How To Become An Actuary: Degree & Career Guide

Every decision that we have ever made and will ever make will either present us with a risk or reward. Whether it is as small as eating pizza and ruining the diet that you have stuck to for a month, or whether it is investing in a high-risk, high-reward financial opportunity, everything we do in life comes with some sort of risk.

When risks are associated with finances and financial health, it becomes even more important. When it comes to money, large companies and even individuals have one thing in common – they don't want to face any financial risk.

But in order to gain financial growth, one has to take some sort of risk. If you consider that any form of investment is a risk, this may change the entire approach that people have toward the idea of risk and reward.

As companies and individuals approach their financial risks, they make use of actuaries who dedicate their entire careers to assessing financial risks.

To become an actuary, you would need to obtain your bachelor's degree, you would need to earn the appropriate certifications, you would need to garner the appropriate technical skills required for the job, you would need to gain experience, and lastly, you would need to find a suitable role.

Read on to explore the details of this career path and take a closer look at the steps you would need to take to become an actuary.

What Is An Actuary?

If you ever wanted to know what your financial future looks like, the best person who can look at the crystal ball and give you insight is an actuary. However, instead of a magic ball, they use accurate analytics, financial data, estimates, and projections to forecast your future financial risks and how to either embrace these risks or avoid them.

Using numbers, they make predictions about the financial status of your organization, and they work toward assisting you in devising processes that could help you mitigate these risks. Working closely with the financial division of an organization, actuaries will assess the financial data to determine what risks the organization may potentially face.

They also determine if a company can afford to take financial risks and may provide information on how to proceed with such risks.

I know the idea of taking a risk does seem… risky. But when you make a decision to invest, you are taking a calculated risk. Some investment opportunities are more trusted than others, but no matter how small the risk is, it still presents itself.

If an organization does decide to proceed with a financial risk, an actuary will present the company with possible safety nets that can be set in place to ensure protection against any downfalls.

To say that your calculations would need to be accurate is an understatement when it comes to the field of actuarial sciences. In this role, you would need to be meticulous because companies often plan their budgets, expansions, and their projects around the projected financial status of a company. If something is awry, a company could face potentially greater risks in terms of growth.

There are a number of different types of actuaries that exist which include enterprise actuaries that deal specifically with organizations and companies, and the financial health of these organizations and companies. There are also health insurance, life insurance, and pension and retirement actuaries who don't work so much with organizations but rather with individuals in determining the appropriate insurance coverage that these individuals may require.

For the most part, actuaries work with insurance companies in that the insurance company would provide a financial safety net if risks were encountered. When providing health, life, or retirement insurance for individuals, actuaries will assess if the individual is high risk (they go skydiving often, they suffer from ill health, or they exercise daily) to determine how great of a financial risk they are and how much they would need to pay on their monthly premiums.

What Does An Actuary Do?

In contrast to accountants who take a detailed tally of transactions that have already occurred in the past, actuaries work on the future of a company and on determining the future financial successes of an organization.

They design business strategies for new businesses and existing businesses to figure out and actively lower potential risks, and to directly increase a company's profitability.

They also test any existing business strategies to determine if there are any flaws that need to be remedied and any processes that need to be adjusted to mitigate and avoid any potential risks that may arise.

Actuaries devise investments, insurance, and pension plans for companies that are larger entities, and for individuals.

Based on the existing numbers and financial numbers of a company, as well as the external economy, actuaries will determine the likelihood of future risk, they will devise plans to avoid such risks, they will set processes in place that can be immediately implemented should any variety of scenarios play out, and they will compile and develop reports on the current financial status of a company for future analysis.

They establish the likelihood of certain events taking place and they share their findings and projections with the relevant stakeholders.

Steps To Become An Actuary

Step One: Earn A Degree

The first step would be to work toward your bachelor's degree in the field of actuarial sciences, statistics, economics, business, financial management, or mathematics. This will equip you with the skills you will need to work accurately and efficiently with numbers.

Step Two: Obtain Your Certification

As the most rigorous step in the process, it is a requirement for those who hope to work as an actuary to hold the appropriate certification. While you are working on your degree, you may be allowed to take the first of a series of examinations which include the Exam P and the Exam FM. This can be completed before you graduate.

Then, depending on the path you are hoping to pursue, whether you are hoping to go into health insurance, retirement, life insurance, finance, and investments, you would need to obtain a certification from the Society of Actuaries (SOA). If you are hoping to head into the field of property and casualty risks, then you can obtain your certification from the Casualty Actuarial Society (CAS).

For each type of certification, you will be required to complete seven exams and the entire process can take up to six years to complete.

Step Three: Gain Technical Skills

Since most of the work that actuaries do is on the computer, it will be a benefit to gain skills that are computer related and that will allow you to work successfully on computer software.

Step Four: Gain Experience

Next, you will need to gain direct industry experience by either obtaining an internship or getting an industry-related entry-level role. You could work in risk management and data analysis internships, and these can be done even while you are still in university.

Step Five: Find An Appropriate Job

Now that you have everything you need in hand, it is time to begin your job hunt. This shouldn't be too hard especially given that actuaries can expect to see a projected 21% growth in the next decade, according to the U.S. Bureau of Labor Statistics (BLS).

How Much Does An Actuary Earn?

According to the BLS, actuaries can earn a median annual salary of $105,900, and they can expect to earn a median hourly rate of $59.91.

What Skills Do You Need To Be An Actuary?

You would need to have strong mathematical skills, be a decision-maker, and be an analytical thinker.

FAQs

How Long Does It Take To Become An Actuary

It can take between four and seven years for you to complete your degree and your certification to become a qualified actuary.

Conclusion

While seeing into the future may not be what you expect, if you would like to hold this power and you have the skills and ability to use numbers to do so, then perhaps the role of an actuary is best for you. With a dedication of time and knowledge, you can enter this career that provides you with stability and growth.