahoo; 12-23-2018 at 08:20 PM..
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  #4  
Old 12-24-2018, 03:28 PM
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Eddie Smith
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I think this is the key part of the OP's post:

Quote:
Although I have been working in the traditional actuarial space for a while (mostly for a solid foundation), I do not plan to stay in pricing or valuation/modeling in the long-run. I think I'd like to work in capital management or some kind of ERM role.
If you were planning to stay in an pricing or valuation ILA role, I would definitely say the ILA track has the most practical value. In particular, the reserve methods covered on the LFV exam are the same methods valuation actuaries carry out every month on the job. Understanding these methods absolutely has a real and immediate benefit to valuation actuaries. I say this as someone who has worked on the job in these areas and hired people who did and did not have experience coming into valuation roles. The more you understand the reserve methods -- even in an academic sense -- the more value you can add day 1 on the job.

Also, keep in mind that you can take the ERM exam on any track and get your CERA. This would give you a boost if you plan to work in an ERM role later, especially ORSA work. If you think you'd like to work at a higher capital management / ERM level in a life and annuity company, the ILA exams + ERM exam might be a very good fit and give you an exam foundation that you could take in many, many different directions.

Beyond that, go with what you think you'll be the most interested in studying since that will help you get through the many long hours required to pass any of the FSA-level exams. Good luck!
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  #5  
Old 12-25-2018, 12:15 AM
thatactuarialguy thatactuarialguy is offline
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Quote:
Originally Posted by PaulP View Post
Hello,
I'm a little biased, because I teach the CFE Track and it was the track I took (or, its equivalent back in the day) when I got my FSA, but let me tell you why I like that track better.

First, CFE is a slightly "softer" tracker then ILA or QFA, but I find that it has helped most in the "real world" actuarial problems. ILA has lots of technical details and calculations, and while those are important, often your job as an actuary is going to be analyzing problems and recommending solutions. That is the heart and soul of CFE. Yes, you don't learn the details of FAS60 or FAS97, but you get those details in your day-to-day if you need them. I loved CFE because it teaches you to think through a problem, consider the pros and cons, and then provide a rational. It will often feel like your answers are emails to your boss, which is a good habit to get into.

Second, CFE doesn't box you in as much. It's true that your track doesn't matter a ton, but CFE gives you a nice broad overview that is applicable to a lot of different topics. It makes you a jack of a lot of trades, even if you don't end up mastering any particular reserving methodology.

And lastly, CFE leads into Exam ERM most naturally, so students who take CFE tend to do better on Exam ERM; Exam ERM and CFE are much more similar than Exam ERM and ILA. The upside of this is that it makes it relatively easier for you to get your CERA designation. While this is not the MOST valuable of designations in the world, it can be a nice feather in your cap.

Just my thoughts! Take a look at the syllabuses and pick the one that is best for you. At the end of the day, the best track is the one that you think you can pass most easily. And the one you can pass the most easily is the one you find most interesting. In 10 years, it likely won't matter too much which you choose.

Please let me know if you have any more questions!
These are some great insights Paul! I have actually just recently purchased the ERM PAK study manual and I can't wait for the actual release. Since I plan to take the 4-hr ERM exam regardless of which track I end up pursuing, I figure it makes the most sense to start with an universally applicable exam first.

I do have a few questions that I'd like to get your opinions on. It'd be great if you don't mind sharing your thoughts.

1. I actually love the communication/writing side of my job. However, I'm not sure if this is good in the context of exams. Many of my coworkers (both candidates and exam makers/graders) have told me that CFE exam questions often don't have a "correct" answer and that you have to be "creative" with your answers. This sounds like a nightmare to me. How can I be sure that I'm answering the questions the way they wanted? Would I be able to bs my way through the exam using common sense and general business knowledge?

2. I'm surprised that you said ILA exams have a lot of calculations. I always thought that ILA has a lot of memorization whereas CFE and QFI are more on the "mathier" side. Is it true that CFE exams rely heavily on statistical theories? What kinds of calculations can I expect from ILA vs. CFE exams (in terms of subject/areas, width, depth, etc.)?

3. For the ERM exam, how much ILA exposure would I get from picking the ILA extension? In other words, is it fair to gauge my potential interest in ILA from studying the ERM-ILA extension? Do you think that picking a non-CFE extension can diversify my exposure and thus be more beneficial? Does having relevant experience in life pricing/valuation help me get through the ILA extension more easily over other extensions?

Thanks!
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  #6  
Old 12-25-2018, 12:44 AM
thatactuarialguy thatactuarialguy is offline
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Quote:
Originally Posted by 110PercentWahoo View Post
I'm currently pursuing the CFE track. I like to think of the CFE track as a quantitative MBA program that emphasizes risk management and insurance. You don't learn onerous regulation, actuarial guidelines/ASOPs, formulae, or products like you do on the Health, Life and Retirement tracks, but instead general business concepts (marketing, corporate structure, cost of capital, managerial accounting, decision-making) and modeling techniques for quantifying risk (stochastic models, copulas, EVT, model validation practices, value of information, etc.).

I find the material much more enjoyable to study than the other tracks (for reference, I studied for and failed GHCOR-US with a 5 at one point and my day job is in Life). The exams for Life, Health and Retirement are so boring and teach non-transferable skills. Like, how many companies outside of life insurers and reinsurers require life pricing and valuation knowledge? In theory, the CFE track should make you an actuarial generalist and the outward face of the profession - the Actuary that can break into other industries or continue to work in Life, Health and P&C in a risk management capacity if they choose to.

In reality, no one hires Actuaries for general knowledge, they hire them for specialization. Pursuing the CFE track instead of the line of business specific tracks will put you at a disadvantage relative to your peers pursuing their practice area specific track.

Reasons for this are:
  • Your peers will formally learn the regulations/niche knowledge required to rise in the ranks of the traditional actuarial department (AG38, Stat reserves, Dukes-McDonald, FAS-97, ACA, requirements of LTC, and all the other stuff no one cares about outside of life/health insurance).
That type of knowledge results in your peers getting promotions because they know what they're talking about in a traditional actuarial setting whereas you'll be sitting there going 'idk' to a lot of product-specific questions at the mid-career level. In contrast, you'll understand how to run a business (e.g. how to raise capital, please stakeholders, see the big picture) while most of your co-workers will be clueless on these fronts.
  • The exams for Life, Health and Retirement are also easier based on pass rates.
This means you'll likely take longer to attain your fellowship on the CFE track and fall behind your co-workers in the corporate rat race.
Finally, it's worth noting that MBAs and/or Master degree holders are preferred for roles that CFE track FSA, CERAs are designed to fill. Said roles also often pay less than the salary you'd ideally want as an Actuary.

That said, I'm still happy I chose to pursue the CFE track. I really feel like I'm improving my business acumen and learning things that are transferable outside of the actuarial world. It's a pivotal part of my education and it's helping me become a stronger business analyst and strategist.

TLDR: CFE track is a holistic skill set, not a specialized one. The CFE track (or CERA for that matter) is not worth it if you want to be a traditional Actuary forever and maybe (but probably not) worth it if you are hoping to leverage your learnings into a non-actuarial role. I like it and think it's good-to-know knowledge, but at the end of the day, I'm a masochist when it comes to studying for exams and I like having fancy letters after my name.
You made some great points about the pros/cons of being a generalist vs. specialist. From an interest prospective, I would pick CFE over ILA in a heartbeat. From a career prospective, I think ILA makes more sense if I want to stay in a traditional actuarial role. I'm curious as to what you think of the following:

1. With the introduction of principle-based reserving (PBR) in the life space, do you think knowing regulations and specific reserving methodology will matter as much in the future? Even though PBR is only applicable to new issue business, I would imagine that a lot of the old calculations would eventually be automated in the future.

2. Do you think I can make up the knowledge gap through rotations/work experience? One of the biggest regrets from my previous rotation is that I didn't ask enough questions about the "bigger picture", so I'll make sure to avoid the same mistake in my current rotation. Also, my plan is to have at least two solid rotations in a traditional/technical role such as pricing and valuation with the hope that I'll get the "foundation" I needed.

3. Even if the CFE track gives you a slight disadvantage in the insurer/reinsurer space, do you think the same statement can be applied to consulting? I would imagine that consulting prefers generalists over specialists.
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  #7  
Old 12-26-2018, 11:39 AM
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Quote:
Originally Posted by thatactuarialguy View Post
These are some great insights Paul! I have actually just recently purchased the ERM PAK study manual and I can't wait for the actual release. Since I plan to take the 4-hr ERM exam regardless of which track I end up pursuing, I figure it makes the most sense to start with an universally applicable exam first.

I do have a few questions that I'd like to get your opinions on. It'd be great if you don't mind sharing your thoughts.

1. I actually love the communication/writing side of my job. However, I'm not sure if this is good in the context of exams. Many of my coworkers (both candidates and exam makers/graders) have told me that CFE exam questions often don't have a "correct" answer and that you have to be "creative" with your answers. This sounds like a nightmare to me. How can I be sure that I'm answering the questions the way they wanted? Would I be able to bs my way through the exam using common sense and general business knowledge?

2. I'm surprised that you said ILA exams have a lot of calculations. I always thought that ILA has a lot of memorization whereas CFE and QFI are more on the "mathier" side. Is it true that CFE exams rely heavily on statistical theories? What kinds of calculations can I expect from ILA vs. CFE exams (in terms of subject/areas, width, depth, etc.)?

3. For the ERM exam, how much ILA exposure would I get from picking the ILA extension? In other words, is it fair to gauge my potential interest in ILA from studying the ERM-ILA extension? Do you think that picking a non-CFE extension can diversify my exposure and thus be more beneficial? Does having relevant experience in life pricing/valuation help me get through the ILA extension more easily over other extensions?

Thanks!
1) The answers in CFE definitely can be more creative, but that's partially by design. A "correct" answer is one that can be supported by the material. So, for example, a question asks you to recommend one of two options. The graders might be looking for Option A, but if you make a good argument that is supported by the material for Option B, you may get all the points. I hesitate to say it's just bs-ing, because there always has to be a kernel of syllabus material that supports your answer.

This is a bit tough at times, especially coming from the prelims where there is definitely a right or wrong answer, but it gives you a little bit of freedom, as long as you stay logical and consistent with your answering, and clearly lay out your thinking. It's very similar to a work environment; there is usually a right or wrong answer, but your argument and reasons are the most important thing.

2) I probably shouldn't have compared calculations, but rather technicality of the material. ILA is all about learning specific rules and techniques, while CFE is more about learning the "big picture" sort of ideas. QFI is definitely going to have the most calculations, and they tend to be very complex. Calculations in CFE tend to be more straightforward, and are usually just a step to get to a decision. (Note, different exams have different amounts of calculations - Exam CFE has a fairly high number, but Exam SDM will have very few.)

The best example is thinking about NPV in CFE. We learn several different ways to calculate NPV, and none are super complex, but you need to take care to keep them straight in your mind. Then, a question might ask you to choose between to projects, and you will need to use the NPV calculation and then write an explanation for why you would choose one or the other. CFE will tend to be rely on more "logical" calculations than ILA's prescribed formulas, and they will use them to help us come up with a recommendation.

3) Honestly, you probably won't get a TON of a ILA experience from ERM-ILA. The ERM portion comes first, and the extension is just a small flavor. For example, we might have a risk management article that refers to an insurance company, while ERM-RB might have an article about asset risk in pension portfolios. "ERM" comes first, and the extension just switches our focus a bit. I think any student could take any extension, and do equally well on any.
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