Prepare for the future.
In order to become fully credentialed Actuary, students must pass a series of very difficult tests called Actuarial Exams. The preliminary exams are 3 hours long and consist of 30-35 multiple choice problems with a pass rate of typically only 30-40%.
So what’s the best way to study for these exams? Well, everyone has different study methods that work for them, but generally they all have some common factors that lead to a successful pass.
Here’s a general outline of an effective study method that contain common steps among all study methods:
1. Look Up the Exam Syllabus Online at BeAnActuary.com.
The syllabus outlines what materials will be covered on the exam and gives you a good idea of what you need to study. The material will sometimes vary depending on the month the exam is offered (i.e. the “sitting”). Therefore, it is a good idea to look up the syllabus corresponding with the month you will be sitting that specific exam.
2. Get a Study Manual.
The most popular textbook study manuals are from ACTEX Publications and Actuarial Study Manuals (ASM). Some alternatives (or supplements) are The Infinite Actuary (TIA) online seminars and the Coaching Actuaries eCourses and ADAPT software. As these seminars and eCourses can get a bit pricey, most stick with one of the previously mentioned textbook manuals. Free, comprehensive and continuously updated study manuals by Marcel B. Finan can also be found online at A Probability Course for the Actuaries: A Preparation for Exam P/1 and A Basic Course in the Theory of Interest and Derivatives Markets: A Preparation for the Actuarial Exam FM/2.
3. Read the Manual, Take Notes, and Do Practice Questions.
You will most likely be spending the majority of your studying time on this step. The study manuals will help you get a grasp of the topics that will be covered on the exam. It’s very important that you really understand the material that is covered by the syllabus. It’s not enough to just know what numbers to plug into which formulas. You must have a deep understanding of why each formula is structured the way it is and be able to manipulate it accordingly during the exam. Most study manuals will have an adequate in-depth explanation for each topic, so don’t skip it.
If you come across a topic in your manual that is not mentioned on the syllabus, it is possible a question related to that topic won’t show up on the exam. But be careful! If the topic in question builds on another topic that is listened on the syllabus, then it would be wise to play it safe and familiarize yourself with that material as well.
4. Create a Condensed Study Packet That Follows the Exam Syllabus.
This packet will mostly consist of formulas but it is meant to replace your study manual. Your notes should be thorough and written in a way you can eaPsily understand.
A personal example: Color-codded notes; I write important formulas in black and box it in blue, my explanations are written in blue with key values & variables written in black, and I draw graphs/pictures when applicable.
5. Problems, Problems, Problems!
This is the most important step. You should practice as many exam-like problems as you can get a hold of during at least your last 3 weeks leading up to your exam date. This is where your study packet will come in handy. The Society of Actuaries provides practice problems and solutions, which are found on your exam syllabus. These problems will help give you a strong idea of what style of questions you will encounter during your exam. Make sure you can do all of these problems quickly and that you understand the underlying theory behind each of them. Keep track of the questions that gave you a hard time so you can go over them again. Your study manual will most likely also provide you with sample problems for you to review. You can also find more sample problems online, many of which can be found on ActuarialOutpost.com. It would be a good idea to make an account on this site and ask questions when you have them. Additionally, your professors, TA’s and peers will be more than willing to help you out.
Alongside practicing problems after problems, now is the time to commit all those formulas and theories from your self-made study packet to memory. Don’t worry. With enough practice, all the information will come almost second-handedly.
6. Take Practice Exams.
Some study manuals provide a few practice exams of varying difficulty. You can also purchase sample exams online. It is important to take these exams under strict exam conditions. Time yourself, clear your table of distractions and don’t take a break until you’re done. The exact terms of the exam condition can be found at BeAnActuary.com and in the confirmation email you received from Prometric after you signed up for your exam. While taking these practice exams, you should only refer to the packet you made if you absolutely need to in order to do the problem (which should be almost never). Although the number of questions you will need to answer correctly for a pass will change from sitting to sitting, on 35-question practice exams you should aim to be consistently answering 25 or more correctly.
7. Complete Your Final Preparations and Pass the Exam.
Make sure you’ve got your packet memorized, go over all the materials a couple more times, and most importantly, get plenty of sleep. Don’t overwork yourself the night before the exam. Relax, go to bed early, eat a healthy breakfast, and get to the test center early so you can review your notes before you sit the exam.
Getting that preliminary pass will be well worth all your hard work!
- Get to know your calculator! There are many useful shortcuts that can save you valuable time during the exam. Also make sure it’s on the list of approved calculators.
- Start early. The worst thing you can do to yourself is to start too late and not have enough time to study the material properly, leading you to fail the exam and have to start this whole cycle all over again. Starting any later than 10 weeks prior to your exam date is cutting it close.
- ActuarialOutpost.com is a great resource: there is more information on there about the exams and the profession than you will ever want to know.