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What does an Actuary do?

Actuaries are integral part of the financial sector but what exactly does an actuary do?

The primary role of an actuary is advising businesses and individuals about financial risk.

An actuary uses financial knowledge and an understanding of statistical theory to make predictions around investments and commercial activity. The actuary will be trusted with a lot of information and their advice is much sought-after. 

At the same time, an actuary will often have to take quite complex financial theory and data and explain it to people who don’t have as clear an understanding. This means that one of the key skills of an actuary is communication.

What’s it all about?

This is truly a wide-ranging career with plenty of scope. Some actuaries even make it to the boardroom, and have extensive authority within a large business. 

Your responsibilities will include:

  • You will be asked to analyse complex data so that you can make calculations about risk and future financial events
  • Your employers will ask for detailed financial reports and presentations and to present these to interested parties, including at board-room level
  • You will advise business leaders on the recruitment of investment managers
  • You’ll be working alongside IT teams so that you can ensure systems are able to do the required work for compliance, including compliance with HMRC
  • You’ll have a key role to play in any mergers or acquisitions that are taking place or planned to take place
  • Your employer will expect you to use statistical models and mathematical modelling to assess financial risk
  • You may be asked to create and develop new financial products, either for your employer or a client
  • You’ll also be expected to be a strong communicator, one who is able to liaise with clients and teams
  • One of the most pressured areas of the work is managing risk. You could be asked to analyse trading positions and report on the risk the positions entail

So how do you get there?

The field is very much wide open. Any graduate with strong numerical skills can apply for work in this area. So while the role is firmly embedded in the finance arena, you can still apply as a graduate, no matter what you have studied.

Although that is true, the industry is very competitive. This means that your degree may have some impact, especially if you studied in the following areas:

  • Economics
  • Engineering
  • Mathematics
  • Actuarial Mathematics
  • Business
  • Finance
  • Risk management

If you are interested in becoming an actuary, you will need to have a Mathematics A Level at grade B or above. 

As a student, you will have to apply to become a student member of the Institute and Faculty of Actuaries. This professional body will guide you through the training process and prepare you for a career in the area.

Who will I work for?

Actuaries work in the following industries and sectors:

  1. Corporate finance
  2. Investment management
  3. Pensions
  4. Banking
  5. Insurance

Essentially, any company or organisation that needs financial risk management will call upon an actuary for assistance. In large companies, actuaries are part of the senior leadership team, due to their pivotal role in risk management.

Most actuaries find themselves working in finance or insurance. Insurance is the biggest employer of actuaries, and this is because actuaries are trained to reduce risk. 

Show me the money

The career does have some very high salaries attached to it, but as with most careers, experience has a huge role to play in the remuneration you recieve.

The average starting salary for an actuary is somewhere between £25,000 and £35,000.

Insurance companies offer excellent salaries for actuaries, with new actuaries being capable of earning a salary of £55,000. Experienced actuaries can find themselves earning an average of around £60,000 a year.

The very highest level is very much worth shooting for, as top actuaries can become executives in large companies, and earn in excess of £200,000.

Is it for me?

It cannot be stressed enough that someone who wishes to enter the profession must have a strong aptitude with Mathematics. As stated earlier in this article, you need to have a ‘B’ grade at A Level Mathematics.

The career will also make huge demands of your communication skills. If you feel that you will be able to present information and data to the senior leaders of a business, that’s good. The career asks that you are able to take complex figures and information on finance, and present them clearly to stakeholders.

If you have proven expertise with numbers, and some understanding of risk in financial markets, this could well be the right role for you.

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