What Do Actuaries Do? A Career Guide
Actuaries predict, measure and mitigate financial risk and give appropriate advice to clients.
Actuaries traditionally work in finance, investment, risk management, general insurance, life insurance, pensions and social security.
Actuaries look at various business and financial problems, and use data to predict and assess the probability of different outcomes. They try to mitigate as much risk as possible, by assessing how likely an event may be and what costs might be involved.
Although the work of actuaries can vary widely, most aim to manage and mitigate future risk by:
- Analysing what has happened in the past;
- Predicting what may (or may not) happen in the future;
- Assessing the probability of risk going forward,
- Communicating the financial implications to clients.
Where Do Actuaries Work?
Actuaries work for actuarial firms, actuarial consultancies, accountancy firms and insurance companies, as well as other types of organisation.
Actuarial consultancies are the biggest employers of actuaries in the UK.
Consultancies provide clients with advice on a wide range of topics, such as occupational pension schemes, safety and natural disasters, insurance, investments, enterprise risk management, and mergers and acquisitions.
They will help clients make the correct decisions based on their specific circumstances.
Government Actuary's Department
The Government Actuary’s Department (GAD) works with government departments and a wide range of public sector employers, including local councils and the NHS.
The GAD advises on all the main public service pension schemes in the UK, as well as funded occupational pension schemes in the public sector. It also provides actuarial advice on investments, insurance, modelling and social security.
Advising on company pensions is a time-honoured role for an actuary. There is a growing demand for specialist advice as the pensions sector develops and becomes more complex.
Pensions actuaries now advise trustees, companies and scheme members on pension arrangements, including defined benefit, risk-sharing and defined contribution schemes.
They work with other specialists such as pensions lawyers and administrators to help keep schemes running well, and meeting the needs of employers and pension plan members.
Life insurance companies provide life insurance, pensions and other financial services.
Actuaries are involved at all stages during the development of different life insurance products, and offer a thorough risk assessment. Their advice will influence how these products are priced and marketed.
In addition, actuaries work with individuals to help them decide which product is right for them.
This includes personal insurance, such as for homes or cars, as well as insurance for large commercial risks.
Numerous factors can affect the size and volume of claims, so general insurance companies employ actuaries to analyse the data and help their financial management.
Finance and Investment
Actuaries working within finance and investment can take on a variety of roles for many different types of employer.
Investment actuaries may work in investment management, banking, consulting and retail finance.
Finance actuaries work in areas including financial reporting, corporate finance, and mergers and acquisitions. They also interact closely with actuaries in other practice areas.
Health and Care
This is a small but growing field, as the government seeks new ways to restructure the welfare state to meet the demands and expectations of a changing population.
Private sector work is also growing to meet changing needs. Health and care actuaries may work in areas such as financial planning for the NHS, private medical insurance and income protection.
There is an increasing demand for actuaries in banking. As more insurance companies are setting up banking operations, actuaries are taking on senior positions in risk and finance.
Some retail banks also now employ actuaries, valuing the longer-term approach that they bring to the business.
An actuary’s skill and experience in analysing specific risks makes them perfectly suited to working in risk management.
Actuaries develop models for businesses that help them minimise future risk. They also need to explain how and why to use this model to best effect, so must be able to communicate complex information in simple terms.
Key Skills That Actuaries Need
Actuaries are known for their ability to understand and analyse businesses, and the people operating within them.
They must also consider the possible impact legislation and financial economics may have.
Actuaries must also have strong mathematical and statistical skills.
Here are some of the specific skills that actuarial employers might look for:
Specialised maths knowledge, including calculus, statistics and probability
The ability to solve problems and think analytically
Good business sense and sound knowledge of economics, finance and accounting
Excellent written and oral communication skills, and the ability to interpret complex information and relay this clearly to non-specialists
Strong computer skills
Ability to work effectively alone or as part of a team
Ambition and self-motivation
How to Become an Actuary
While a career as an actuary is open to any graduate with strong numerical skills, in practice, the majority of employers are looking for graduates with at least a 2.1.
Ideally this degree would be in a numerate subject such as mathematics, statistics, actuarial science, economics, business, engineering, physics and chemistry.
Applicants will also usually require excellent A-levels (or equivalent).
To qualify as an actuary, you must become a student member of the Institute and Faculty of Actuaries (IFoA).
The minimum entrance requirements for admittance to the IFoA are maths A-level (or equivalent) at grade B, along with a second A-level (or equivalent) in any subject at grade C. The majority of entrants to the IFoA have a first- or second-class degree.
For holders of a second class honours degree or above in any subject, the maths A-level requirement is reduced to a grade C.
For graduates with a third-class honours or above in a mathematical or actuarial science subject, the maths A-level requirement is dropped.
How Many Years Does it Take to Qualify?
An actuary’s early training involves studying for professional exams, while simultaneously building practical work experience.
After graduating, most actuaries join an actuarial firm as a trainee.
From January 2019, all students joining the IFoA are required to qualify as an associate before choosing to progress to a fellowship.
This involves completing Core Principles and Core Practice subjects, either during your degree or while working as an actuarial student. You will also need a minimum of two years of personal and professional development (PPD).
Qualifying as an associate typically takes between three to six years. Associates are recognised internationally as meeting the minimum requirements necessary to practise as an actuary.
Actuaries who want to study to a more advanced level or specialise in a particular field can then apply to become a fellow.
To become an IFoA fellow, students must pass further specialist examinations and acquire a satisfactory level of work-based skills. On average, it takes about six to seven years to qualify as a fellow.
Once qualified, there are several different career paths to choose from. Many actuaries opt to specialise in one of the traditional fields and go on to become senior managers in insurance companies or actuarial consultancy firms.
Others may choose to focus on commercial activities or technical research.
Actuaries are well paid and enjoy good job security and prospects (see the section on salary and typical career development below), but they must work hard to get there.
During their early years in the job, trainee actuaries are required to sit a rigorous set of examinations while also performing well in the duties of their job.
Actuarial students spend an average of 15 hours a week studying for their exams, and this can impact on their personal life.
However, they can expect support from their employer – who will generally offer paid study leave as well as covering the cost of tuition and exams.
Study aside, actuaries tend to work normal office hours. Weekend and shift work is not typical, but you should expect to work overtime.
The highest proportion of jobs are in London, though actuarial positions can also be found in most large towns and cities.
UK-qualified actuaries are highly valued around the world, so there are also opportunities overseas. Around 60% of qualified members of the IFoA are currently working abroad.
Flexible/part-time work and career breaks may be available, but this usually depends on the employer. Working life and pressures can also vary depending on the type of company you decide to work for.
In an insurance company environment, for example, you would usually have just one client – your employer – and would generally be required to work in one area for around a year before moving on to the next project.
With a consultancy firm, you are likely to work for many different clients in any one year. While more varied, consultancy work can also be more challenging with several projects running at the same time, all with deadlines to meet and clients’ expectations to manage.
Some consultancy projects also involve travelling to the client’s office. This can give you a valuable opportunity to work with new people and see how other organisations are run.
However, you would need to consider the impact of being away from home. You may also find yourself working on just part of a project, rather than seeing it all the way through from start to finish.
Salary and Typical Career Development
Although qualifying as an actuary is a demanding process, you can expect to be well rewarded for your efforts.
Starting salaries are well above other industries, with student actuaries earning an average basic salary of around £35,000. This can rise to around £50,000 for newly qualified actuaries, while senior actuaries can earn over £200,000.
Career progression is also good. Once qualified, actuaries tend to move quickly into managerial positions, where they take on more responsibility for project work and managing teams.
Actuarial careers offer flexibility too. While many choose to specialise in a particular area, such as pensions, consultancy or investments, you can change areas later on in your career.
Opportunities within the profession continue to grow, with an increasing number of actuaries in non-traditional roles, such as consultants and professional financial services firms.
Actuaries must be prepared to work hard and put in the hours early on in their careers, but they quickly reap the rewards in terms of salary, career prospects and intellectual challenges.
So, if you’ve got a head for numbers, love solving problems and cope well under pressure, this could be a worthwhile career path.