Finance and investment actuaries work in many areas, including investment management, corporate finance and banking.
Actuaries have been involved in the field of investment management for decades. Indeed, it is probably true to say that more people see the word ‘actuaries’ through the daily stock exchange indices than through any other source.
Investment centres around the capital markets, (stock and bond markets, and currency, property and derivatives markets). Many actuaries are involved in day-to-day activity in these markets (on behalf of their clients or employers), whilst others advise on the longer-term characteristics and implications of different investment strategies.
Actuaries are involved in buying and selling assets, investment analysis and portfolio management.
Actuarial techniques are ideal for use in measuring investment performance. Solving problems while making correct investment decisions is a constant stimulus. Many employers recognise the skills that the training provides and have allowed actuaries to develop these skills as well as others, such as the skills of financial economists. Actuaries are seeking to improve their tools both in the development of valuation models and in the refinement of traditional methods.
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 ideal for estimating whether a capital project (e.g. for a new hospital or a transport infrastructure project) is financially viable.
Employers might include government departments, management consultancies, or property companies specialising in this area.
Actuaries are becoming increasingly involved in banking. For example, some of the leading insurance companies now have their own established banking operations, with actuaries filling some of the senior executive positions for finance and risk.
The leading retail banks are also increasingly employing actuaries, as they recognise that the longer term approaches advocated by actuaries can add value to their businesses. As insurance companies increasingly hedge their risks, we have seen a corresponding increase in the demand for actuaries from the investment banks that provide the hedge products.
As the insurance and banking markets continue to converge, we can expect to see the demand for actuaries within banking fields continue to grow.
Find out more about actuarial roles in banking
Gain a deeper insight into working in finance by taking a look at profiles of actuaries in the industry.
Nick Reilly is Head of Insurance Pricing at HSBC.