I have experienced VLE of University of London for 3 years in bachelors’ sociology where the academic direction is run by London School of Economics as well as through Institute and Faculty of Actuaries UK VLE for completing CPD. Aside from this I am a believer in online education especially since the advent of MOOCs like coursera, edX, Udacity etc.
With virtual education generally, there is a sense of disconnection; we feel isolated and not integrated members into a learned society; there is negligible interaction with other students, physical presence like university building, lecture halls etc. are missing and still to date there is avoidance of online platform for doing concrete learning and building of our base. Why is this? In my observation this is because it is not personal enough, it is not tailor made enough and it is not two-way enough.
‘The Guide to Becoming an Actuary’ should focus on the psychological strategies necessary for eventual success in actuarial science. My experience, which you might agree as well, is that students drop out or avoid actuarial science because they do not seem to have developed the right cognitive skill-set in dealing with IFoA papers. Nothing is rocket science anymore if we have the right mental attitude for it. It is too outdated-but still prevalent to think that for instance I did not take A level physics and now I am an accountant so I can never become an astrophysicist for the rest of my life.
For VLE, we have to make it interactive not through just user friendly interfaces but also with attractive graphics. Far more important than this, is the story telling aspect. Tell stories of actuaries in case studies and role playing to get in touch with their feelings. The greatest of mathematical equation has to be felt by our human emotions before it can be understood by our rational mind. Minimize the ‘formal’ tone; a student online forum for discussion is already in place by IFoA; but an informal platform like ‘Actuarial Outpost’ is much more potent and effective for students to get their voices across without getting the hesitation of being under surveillance of the mighty authorities of IFoA and other actuarial societies.
As actuaries, we focus too much on educating our minds and give little thought in comparison to education of our hearts. Aristotle has warned us here-‘Education of the mind without education of the heart is no education at all”. But then, here is where Nietzsche whispers in our ears: “You must have chaos within you to give birth to a dancing star”. This hits the core; we should have a healthy level of creativity, intuition and holy curiosity within us as well as this complements the scientific, intellectual and rational mind, not opposes it.
These elements are not ivory towers with no relevance to actuaries (as Jean Paul Satre would say we are humans first and actuaries later). It is in learning the right cognitive skills that actuaries can be much more productive, especially student members. Specifically, the cognitive skills training can highlight and address the following shortcomings:
- We are too result oriented. We should give due importance to the journey as well.
- School fails to replicate reality because it teaches us to be successful instead of how to effectively handle failure (Nassim Nicholas Taleb). We should accept and celebrate our failures and not just successes.
- Explosion of information has made us broad in knowing things on the surface, but inwardly shallow depth-wise. We need to focus more on quality rather than quantity. If we are deep enough, we will realize the interconnections between various elements and then ultimately be broad enough too.
- Fundamental attribution error; this is supposing that everything bad has happened to us due to external circumstances and everything good has happened to us due to our own actions and strength. At the other extreme, this error is blaming yourself for failure even when there are a lot of external influences at play as well. We have to learn to differentiate between what is in our control and what is not so as to avoid the fundamental attribution error.
- We should not give in to the compartmentalization of knowledge where specialized and isolated pockets of knowledge are accessed without any connection to the bigger picture involved.
- The list can go on and on. Please refer to my UOL and IFoA articles for further details on the right cognitive skills training.
We also need to get rid of the stigma of actuaries as technical geeks. Our objective should be to make actuaries look “cool and trendy” but professionals with superior skills enjoying best of both worlds.
Another crucial aspect of technical skills that every actuary has to be aware of is the cognitive mindset brought about by ‘the financial modelers manifesto’ crafted profoundly by Paul Wilmott and Emanuel Derman in 2009 which explicitly brings out the realism in financial modeling that is often ignored by most of the rest of the people.
The manifesto is presented as selected excerpts from the original source because of the sheer brilliance of expression of Wilmott and Derman in the manifesto (which the author of this document cannot ever hope to achieve):
Selected excerpts from the financial modelers manifesto are shown as follows (Wilmott, P. & Derman, E, 2009):
“It’s a different story with finance and economics, which are concerned with the mental world of monetary value. Financial theory has tried hard to emulate the style and elegance of physics in order to discover its own laws. But markets are made of people, who are influenced by events, by their ephemeral feelings about events and by their expectations of other people’s feelings. The truth is that there are no fundamental laws in finance. And even if there were, there is no way to run repeatable experiments to verify them.
Models are at bottom tools for approximate thinking.
Our experience in the financial arena has taught us to be very humble in applying mathematics to markets, and to be extremely wary of ambitious theories, which are in the end trying to model human behavior. We like simplicity, but we like to remember that it is our models that are simple, not the world.
The most important question about any financial model is how wrong it is likely to be, and how useful it is despite its assumptions. You must start with models and then overlay them with common sense and experience.
Progress in financial modeling is fleeting and temporary. Markets change and newer models become necessary. Simple clear models with explicit assumptions about small numbers of variables are therefore the best way to leverage your intuition without deluding yourself.
All models sweep dirt under the rug. A good model makes the absence of the dirt visible.
The greatest danger is the age-old sin of idolatry. Financial markets are alive but a model, however beautiful, is an artifice. No matter how hard you try, you will not be able to breathe life into it. To confuse the model with the world is to embrace a future disaster driven by the belief that humans obey mathematical rules.”