Jim Tilley, FSA, Ph.D
"Innovate—especially when someone tells
you that you can't or shouldn't." It's a philosophy that Jim Tilley
has used to guide his career. Learn more about Jim in the Q&A below.
Please tell us about your work experience.
After earning my Ph.D. in Physics from Harvard in 1975, I took the first
two actuarial exams and started work as an actuarial student at Sun Life
of Canada’s U.S. headquarters in Wellesley, Massachusetts. I took
the final fellowship exam in the fall of 1977 just before leaving Sun
Life to join the John Hancock in Boston where I worked with other actuaries
on compensation programs for both John Hancock’s general agents
and debit agents. During that time, I started a “hobby” of
learning about and doing research on asset/liability management for life
insurers. I joined The Equitable in New York City in 1981 as the actuary
in charge of designing and pricing GICs. My principal colleague there
was Bob Platt, the manager of the GIC asset portfolio. When he left to
establish a fixed income research department at Morgan Stanley in 1983,
I followed him. I spent 18 years at Morgan Stanley, becoming global head
of fixed income research, then doing a two-year stint in investment banking
designing catastrophe insurance products, working to help fund the nascent
California Earthquake Authority, and then becoming Chief Information Officer
for the institutional securities business for my last four years.
How did the education you received prepare
you for the positions you held/hold?
My education in physics and mathematics set me up to undertake major independent
research projects, indeed to cherish the opportunity to think creatively
about unsolved problems. Obviously, the tools of mathematics are essential
to building stochastic models of financial institutions and financial
markets, and that became my research passion. The syllabus material for
the actuarial examinations and my training as an actuary provided a fundamental
understanding of the life insurance industry and pension funds so that
the research I undertook was grounded in the reality of the business.
What do you consider to be your greatest
career accomplishment?
In the actuarial profession, it is being involved early on in the development
of the “science” of asset/liability management for financial
institutions and in being one of the first people to emphasize the criticality
of cash inflows and outflows and the importance of market values of assets
and liabilities in lieu of the traditional amortized cost and reserve
valuations. In the specific area of research, my greatest accomplishment
was proving that American options could be priced by means of a Monte
Carlo simulation, something that had previously been claimed in textbooks
on investments and finance to be impossible.
What advice would you give to an actuary
who is considering pursuing a non-traditional role?
Don’t try to stake your claim to the nontraditional territory by
reason of being qualified as an actuary. Let those skills speak for themselves
through the quality of the work you do. Be interested in acquiring credentials,
in finance and investments, for example, in addition to your explicit
actuarial designations. Don’t be afraid to do research and to push
the boundaries of our existing theories and models of financial markets
and institutions. Innovate, especially when someone tells you that you
can’t or shouldn’t.
How have you turned risk into opportunity
throughout your career?
I guess many people feel that it’s risky to change jobs/employers
as often as I did early in my career. I think that people need to do that
until they find a true home for their interests and talents. Careers are
generally 30-40 years long. In order to survive and actually thrive over
such a long working lifetime, one has to situate oneself in a business
and at a firm in which one can continue to innovate and grow. That worked
for me and I think it works for almost everyone. I know it sounds trite
to say this, but I feel that I never “caved” on my principles.
If I felt that something I saw was wrong, I wouldn’t be hushed until
I had been understood. Over time I learned how to do this increasingly
tactfully, and thus, with greater success.