Fundamentals for Actuarial Practice (FAP), is a new online system that is introduced to expose actuarial candidates to the application of actuarial knowledge in real life situations before attaining the Associate of Society of Actuary (ASA) designation. This article intends to reveal some personal experiences from candidates who are participating/have participated in this program. It should provide potential candidates a solid understanding of the intent and applicability of the material learned in the program.
- What FAP modules are you preparing for now? Which modules have you taken so far?
David: I am in the middle of Module 5 and have completed the first four modules up to this point. I am preparing to write the FAP Exam 1 in December, which from what I understand will be the last offering of FAP Exam 1 before it is moved to an assessment test much like the Final Assessment.
Eddie: I have finished all the FAP modules last summer.
- Which aspects of the new FAP exam system do you prefer compared to the old course–base examination system?
David: Although I did not previously sit for the old Course 5 or Course 7, I feel that the new FAP exam system will allow candidates to work at their own pace. Allowing candidates to write the Final Assessment as soon as they have completed the modules means that those with a strong work ethic can advance at a faster pace than previously.
Eddie: I appreciate the way the FAP modules are more interactive compared to the traditional exams. Instead of being given piles of books and told to memorize lists of facts for an exam, we are now assigned readings related to practical actuarial issues in the industry, and exercises that attempt to complement the knowledge we gained from each module. A lot of the material from the old Course 5 can be better learned with real life examples and exercises. I believe the SOA has taken the correct approach in changing the way the material is tested.
- What are some fundamental practical theories that value the most from all FAP modules?
David: I have found that the end of module exercises give candidates excellent experience working on practical problems they may face in an actuarial role and the exercise also provide students a chance to write memos. Actuaries need to have strong communication skills, and I think the modules will help greatly in that regard.
Eddie: The FAP modules are based on the actuarial control cycle, which is a general practicing routine that is common to many actuarial functions, from asset–liability management to valuations. Each module is structured in such a way that the readings are related to a particular phase in the cycle. While the actuarial control cycle is not exactly a theory, I believe this fundamental knowledge will be useful to many actuarial issues I face on the job.
- How do you take what you have learned from FAP and apply to the real world actuarial practice?
David: The modules emphasize three basic steps of how to tackle actuarial problems: "Define the problem, Design a solution, Monitor the results." When I am at work I try to keep these ideas in mind.
Eddie: Many of the readings in the FAP modules address the real issues faced by actuaries these days; it's not difficult to notice the link between the module material and the real world. For example, one module focuses on the external factors that affect the work of different actuaries—demographic changes may affect the work of pension actuaries, while the economic outlook may concern investment actuaries. After this module, students should get a better understanding of the external factors that impact the work they do. Another example is the discussion on sensitivity testing. While the test is widely used in the industry, a student may not realize the factors that should be considered when deciding on a certain assumption to test, and how to test it. This is another example where the module material can be applied.
- When is it optimum to take FAP? Any relevance to the preliminary exams done before (eg. Exam P, FM, MLC/MFE, C) that could supplement the progress?
David: The modules do not really draw on much knowledge from any of the preliminary exams. I think a basic understanding of interest theory and life contingencies would definitely be beneficial. I would suggest that anyone could begin the modules after a few preliminary exams (also to make sure they wish to continue in Actuarial Science!). Also, if I were a student, I would consider waiting until I had an internship or full–time opportunity to hopefully get some financial assistance for the modules expense from my employer
Eddie: I personally think the FAP should not be taken at least until the completion of MLC/MFE. While the modules have no direct relation to the preliminary exams, it would be very helpful to know some of the basic actuarial calculations (such as life contingency knowledge) in completing some of the exercises. It will also help in understanding some of the readings when one has a basic background of actuarial calculations.
- Word has it that one of the challenges for the FAP modules is completing the modules in a timely manner. What is your view concerning this matter? How long does it take you to complete one module? What are some tips you could provide to our potential FAP candidates?
David: Now that the SOA is eliminating the FAP Exam 1, there will be no need to complete the first five modules prior to a certain date. As with the final assessment, candidates will be able to go through the modules at their own pace. I am not sure if this is good or bad since some people might need a deadline to push for, but if you are motivated you can simply set a deadline for yourself when you want to finish each module. Each module generally takes a few weeks to complete depending on how diligent you are. I would suggest working on a module for a couple hours a night rather than cram it all into a few weekends.
Eddie: The fact that the FAP exam is offered more frequently than traditional exams, and that the modules are completed at your own pace may prompt people to procrastinate. It takes strong will to stick to a strict studying schedule for the FAP, but do note that some of the assigned readings are not that bad to read. I would try to split the readings evenly throughout the study days. If possible, print out some of the material and read them on your commute. On average, it takes me about a month to complete a module.
Note: On Oct. 13, 2007, the SOA Board of Directors approved the proposed change in FAP structure. Therefore, FAP Exam 1 (multiple–choice, two hour exam on Modules1–5) will change to an Interim Assessment in 2008. The last administration of FAP Exam 1 will be on Dec. 12, 2007. (http://www.soa.org/files/pdf/edu-fap-mod-faq.pdf)