Will an MBA advance your Actuarial Career? As a recruiting team with over 20 years of combined experience connecting Actuaries with jobs, we have witnessed many changes in the demand for actuarial expertise. Without a doubt, the dominant trend has been finding Actuaries who help companies utilize advances in technology and the availability of data to drive better business decisions. The effect of this has been that doors leading outside of traditional actuarial work have opened even further. Actuaries are no longer expected to be experts on purely pricing or valuation, but rather are invited to be business partners interpreting data and complex models to create value and increase profitability for the company. We now regularly see Actuaries leading catastrophe modeling, predictive modeling, underwriting, product management, and enterprise wide risk management departments, just to name a few.
Given this continued expansion into broader business related functions, we are often asked by aspiring Actuaries whether it makes sense to pursue an MBA. Although there are many reasons for someone to pursue an MBA, for the sake of this article we will focus on two criteria which tend to be the motivating factors for obtaining an MBA: 1) future compensation and 2) future career advancement.
MBA <> Higher Compensation
A ballpark average for the cost of a full time top 20 MBA program’s tuition and fees is somewhere between $80,000 to over $150,000. If you factor in the additional opportunity costs associated with loss of two year’s income from not being able to work while completing the program, the total costs can exceed $200,000.
For an Actuary early on in their career, just to recoup that amount can easily equate to four years of full-time employment. So, the question then is will an MBA increase your compensation enough to make up those costs? Not generally. Actuarial salary increases are by and large correlated to years of experience and level of exam passage. We do not typically see raises awarded after an Actuary completes their MBA, and it may be unrealistic to expect an employer to award a substantial raise or promotion after completion of an MBA.
The one exception to this might be if your current company requires having an MBA as key to promotion, and they are willing to pay for it. If this is the case, an executive MBA (classes typically meet on weekends) or night classes tend to work best so you don’t forfeit a salary. In the actuarial world, these situations are the exception rather than the norm.
Of the hundreds of actuarial jobs we work on filling each year, very few require an MBA. Those that do, tend to be organizations peripheral to insurance such as rating agencies, regulatory bodies, management consulting firms or roles involving capital management. However, even in those cases the requirements will likely indicate a preference for an advanced degree, listing a wide range of qualifications such as MBA, CPA, or PhD. That said, most of these companies will also mention Fellowship to an actuarial society as an equivalent designation. We have not had any clients that are seeking actuarial expertise who then limit the candidate pool to those with MBA’s only.
What about roles that require management? Does an MBA improve your chances of being moved into those roles? Actuaries are looked to because of their unique quantitative abilities. For actuarial roles that involve managing employees or processes, we find that companies time and time again choose a designated Actuary over a non-designated one with an MBA. Even for roles that have moved outside of traditional responsibilities, where actuarial letters don’t hold as much clout, we generally still see that an employer would rather leverage a candidate’s quantitative strengths and experience than graduate level educational background.
We have seen countless examples of Actuaries moving into senior management roles without an MBA. In our experience, an aspiring Actuary would be better served by focusing the time and effort that would be spent on pursuing the MBA on excelling at their current job, obtaining their actuarial designation, gaining real world leadership experience, and finding ways to create value for their company. One exception may be if you have already completed your actuarial designation and are looking for additional ways to increase your general business knowledge. At that point it may be beneficial to pursue an MBA.
Ultimately, each person has to decide how to invest their time and money. As beneficial as obtaining an MBA might be in developing a broader business foundation and understanding, it is not necessarily advantageous to a candidate on the actuarial career path. For most Actuaries, the biggest influence on maximizing compensation and advancement opportunities is to achieve your designation and to gain experience in effectively communicating and applying the results of your quantitative expertise.
About the Authors
Dan Karrow is a Director with DW Simpson and joined the firm in 2004. He has a successful track record placing actuaries from the student to chief actuary level within the P&C, Life, Retirement, and Health Industries. He has also assisted predictive modelers, financial modelers, catastrophe modelers and other quantitative professionals in finding positions.
Although his focus is on North America and Bermuda, Dan also has a keen interest in international insurance markets and global opportunities for actuaries.
Valorie Mulder holds the role of Manager on a team with Director, Dan Karrow. She joined DW Simpson in 2005 as an Assistant to the late Managing Partner & Founder, David Simpson.
Valorie works with all levels of actuaries and other quantitative risk management professionals to provide them with as many suitable opportunities as possible during their job search.