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Old 09-06-2004, 11:32 PM
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Default TAN: Requirements to become an FCAS

I still would like to know what you think the requirements should be for FCAS? Sounds to me like you would believe that everyone who desires being an FCAS should be able to achieve that, without having it get in the way of other things of course.
I know I'm in the minority when I speak about this, but I think focusing on barier to entry is foolish. The CAS is competing with CFAs, MBAs and what not. If the marketplace determines that the FCAS does not offer sufficient value, we're gone. CFA is only 3 exams versus the current 9, and MBAs are not hard to find. Furthemore, who knows if there isn't some new designation that will do what the CAS does better and cheaper.

The primary goal of the education system must be to educate. If the people are capable and willing, they should be able to become FCAS. I'm not saying that any Tom, Dick or Harry should be able to become an FCAS. I'm saying the requirements to become an FCAS should first look to the value added.

Secondary goal of an educational system is to educate in the most effective manner. Some topics of study do lend themselves to test taking. Everything that does, should be tested this way. There are topics though that don't necessarily lend themselves to test taking.

For example, the reserving test. Sure, you can create an exam that tests an actuaries ability to do a given method when told to, and see if he remembers the ASOP on writing reports. Has the actuary really shown mastery of reserving? or mastery of answering reserve exam questions?

What would be a superior test of an actuaries knowledge of reserving. An exam that tests the actuaries knowing how to perform a method? Or giving an actuary a set of data and demanding they do a reserve analysis and write-up on the data (more of a paper writing course)?

Tertiary goal of an education system is to prioritize what must be mastered, what must be capable at, and must be familiar with. Lets go back to doctors. Doctors must be capable at math - but they're not required to master it. Most pre-med courses end up with a class geared for pre-meds and not for math majors. The CAS is starting to make some of these distinctions with the VEE requirements.

I'll admit. I don't know all that an FCAS should know. I'm here to challenge the way the education system is done. I think it is a decent system, but I think it can be better. I'm much less concerned in keeping the number of FCAS down and much more concerned in getting the best and the brightest to want to become FCAS.

There are somethings I think FCAS must demonstrate mastery with. Reserving and rate making are obvious. Policies, coverages, and operations are there too. I think FCAS should be able to demostrate compentenacy with model building - but I see no way of doing that in an exam structure. I don't think FCAS must show mastery of calculus, which is why I think the VEE is an interesting development.
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Old 09-07-2004, 12:47 AM
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First off Whisper believe it or not I think you are absolutely correct in about 99% of your above post.
I think a problem though is we are no longer talking about why ACAS's should / shouldn't be given FCAS staus but how we can improve the process to become a FCAS. (Which I think many will agree is not perfect)

I like the idea of giving canidates a set of data and having them do a reserving analysis and interpetation. The question would come to mind on how to grade it (although I think this would be possible) and how to administer it (tougher question.)
This would also be good for modeling which you allude to as well.

And yes I agree the exams are OK at best and pretty crappy at worst. But they do test intelligence and dedication. So until we find a process that can do this better we need to use exams.
But because we don't think the exams are perfect is definetely not a reason to give ACAS's a title they did not earn.

Where I disagree is in the competing with MBA's or CFA's.
MBA's are a dime a dozen and the title is pretty much worthless if it is not from the right school WITH the right connections. I know I am one and my ACAS designation is worth vastly more than my MBA (which I paid many many thousands of dollars to get - and am still paying for and will be for a long time)
The problem with MBA's is there are to many of them and once you get accepted (which isn't hard) as long as you continue to breathe you can become a MBA.
CFA's are well on their way down the same path. The process just is not hard enough to weed out those who don't want it bad enough.

Being a FCAS is a serious accomplishment and on it's own shows dedication and intelligence. period.
Being an FCAS will get you a relatively high paying job. An MBA or CFA will not even come close on their own. Yes MBA's may make X but that is a highly highly skewed distribution. You will also on the low end find MBA's making <40K at a bank (and they may be overpaid at that). You will not find the same for a FCAS. Actuaries also don't put in the hours a Wall street investment banker MBA does so comparing the two is not apples to apples. Also many CFA's / MBA's have connections that most people could only dream about. Again not fair to compare our salaries to thiers.

I would guess the letters FCAS standing alone is the most valuable designation one can achieve. (There is a reason actuary is so high in the job alamanac job rankings year after year) We should strive to keep it that way.

The CAS must be very careful about watering down the requirements to becoming a FCAS. It is when the FCAS title is easier to achieve that other practices will be brought in to do our jobs; not the other way around.
Allowing people who have not completed all the requirements to be FCAS's will be the start of watering down the designation, and not a road we want to take.

(P.S. I am also against allowing international members to apply to BECOME FCAS's. Practice rights fine, using the designation "no")
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Old 09-07-2004, 08:21 AM
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Good post. I agree with that.

One other comment on "barrier to entry." I have always said that one of the side effects of having travel time of 7 years + is that an FCAS will most likely have gained the requisite experience needed to become an FCAS simply because of the 7 years.

There are obviously counter-examples. We all know the FCAS who did nothing but study and didn't get the on the job training that most of us did.

But most of us are tested on the job. Most large companies have rotation schemes that give the actuary the needed skills in 2 year doses. And while it doesn't work out always, having a student in reserving while taking the reserving exam is an irreplaceable experience. You can't tell me that this student isn't competent in reserving. And while not everyone gets to match up exams and practical experience, its still effective in my book.

And you can argue that it should only take 3 years, or should take 10 to get all the experience needed to be an FCAS. But the fact is, the way the system is set up, 9 out of 10 people who achieve FCAS can demonstrate the skills needed to be an FCAS.

This means that the CAS does not have to design a testing scheme to prove that each FCAS has the necessary on the job experience. It may not be perfect, but its cheap and its effective.

The fact that some people get through the exams in 3 years and aren't qualified while it takes others 12 years is unfortunate. but trying to fix this by making exams easier causes too many other problems in my book.

My $.02. Fire away.
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