When I did the actuarial exams, the top tip from my study mentors was:
There is always a mark for tax.
And it was true. So in this coming exam season, my advice to all the students I know (plus any reading this blog) is the same.
In almost every question on my final set of exams (in my day, four six-hour papers, one each on life insurance, superannuation, investments and general insurance), you would get on mark (out of 20 or so) for mentioning tax as an issue you should take into account in whatever hypothetical situation you were considering – so about 5% of the marks available.
The surprising thing for me, though, is that this is actually good advice in my real job. So the exams did test reality after all!
Lately, at work, the “mark for tax” has been real in many business situations. Tax is an issue that so many actuaries forget about, and yet because it is rarely logically linked to the rest of the financials of any given situation, it can make a big difference to whether any given decision is the right one. I’ve had three experiences like that in the last three months (I only got to use my “mark for tax” catchphrase usefully once, though).
It’s nice to know those exams were actually useful for more than the Fellowship I got at the end of them. So I’ve been trying to remember all those easy marks at work; the ones that you always got a mark for. Actually having exam technique is quite useful in real life; who knew?