Actuaries working in finance and investment work in many areas, including investment management, corporate finance and banking.
Actuaries have been involved in the field of investment management for decades. They are involved in buying and selling assets, investment analysis and portfolio management. In addition, actuarial techniques are ideal for use in measuring investment performance.
Investment centres around the capital markets. This includes stock and bond markets, currency, property and derivatives. An actuary working in this area is involved in the day to day activity in these markets on behalf of clients or employers. Some actuaries may be involved in advising on the long-term characteristics and implications of different strategies.
An actuary can be useful to investors as they are used to measure the risk involved in an investment portfolio. They are also used to assess risks on loan products.
Actuarial techniques are ideal when measuring investment performance as they can solve problems while making correct investment decisions. This means that actuaries are well valued when it comes to working in investment management.
Actuaries bring strong analytical skills and have a deep understanding of how assets interact. This is particularly important in the world of investment management.
Employers recognise the skills that actuaries bring to their company and see that actuaries often seek to improve the development of valuation models and the refinement of traditional methods. Therefore, they allow actuaries to further develop these skills as well as develop skills in other areas such as financial economics.
Although generally regarded as the province of the investment banker, actuaries can add value in this area. An actuary’s basic skills in forecasting and assessing risks are vital in this area. For example, they have the skills to estimate whether a capital project is financially viable. Employers might include government departments, management consultancies, or property companies specialising in this area.
Actuaries working in corporate finance may work in areas such as financial reporting, capital management and mergers and acquisitions.
If you are considering a career as an actuary, you may also be considering a career as a financial analyst. So what’s the difference?
The main difference between the two is that financial analysts deal with financial information, whereas actuaries deal with risk analysis.
The demand for actuaries in the banking field is growing. As an increasing number of insurance companies have their own banking operations, many actuaries are now filling some of the senior roles in finance and risk.
Actuaries are now also found in retail banks, as many are recognising that the longer term approaches advocated by actuarial professionals can add value to their businesses. And, with insurance companies hedging their risks, there has been an increased demand for actuaries from investment banks that provide hedge products.
Some actuaries may move into financial analysis and work with a range of businesses. They may work in areas including regulations, markets and investments. Alternatively, actuaries can be used to measure the potential loss in an investment portfolio.
As the insurance and banking markets continue to converge, we can expect to see the demand for actuaries continue to grow.