Accounting vs. Actuary: An Overview

People with a talent for mathematical and statistical problem-solving are always in demand. Young people with that talent might consider careers as accountants or actuaries. The skills and training needed are similar, but the focus of the work and the industries they serve are very different.

  • Accountants create and maintain the financial records of businesses and other entities and ensure the integrity of those records from day to day. Other accountants are employed by government agencies, banks, and other businesses to inspect those records for accuracy.
  • Actuaries estimate risk, primarily for the insurance and banking industries. They compile and analyze statistics in order to assess the degree of future financial risk that a policy entails and, therefore, how much the premium should be.

Key Takeaways

  • An accountant may work in virtually any business or public agency. They record and track money coming in and going out, and ensure the business runs smoothly.
  • An actuary is a statistician who researches and analyzes numbers on risk in order to estimate the potential pitfalls and rewards of a business or government undertaking.
  • Both fields require extensive study and certification but offer higher-than-average salaries and good work-life balance.

Accountant

Accountants have a role in every industry. They may work for a business, an individual, or a government. In every case, they keep track of money spent, money taken in, and money owed in taxes.

Many career accountants earn the title of certified public accountant (CPA). Few professions place as much dependence on a single title as accountants place on the CPA designation.

Qualifications for Accountants

Aspiring accountants must study for and pass four CPA exams.

CPAs may specialize in many different areas such as internal audits, forensic accounting, managerial accounting, environment accounts, or taxes, among others. The exams are the same, however, regardless of specialization.

Becoming a CPA requires intense preparation. Most candidates study for 20 to 30 hours a week for four to six months before passing all the exams. In addition, most states require candidates to have at least 150 semester hours of instruction and a college degree as prerequisites for taking the CPA exams. 

Salaries 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 $71,550 in 2019, according to the BLS.

Overall, there are many more accountants than actuaries in the U.S. The BLS estimates that actuarial jobs will grow 20% between 2018 and 2028, while the number of accounting jobs is projected to grow 6% during that time. This compares to an average growth rate for all occupations of 5%. 

Actuary

Perhaps more than any other profession, actuaries deal with tons of data. These are true statisticians who use past data to predict likely future outcomes.

Such skills make them critical to the operations of insurance companies and lending institutions. Both base the rates for their services on an actuary's analysis of the risks involved in the transaction.

In fact, actuaries may work for any company or government agency that needs to analyze risk. Such an analysis is input in the decision-making process for major new initiatives.

Qualifications for an Actuary

Insurance companies demand that applicants have a strong background in mathematics, statistics, actuarial science, computer science, and calculus.

To qualify for 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 qualified to work in life insurance, health insurance, investments, and finance. Certification with the SOA is offered in six tracks that range from individual life and annuities to corporate finance.

The second organization, the Casualty Actuarial Society (CAS), specializes in certifying actuaries for property and casualty risk for businesses and governments.

An actuary spends 6 to 10 years in pursuit of SOA or CAS certification.

Salaries for Actuaries

The median annual salary for an actuary in the United States in 2019 was about $108,560, according to the Bureau of Labor Statistics (BLS). Actuaries are paid so well in part because few people have the patience or ability to spend five years or more passing all the exams.

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

Special Considerations

A bachelor's degree in accounting or mathematics is a huge plus for anyone considering a career as either an accountant or an actuary.

Most accountants and actuaries start out as entry-level employees at accounting firms or insurance companies, where they work while preparing for the litany of exams that will move their careers farther along.

Quality of Life Factors

Both professions allow for a very balanced work-life schedule, especially compared to that of many of their peers in the financial industry. Most surveys and studies, such as the Jobs Rated Almanac, consistently rate accountants and actuaries positions 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.  As the global economy demonstrates increasing complexity and regulatory demands, these professions become increasingly essential for individuals, businesses, and governments eager to adapt.