Some careers are so similar in nature that it can be hard to know who you need to hire. For example, actuaries and accountants perform similar duties, but their overall job function differs. Actuaries assess and manage financial risk. Accountants, on the other hand, directly manage a company’s finances. They track transactions, draft reports, and predict the financials needs of a business.
Are you wondering which of these professionals can best help you upkeep the financial health of your business? Keep reading to learn the key differences between an actuary vs. an account.
What’s an Actuary?
In short, actuaries assess and manage risks. You may want to consider hiring an actuary if you’re looking for someone who can analyze data, develop solutions for your financial issues, consult on your financial investments, and effectively communicate their solutions in a business setting.
When you embark on a business venture, there are risks involved. An actuary utilizes their skills and competencies—which typically include math, statistics, and other financial information—to analyze the potential risks and find solutions that communicate which risks a business should take.
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Actuary Qualifications
Becoming an actuary typically requires individuals to obtain a bachelor’s degree. During undergrad, students will learn more about finances, statistics, and mathematics and take a number of courses related to business management and actuarial sciences.
Upon completing an undergraduate degree, some individuals may pursue additional education. But entry-level jobs are necessary to complete certifications—such as credentials from the Casualty Actuarial Society (CAS) or Society of Actuaries (SOA). Entry-level work also helps new actuaries gain hands-on experience and boost their careers.
After gaining direct experience, a person can still obtain a master’s degree or pursue other continuing education programs. Any of these routes can sharpen skills and strengthen an actuarial’s ability to complete their day-to-day responsibilities.
Day-to-Day Responsibilities of an Actuary
Actuaries work in many industries, calculating and assessing risks for insurance companies, healthcare institutions, or within the private sector. In these industries, the day-to-day responsibilities of an actuary typically revolve around the following:
- Gathering statistical data for analyses
- Estimating probabilities and costs
- Finding solutions to minimize risk and maximize profits
- Designing policies, investments, or business plans based on risk and profit predictions
- Creating tables, graphs, charts, and reports to explain their calculations and solutions
- Through experience, actuary candidates will have obtained the necessary skills to be successful in their role, including analytical skills, communication, computer proficiency, and math and problem-solving skills.
What Does an Accountant Do?
Like an actuary, an accountant requires math and financial analysis to perform their job, but in very different ways. Accountants manage the finances of a company. That includes tracking transactions, making reports, and predicting the financial needs of a business.
In addition to analyzing financial data, managing financial transactions, and performing audits, accountants prepare financial statements, focus on taxes, budgeting, and compliance, and typically work with payroll and accounts receivable and payable.
Education Requirements to Become an Accountant
Similar to actuaries, accountants usually require at least a bachelor’s degree. Many will also obtain a master’s degree. However, individuals can also pursue additional licensure post-undergrad, which some companies may prefer. That may include a Certified Public Accountant (CPA) licensure.
Licensures or certifications—like a CPA—may be required by some companies. During undergrad, graduate school, or entry-level positions, accountants can determine concentrations or areas they’d like to focus their accounting skills and begin growing their careers.
Day-to-Day Responsibilities of an Accountant
The day-to-day responsibilities of an accountant vary depending on company needs, the industry, and whether they’re part of an accounting team. Some of those responsibilities may include:
- Audit business financial transactions
- Create reports on the company’s financial statements
- Calculate and prepare tax returns for the business
- Document and manage all financial information regarding the company
- Adhere to and comply with the company’s policies, procedures, and financial regulations
Between education, certification, and hands-on experience, entry-level accountants will learn the necessary skills to be successful in their roles. That includes critical thinking, communication, and math skills.
Essential Differences Between Actuaries and Accountants
Actuaries and accountants have many similarities. They both usually require at least a bachelor’s degree and certification and utilize analytical, mathematical, and financial theories. Both require some of the same skills too, such as:
- Computer proficiency
- Problem-solving skills
- Attention to detail
- Business management and financial skills
- Critical thinking, mathematical, and analytical skills
But despite these similarities, the primary functions of each differ substantially. Actuaries focus more on assessing and managing risks. They may also utilize computer programs and languages necessary for calculating those risks. Additionally, they serve a very niche function rather than handling all the ins and outs of a company’s finances.
Accountants may also need to analyze data to predict risks. But that’s not their primary function. They document and manage the company’s finances and typically work more with the bottom line of finances, not determining the future outcomes of business strategies.
Actuary vs. Accountant: Which Should You Consider?
By understanding the duties and responsibilities of actuaries and accountants, you can better discern which will fit your business needs. If you require someone to manage your company’s finance—whatever that may entail—an accountant is best.
If you’re looking for someone to help you plan and understand the financial risk associated with your business plans, you’ll want to hire an actuary. Both roles can be invaluable to a company—it all depends on your company and its overall business needs.
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