Accounting vs. Actuary: An Overview

Individuals with a talent for mathematical and statistical problem-solving are always in high demand. Someone with a real knack or passion for working with numbers might consider a possible career as an accountant or an actuary, two fields where her skills can earn her a well-paying, steady job.

Accountants work behind the scenes to help out businesses, investors, regulators, and auditors. Actuaries make it possible for insurance companies to gauge risk effectively.

Key Takeaways

  • Accounting jobs should appeal to those who are interested in finance or business management and who don't want to deal with constant stress or job uncertainty.
  • Those with a passion for statistics and computer modeling will be hard-pressed to find a career better suited than as an actuary.
  • Both fields require the ability to work through problems logically and deductively, though actuaries require more rigorous math knowledge.

Actuary

Actuaries deal with tons of data—perhaps more than any other profession. These are true professional statisticians who use past data to predict likely future outcomes. Such skills make them exceedingly useful for insurance companies and other businesses that sell insurable products.

An actuary might be responsible for predicting how much money an insurance company will have to pay out to cover damages from future floods or forest fires. Actuaries are needed to develop and effectively price insurance products.

It can be particularly challenging to become an actuary. Insurance companies demand that applicants have strong backgrounds in areas such as mathematics, statistics, actuarial science, computer science, and calculus. Prior to certification, an aspiring actuary must complete coursework in economics, applied statistics, and corporate finance.

Two organizations grant professional status to actuaries. The Society of Actuaries (SOA) certifies those who want to work in life insurance, health insurance, investments, and finance. Certification with the SOA is offered in five different tracks that range from life and annuities to enterprise risk management.

The second organization, the Casualty Actuarial Society (CAS), is much smaller than the SOA. It specializes in certifying actuaries for property and casualty fields, medical malpractice, and workers' compensation.

An actuary spends four to seven years in pursuit of his SOA or CAS certifications.

Accounting

There's a great deal of variety in the accounting field, but all accountants are responsible for compiling and comparing financial records. Accountants service individuals, businesses, and governments to help ensure that everything is running efficiently and accurately.

The majority of career accountants earn the title of Certified Public Accountant (CPA). Perhaps no job in the industry is as dependent on a single title as accountants are with the CPA designation. Aspiring accountants must study for and pass the four CPA exams.

CPAs can specialize in many different areas, such as internal audits, forensic accounting, managerial accounting, environment accounts, or taxes. The exams are the same, however, regardless of the accountant's area of specialization. Becoming a CPA requires an intense amount of preparation. Most accountants study 20 to 30 hours a week for four to six months before passing all the exams, and most states require at least 150 semester hours of instruction and a college degree before an individual can take the CPA exams.

Accounting vs. Actuary Examples

According to the Bureau of Labor Statistics (BLS), the median annual salary for an actuary in the United States in 2017 was approximately $101,560. Actuaries are paid so well in part because so few people have the patience or ability to spend five years passing all the actuarial exams.

Actuaries often spend the first half-decade of their careers earning far less than the median salary, toiling away until they can complete all of their certifications.

As for accountants, a treasurer for a large corporation can earn more than $250,000 a year, while a first-year tax accountant might earn $45,000 or less. Median pay for an accountant was $69,350 in 2017, according to the BLS.

Overall, there are many more accountants than actuaries in the United States. The BLS estimates that actuarial jobs will grow 22 percent between 2016 and 2026, while the number of accounting jobs is projected to grow 10 percent during that time. This compares to an average growth rate for all occupations of 7 percent.

Special Considerations

A bachelor's degree in accounting or mathematics is a huge plus for anyone considering a career as either an accountant or actuary. Most accountants and actuaries start out as entry-level employees at accounting firms or insurance companies, where they can work while preparing for the litany of exams before furthering their careers.

Accountants and actuaries both tend to have very balanced work-life schedules, especially compared to many of their peers in the financial industry. Most surveys and studies, such as the Jobs Rated Almanac, consistently rate accountants and actuaries highly in terms of work stress, hours on the job, job security, and work-life balance.

Tax accountants are a special (and temporary) exception. Many tax accountants work six or more days a week and 10-plus hours a day during tax season, which stretches from February through April.

Actuaries and accountants are both in-demand occupations. As the U.S. economy demonstrates increasing complexity and regulatory changes, these professions become increasingly essential for individuals, businesses, and governments to adapt responsibly.