If you’re deciding between a career as an actuary or accountant, you’ll never find yourself short on work. The financial industry is booming and will only continue to grow with time. The demand is high because not everyone is great with money, and they need a professional to help manage their assets. However, deciding which career path to choose can be tricky, especially if you don’t know the difference between the two. They’re similar in some ways, and sometimes they even work together. However, there are fundamental differences that you’ll want to consider before blindly following a career path. So, actuary vs. accountant: What’s the difference? Read on to learn the main differences between the two and decide which one may be right for you.
What is an Actuary?
An actuary’s primary responsibility is to forecast the financial impact of future events. The goal is to prevent a loss in a company’s finances, regardless of whether these events occur. To do their job, actuaries analyze thousands of data points to determine an event’s probability. Afterward, they calculate a possible impact on their client. With this information, they can determine the “present value” of a future loss or gain.
Various types of actuaries exist. Your career may include setting up insurance policies for your clients based on their current assets, needs, and potential risks. For example, if your client wants a health or life insurance policy, you’ll assess their health, occupation, hobbies, habits, and current financial situation to determine the best approach.
If you want to steer away from the insurance industry, you could consider consulting to help people plan for retirement. The job is similar: reducing the future risk of loss for your clients. You’ll look at data sets and compare them to your client’s needs to determine which programs will bring the highest benefit down the line.
For an actuary to succeed, they must be comfortable working with complex data sets, math equations, and statistics software. Attention to detail is a MUST. You can’t just skim over some numbers and take a wild guess. This isn’t the casino. Being careless in your job could very well ruin someone’s life.
Getting a bachelor’s degree in mathematics, actuarial science, or statistics is the first step toward becoming an actuary. The curriculum is pretty standard for the industry and should include economics, corporate finance, math, accounting, and business management. Many people also won’t hire someone without standard actuary insurance. Having basic credentials and protections proves to your prospects that you’re a professional.
What is an Accountant?
Accountants typically focus on their client’s current financial situation. They work with complex data sets to determine the economic consequences of past events. But, unlike actuaries, they don’t make predictions for the future. Instead, they assess their client’s financials to ensure balance and compliance with tax laws. They tend to work closely with actuaries, providing the financial data they need to do their jobs.
Accountants are typically hired to help people manage their money. First, they can track how much a company received for products and services over the year. Next, they’ll look at how much they spent on payroll, supplies, and other expenses. Having collected all this data, they create financial reports, such as income statements and balance sheets, to display the profit and loss. Then, they’ll use this information to prepare that company’s taxes.
Accounting professionals maintain financial records, analyze costs versus expenses, and recommend future investments or adjustments. This career may be a good choice if you love math and have a good eye for accuracy. But, just like an actuary, you must pay attention to detail. Being trusted with someone else’s money is a huge responsibility, and one mistake could cost both you and the client a fortune.
Specific skills of an accountant include critical thinking, clerical knowledge, and organizational skills. They must be able to independently prepare financial statements, understand accounting and tax software, and analyze large amounts of data. In addition, there should be a basic understanding of Generally Accepted Accounting Principles (GAAP), which define the standards of accounting in the United States.
An entry-level accounting position will require a bachelor’s degree, but upper-level managerial positions may require a master’s degree. You should also examine specific credit hours and licensing requirements for the Certified Public Accountant exam if you plan to take it. It’s not required, but CPAs often make more money than basic accountants who don’t take the exam, as they tend to land more work.
What Are the Similarities Between an Actuary and an Accountant?
Accountants and actuaries traditionally work in office environments during standard business hours. In both the accounting and actuarial worlds, one typically spends several hours at a desk and using a computer. They often crunch a company’s numbers to report findings and protect its finances as part of their job. There are also times when an accountant and actuary work together to exchange data and determine solutions for a client.
How Are Actuaries and Accountants Different?
The most significant difference between the two careers is their job descriptions. For example, actuaries will calculate a company’s finances for a future risk that might not happen. They also tend to work with more extensive databases and more complex equations. On the other hand, Accountants work with numbers that the company has and organize them for proper spending.
The two professions also have different skills required to excel within their job duties. For example, an accountant will determine payroll requirements, issue invoices, and do business audits. As for an actuary, their duties may include preparing research reports, designing financial strategies, and analyzing risk management.
Actuary vs. Accountant: Which One Is for You?
Actuaries and accountants have similar jobs, but they have entirely different responsibilities. If you’re still having trouble deciding which path you should pursue, speak to an academic advisor at the college you attend. They will discuss your career goals with you and further explain the two professions to help you decide.