The financial sector is full of careers for analytical individuals; perhaps no two jobs exemplify this more than the financial analyst and the actuary. These are good careers for those who love math, statistics, charts and models, and those who can dive into a subject and pick apart its complexities.
Actuaries are the unsung heroes of the insurance industry, which makes them unsung heroes of the medical industry, mortgage industry, car industry and every other industry where insurance coverage plays a prominent role. They are responsible for compiling and analyzing statistics about risks and the individuals who are exposed to risk.
There are actuaries who work in other industries. Some large financial institutions, particularly lenders, employ actuaries to assess risks on loan products. Actuaries can be used to measure the potential for loss in an investment portfolio, which directly crosses over into the realm of financial analysis.
Financial analysts serve as experts for businesses and investors on a wide variety of subjects, such as economics, markets, investments, regulations, taxes or corporate governance. The fundamental role of a financial analyst is to provide accurate information to others and to make recommendations based on that information. Corporations, private companies, public agencies, defense contractors and nonprofits all employ financial analysts.
Education and Skills
Since there are many different kinds of financial analysts (buy-side, sell-side, institutional, industry-specific, corporate, private and so on), there is no defined career path or set of necessary skills to become one. Every financial analyst should be gifted at analytical problem-solving and have the ability to communicate effectively to non-experts, but there are relatively few additional hard-and-fast requirements.
Common areas of study for financial analysts include finance, economics, statistics, accounting, mathematics or other business-related fields. Many financial analysts eventually pursue other professional designations, such as the Certified Public Accountant (CPA) or Chartered Financial Analyst (CFA) designations. Some financial analysts have advanced degrees, such as a Master of Business Administration (MBA).
There are comparatively few actuaries in the United States. Actuarial work – which involves long hours of dedicated analysis and statistical modeling – appeals to a relatively small subset of the population. Another key reason, however, is that actuaries are forced to spend several years passing a series of rigorous certification exams before most companies will consider them.
Aspiring actuaries are encouraged to pursue an undergraduate degree in a field such as mathematics, statistics or actuarial science. Other strong analytic and mathematical fields include economics, physics and accounting.
After receiving a degree, actuaries become licensed through one of two professional associations: the Society of Actuaries (SOA) or the smaller Casualty Actuarial Society (CAS). There is no federal law requiring an actuary to be licensed, but very few employers consider hiring applicants without these credentials. Most actuaries spend between four and six years in pursuit of full licensure.
According to the U.S. Bureau of Labor Statistics (BLS), the median salary for an actuary in the U.S. was $100,610 in 2016, though aspirants .are unlikely to earn near the median salary unless they are credentialed by the CAS or SOA. The BLS expected an additional 22% increase in actuarial positions over the subsequent decade, much faster than the average for all occupations.
There are fewer than 30,000 actuaries in the U.S. There aren't many licensed actuaries to go around, so businesses really have to compete to hire good people.
The BLS has estimated that financial analyst positions will increase by 11% between 2016 and 2026, or slightly faster than overall job growth. In 2016, it highlighted a median salary for financial analysts of $81,760, with the top 10% bringing home $160,760.
The average financial analyst works between 40 and 50 hours per week, receives more than 20 days of paid vacation every year and is not forced to work holidays. Unlike many of their compatriots on Wall Street, financial analysts are not generally expected to dedicate their entire lives to their work.
There are exceptions, of course. A 2012 survey found that nearly one out of three corporate financial analysts worked an average of 75 hours per week early in their careers, which equates to 12.5 hours per day for six days a week.
Actuaries spend even less time at the office than financial analysts. Most actuaries work fewer than 45 hours a week after receiving their certifications. Actuaries who are still pursuing their credentials can expect to spend an additional 15 to 30 hours a week on studying for their exams.
Some actuaries in the investment banking world may work more than 50 hours a week and may also be expected to travel often to meet with clients. Financial analysts who work for investment banks often do so as well.
Both careers are here to stay. Financial analysts are expected to thrive in a business environment because regulations are becoming more onerous and financial markets are growing more complex. There is almost always a shortage of actuaries in the U.S. and, as the BLS points out, both careers can expect above-average job growth until 2022.
Which One to Choose
A 2013 study by CareerCast.com concluded that actuaries had the number one job in America, based on a combination of work environment, income, stress, time away from work and hiring outlook. The Jobs Related Almanac has similarly listed actuaries as the top job multiple times. The actuarial profession is an outstanding fit for analytical, office-focused employees.
Not everyone wants to spend every day with a huge pile of data, however. Even fewer have the patience or aptitude to clear the hurdles posed by the SOA and CAS.
Financial analysts don't receive the same kinds of accolades about job desirability, but this career is a better fit for people who like the Wall Street environment, who like working in support of multiple teams and who may eventually want to move into another financial career, such as investment banking or private equity.