As an actuary, you'll learn how to analyse data, evaluate financial risks, and communicate this data to non-specialists…
An actuary evaluates, manages and advises on financial risks. They use their knowledge of business and economics, together with their understanding of probability theory, statistics and investment theory, to provide strategic, commercial and financial advice.
As an actuary, you will use financial and statistical theories to assess the likelihood of a particular event occurring and the possible financial costs.
You will need to apply your mathematical, economic and statistical awareness to real situations in the financial world and be able to communicate the difficult topics to non-specialists. Therefore, it is important that you can communicate easily with others and that you possess the ability to discuss complex topics in a simple way.
Types of actuary
Actuaries work in these areas:
- corporate finance;
- investment management;
- life, healthcare and general insurance;
Specific tasks vary but your work might include:
- using mathematical modelling techniques and statistical concepts to determine probability and assess risks, such as analysing pension scheme liabilities, to price commercial insurance;
- analysing statistical data in order to calculate, for example, accident rates for particular groups of people;
- developing new financial products;
- preparing presentations, reports, valuations and quarterly updates;
- monitoring risk within trading positions in investment banking to ensure excessive risks are not taken during the fast pace of trading;
- presenting reports, explaining their implications to managers and directors and advising on risk limitation;
- advising on issues such as the selection of investment managers or the administration of pensions and benefits;
- working with IT professionals to develop systems to ensure compliance with the requirements of regulatory bodies;
- communicating with clients and carrying out relationship management, including with investment managers, financial directors and external stakeholders;
- supervising staff;
- working with mergers and acquisitions.
- Starting salaries for graduates generally fall between £25,000 and £35,000. Salaries vary according to location, and are usually higher in the London area.
- Newly qualified actuaries in insurance companies can earn between £40,000 and £55,000. Increments are usually paid for examination success.
- At a senior level or with ten to 15 years of experience, salaries are typically more than £60,000. There is a wide range of salaries for experienced actuaries, but high financial rewards and excellent benefits packages are common.
- Salaries in excess of £185,000 are typical for senior directors.
Income figures are intended as a guide only.
Expect to work overtime, but not necessarily at the weekends or in shifts. In traditional areas of employment, long hours are less likely for more junior staff, e.g. graduate trainees, as they will be devoting time to study for professional examinations.
Flexible and part-time work, as well as career breaks, can be negotiated with some employers, but this is usually dependent on the employer and the individual's circumstances.
What to expect
- Self-employment and freelance work are possible but very unusual, as most actuaries are employed by large financial institutions.
- Jobs are widely available in most large towns and cities in the UK, although London has the largest proportion of jobs.
- There are more than 25,000 members of the Institute and Faculty of Actuaries (IFoA), of which just over half are students.
- There tends to be more men working as actuaries in the UK.
- You will be expected to maintain a smart business dress code but this varies between employers.
- Examinations are an important part of an actuarial student's training, and study during this period may impact on your social and personal life.
- Opportunities to travel vary between employers. For example, an insurance company with offices around the UK or abroad may require actuaries to travel from time to time. Visits to corporate clients may also be necessary, e.g. for those working in reinsurance. The amount of travel varies according to the type of actuarial work and the regional area.
Although this area of work is open to all graduates with strong numerical skills, the following degree subjects may increase your chances:
- actuarial science or actuarial mathematics;
- business or finance;
- mathematics or statistics;
- risk management;
- science, e.g. physics and chemistry.
The majority of UK entrants to the IFoA are graduates with a first or second class honours degree. Graduates must have a minimum of grade B in A-level mathematics and a grade C in another A-level subject.
Employers typically look for a 2:1 or above, ideally in a numerate subject such as mathematics, statistics or economics. Eligibility of other qualifications, including those from outside the UK and Ireland, can be checked with the admissions team at the IFoA. Entry with an HND only is highly unlikely.
A degree, postgraduate diploma or MSc in actuarial science may give exemption from core technical subjects and allow qualification in a shorter time. It is also possible to get exemptions having studied a numerical degree such as mathematics or economics, provided modules include some focus on statistics and probability. The Directory of Actuarial Employers has a list of companies that may offer sponsorship for postgraduate study. Search for postgraduate courses in actuarial science.
The Certificate in Financial Mathematics (CT1) is offered by the IFoA to non-members such as university students and people working in financial services. It provides a useful starting point for those considering a career as an actuary. The exam also goes towards completing the professional qualification.
You will need to have:
- a high level of numeracy;
- good communication skills, including the ability to convey complex information to clients;
- analytical, research and creative problem-solving skills;
- IT skills;
- the ability to write clear reports;
- the ability to take responsibility;
- excellent people, interpersonal and listening skills;
- strong teamwork ethic;
- self-discipline, determination and an appreciation of the demands of studying while working;
- sound judgement and a genuine interest in business;
- commitment to an actuarial career.
Although pre-entry experience is not a requirement, talking to people in the job and, if possible, acquiring some work experience will prove invaluable. Some companies offer work placements or internships for students interested in becoming actuaries.
Internships and placements can potentially be helpful in securing a graduate job, however this is dependent on the organisation. It is also useful to speak with people in the profession by approaching them at careers events or work shadowing where possible.
Most trainees begin their careers in the financial services industry, particularly in the traditional employment areas of insurance and pensions.
This means you will typically work at an insurance company or at a consultancy. At an insurance company, you are always working for one client: your employer. Generally, you will work in one area before moving on to a different area. Insurance work includes life insurance, medical and health insurance and general, personal, home and motor insurance.
In a consultancy firm, the work will be more varied from day-to-day and you will probably work with a range of clients solving different problems. Financial consultancies deal with: pensions, risk management, merger and acquisitions, corporate recovery, asset management and liability management.
Career opportunities vary depending on the type and size of employer. Research companies listed in the Directory of Actuarial Employers in order to gain a full understanding of the type of work involved in each area.
The Government Actuary's Department (GAD) is an independent actuarial consultancy working within government. Their work includes advising public sector organisations in the UK and internationally on insurance-related issues, principally the regulation and supervision of insurance companies.
Look for job vacancies at:
- Actuary Jobs
- The Actuary Jobs
- Directory of Actuarial Employers
- Financial Times
- Inside Careers: Actuaries
- Careers service vacancy lists.
Recruitment agencies sometimes handle vacancies and often advertise in the financial vacancy sections of the press or in professional journals.
Most new students enter the profession by joining a company as an actuarial trainee or risk analyst at the same time as studying for professional exams. It is important to choose the area of work you are most interested in and then apply for suitable posts.
Student actuaries take exams at their own pace through self study, as well as a mixture of distance learning courses and tutorials supplied by specialist providers such as the Actuarial Education Company (ActEd). Many employers provide support through mentoring, coaching, study leave and meeting the costs of learning materials. Subjects studied include statistical modelling, economics and financial actuarial maths. It is crucial for students to keep up with any changes in the sector as these can often affect the content of learning materials and exams.
Qualification as an Associate member of the profession typically takes three to six years. To become an Associate member, you must pass exams, complete a number of practical modules and gain a satisfactory level of work-based skills. The Associate-level qualification is recognised internationally as meeting the minimum requirements to be an actuary and qualifies members to use the letters AIA or AFA.
Actuaries who wish to continue their studies to an advanced level, or who wish to specialise in a particular actuarial field, may take further specialist exams to qualify as a Fellow, becoming an expert in areas such as investments, enterprise risk management, pensions or insurance.
Qualifying for Fellowship can take between three and six years. Exemptions from some of the exams may be awarded to students who have studied to an appropriate standard in a relevant degree, or who have studied actuarial science at postgraduate level. Fellows use the letters FIA or FFA and are sought after as experts in their chosen field.
Once qualified, actuaries can progress quite quickly to managerial positions with greater levels of responsibility for project work and team management, including mentoring new trainees.
An actuarial career offers a great deal of flexibility, and although an actuary may choose a particular area of specialisation such as consultancy, investments, life assurance, general insurance, pensions or reinsurance, it is still possible to change areas later in your career. For instance, some actuaries move from pensions firms to work in investment banks or asset management firms, or into large corporations.
Enterprise risk management is a developing area offering opportunities for senior actuaries to progress to board-level positions as chief risk officers (CRO).
Actuaries may choose to move into product development, marketing and senior sales roles where the complexity of the product and value of sale require a consultative sales approach. It is also possible to pursue particular areas of interest such as genetics, energy supply or climate change.
Other related areas of work open to experienced actuaries include:
- investment systems;
- technical research;
- commercial activities;
- financial modelling;
- software development;
- valuation work;
- general administration.