What is an actuary?An actuary is defined as “a business professional who analyzes the financial consequences of risk.” Actuaries’ tools of the trade are mathematics, statistics, and financial theory. They use these in order to create a financial roadmap to help navigate around the uncertainty of future events, and help make decisions around insurance, pension programs and protecting high-risk assets. Actuaries deal with tons and tons of data, perhaps more than almost any other profession, and at their core actuaries are true statisticians. Because actuaries understand how to take diverse sets of data and condense it into an easy-to-understand statistic for individuals and companies alike make them highly sought after professionals — especially those entities with insurable products.
A day-in-the-life of an actuaryAside from working with individuals looking to assess their retirement options, actuaries also apply specific mathematical models to financial data to help companies and corporate businesses identify particular risks and opportunities that could affect the products and services that they offer. As a result, actuaries commonly work in the field of risk management. If you’ve ever seen the movie Along Came Polly with Ben Stiller and Jennifer Aniston, you may remember that Ben Stiller’s character is an actuary specializing in risk analysis for life insurance companies and attempts to protect his heart by assessing the risk of falling for Polly. Other specifics an actuary may be responsible include:
- Predicting financial pay outs for insurance companies to cover damages from floods or forest fires.
- Developing and pricing insurance products.
- Using medical records, geological information and other miscellaneous data to predict how long a customer will live.
How to become an actuaryWhile becoming an actuary can be a lucrative career and is often listed among the top business jobs, it’s also quite challenging to obtain an official actuarial certification. In order to get professional actuary status you’ll need to go through one of two organizations: The Society of Actuaries (SOA) or The Casualty Actuarial Society (CAS). The former is for those who want to work in insurance, investment and finances while the latter is for those who want to specialize in casualty, malpractice and worker’s compensation. All in all, it can take between four to seven years in order to achieve an SOA or CAS certifications. Actuaries can work independently as consultants or contractors; however, establishing yourself in the profession often requires putting in some time with a corporate entity. Insurance companies often demand that actuary applicants can prove a strong backgrounds in the area of not only actuarial science, but mathematics, economics and computer science. Prior to certification, an actuary-in-training must also complete coursework in applied statistics and corporate finance.
What is an accountant?We’ve covered what an actuary does, so let’s switch gears. The official definition of an accountant is “a practitioner of accounting or accountancy, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources.” The business accounting field offers a pretty diverse range of roles for certified CPAs, including but not limited to:
- Internal audits
- Forensic accounting
- Managerial accounting
- Environment accounts
A day-in-the-life of an accountantMost people think of accountants primarily as those responsible for preparing taxes. And while some certified CPAs do specialize in tax accounting, most accountant roles require a range of other skills and responsibilities such as:
- Overseeing budgetary accounting and income statements
- Preparing and maintaining financial budgets alongside good accounting principles
- Maintaining all accounting records
- Conducting internal audits and testing audits to verify the validity and accuracy of accounting records and reports
How to become an accountantIn order to earn the title of Certified Public Accountant, or CPA, aspiring accountants must pass four CPA exams. Without passing these exams it is not possible to practice as an accountant. The exams are the same regardless of what specialty an accountant chooses to enter and requires a rigorous amount of preparation. Typically, the course of study demands 20-30 hours of study per week for anywhere between four and six months. State requirements vary, but usually an accountant-in-training will also need a bachelor’s degree and at least 150 semester hours of instruction before taking the CPA exams.
Differences Between an Actuary and an AccountSo now that we’ve reviewed let’s quickly recap the differences between the two job roles. Accounts are primarily focused on job duties such as:
- Determining payroll requirements
- Completing company audits
- Issuing invoices
- Explaining accounting policies
- Preparing profit and loss statements
- Understanding of regulatory procedures
- Creating financial solutions
- Analysis and risk management
- Developing research data
- Helping develop strategies to benefit policyholders