What are the Differences Between an Actuary and Accountant?
Although both the fields of actuary science and accounting deal extensively with numbers, there are distinct differences between an actuary and accountant. Accountants record, classify, analyze, summarize and report financial data for businesses in accordance with national and international accounting standards. Actuaries apply mathematical models to financial data to help companies identify risks and opportunities relating to the products and services that they offer to the public. Here are some of the specific job duties, required set of skills, beneficial academic and professional credentials and projected job outlook for both career fields.
Job Duties of Actuaries and Accountants
Actuaries are financial risk managers for insurance companies, wealth management firms, corporate finance departments and banks. Insurance companies offer products to businesses and consumers so that in the event of an unexpected emergency their clients can have a certain level of financial security. However, insurance companies have to make sure that the financial products that they offer have prices, terms and conditions that are favorable to their shareholders’ profits. Actuaries are also called upon to assess risks and opportunities relating to corporate mergers, acquisitions and divestitures. They are able to communicate these findings quantitatively, and that type of analytical proof is what corporate leaders mainly use to make critical strategic decisions. Accountants can work for private consulting firms, government agencies or the accounting departments of any business regardless of industry. They track assets, liabilities, profit and losses for all types of organizations. Management accountants analyze company financial data and translate it into useful information for their senior leaders who are assigned tasks of improving business operations.
Comparison of Skill Sets Needed by Actuaries and Accountants
Actuaries must have strong analytical and quantitative skills to perform most of their daily tasks. They also must be able to explain their solutions and the analytical methods that they used to a variety of corporate stakeholders. Accountants must be organized, detailed oriented and have a firm grasp of general accounting principles to be successful. Management accountants should be able to apply economic and statistical concepts to their work in addition to being aware of the regulations that govern their profession.
Education, Certification and Licenses for Actuaries and Accountants
Actuaries often come from diverse academic backgrounds. For instance, applied mathematics, physics and economics are academic majors that people use to gain entrance into the actuary science field. However, most people who know early that they want to be actuaries take degree programs in actuary science. Many companies only hire actuaries who are certified through organizations like the Society of Actuaries and these business professionals must pass a comprehensive test to gain their certifications. Accountants almost always start their academic careers with an undergraduate degree in accounting. Those who want to work as public accountants must be licensed through their state accountancy boards.
Job Prospects for Actuaries and Accountants
According to the Bureau of Labor Statistics, jobs for actuaries are expected to grow at a rate that is much faster than the rates for all jobs surveyed. They also earned comfortable salaries as well; the median annual income for actuaries in 2012 was $93,680. Accountants reportedly will experience moderate job growth through 2022, and the career field’s projected rate for job growth was as fast as the average for all jobs surveyed. These business professionals also realized modest incomes; the annual median income for accountants in 2012 was $63,550.
Related Relations: Chartered Financial Analyst
While certain job duties of management accountants overlap those of actuaries, the career fields remain largely distinctive. The broad functions and skills of accountants help to ensure that they have a variety of employment opportunities available to them across all industries. However, actuaries who have skills that are in high demand are mainly employed in the financial services industry exclusively. Subsequently, job function, variety and technical difficulty primarily sum up the differences between an actuary and accountant.