Financial Analyst vs. Actuary: What Are the Differences?

A career in finance can offer many opportunities for those with the drive to succeed. Two popular positions in this field are financial analyst and actuary. Both roles require mathematical skills and the ability to assess risk, but there are several key differences between the two. In this article, we discuss the similarities and differences between financial analysts and actuaries, and we provide information on what you can expect from each profession.

What is a Financial Analyst?

Financial Analysts are responsible for providing insights into an organization’s financial health. They use their skills in mathematics and financial analysis to assess past performance and identify trends to help make recommendations about the best way to use an organization’s money. Financial Analysts typically work in banks, insurance companies, accounting firms, or for the government. They often specialize in a particular area, such as risk management or investments. Financial Analysts use their findings to make recommendations about how an organization can save money, invest money, or reduce costs.

What is an Actuary?

Actuaries are typically employed by insurance companies to design and decide which policies and premiums to charge for different companies. They carefully analyze each policy to ensure it’ll be profitable and beneficial for companies to utilize. Some Actuaries may work for consulting firms, government entities or pension companies handling their property, life, casualty and health insurance policies. Actuaries typically gather statistical data to analyze, then they present these findings to government officials, shareholders, executives or other clients. They often create and use charts or graphs to better explain their projections, calculations and new policy plans.

Financial Analyst vs. Actuary

Here are the main differences between a financial analyst and an actuary.

Job Duties

Financial analysts and actuaries share some job duties, such as researching financial data to determine the likelihood of certain events occurring. Another common task for both professions is creating models to help companies evaluate different scenarios and predict future outcomes.

Actuaries often focus on predicting insurance risk by studying how many people are likely to file claims during a given period and what those claims might cost. They may also calculate the expected monetary value of certain benefits promised to policyholders and develop methods for pricing those policies. In contrast, financial analysts often work in the financial services sector, focusing on areas like banking, stock trading or investment advising.

Job Requirements

Both financial analysts and actuaries need at least a bachelor’s degree to enter the field. However, because of the complex nature of their work, many professionals in these positions have a master’s degree as well. Financial analysts typically study finance, accounting or economics, while actuaries often major in mathematics, statistics or actuarial science.

In addition to their educational requirements, both financial analysts and actuaries must pass exams to earn professional certification. Financial analysts can become certified through the Chartered Financial Analyst (CFA) program, which is offered by the CFA Institute. To become an actuary, you must pass a series of exams administered by the Society of Actuaries (SOA).

Work Environment

Financial analysts typically work in an office setting, but they may also travel to meet with clients. They often work full time and have a 40-hour work week. Actuaries usually work for insurance companies or other financial institutions. They may work on teams of actuaries who collaborate on projects together.

Financial analysts can work overtime if necessary, but it’s not common. Actuaries rarely work overtime because their job is more about analyzing data than interacting with customers.

Skills

Both financial analysts and actuaries use analytical skills to assess data and make recommendations. Financial analysts typically focus on analyzing past financial data to predict future trends, while actuaries focus on analyzing data to identify risk and determine insurance premiums.

Both of these professionals need to have strong math skills to perform their job duties. Financial analysts use math when they are calculating ratios and creating financial models. Actuaries use math when they are calculating the probability of events occurring and determining the financial impact of those events.

Financial analysts also need to have excellent communication skills to present their findings to clients and colleagues. Actuaries need to be able to clearly communicate their findings as well, but they also need to be able to explain complex concepts in a way that non-actuaries can understand.

Salary

Financial analysts earn an average salary of $71,352 per year, while actuaries earn an average salary of $124,755 per year. Both of these average salaries may vary depending on the size of the company at which you work, location of your job and the level of experience you have prior to pursuing either position.