Actuarial Consultant Details

To provide advice to their clients, actuarial consultants don't rely merely upon hunches but various indicators and calculated considerations. To help formulate an effective plan according to the client's goals and situations, actuarial clients use quantitive or statistical data. They analyze, calculate, then draw conclusions from it. They also give professional opinions and suggestions to help their clients make the best decisions based on what options are available to them.

A professional actuarial consultant can also find the perfect balance between costs and risks and present this information properly to their clients. They pay attention to trends when computing numbers and simulating scenarios related to clients' needs. Furthermore, to make their clients comfortable with their recommendations, actuarial consultants must recognize their clients' financial conditions. To protect clients, federal and state agencies, such as the Securities and Exchange Commission (SEC), act as supervisory entities.

To be an actuarial consultant, you need an undergraduate degree in a related field and years of experience. You may also need to pass certain exams. To put it simply, an aspiring actuarial consultant should strive to master actuarial science, a discipline useful for determining risks in finance-related fields using empirical methods. Actuarial science requires logical thinking, mathematical modeling, and good judgment.

Actuarial Consultant Example

Cindy is an actuarial consultant who specializes in helping employers looking for establishing pension plans for their employees. In this case, her client is a public-owned company working in a media-related industry. To start, Cindy provides an estimation of how much capital the firm needs to set aside for expenses related to the plan. This calculation considers various factors, including inflation rate, expected retirement age, and the level of risks of several investment vehicle options.

Cindy may also give suggestions of whether or not there should be regular employer contributions to the plan. That said, even if there's no employer contribution, there are still costs revolving around the pension plan foundation. Thus, actuarial consultants like Cindy are essential to companies. They help arrange pension plans with as much efficiency and effectiveness as possible.

Types of Actuarial Consultant

Actuarial consultants don't involve themselves in only one type of industry, but many. This consists of—but is not limited to—investments and insurance fields. For investments, actuarial consultants work directly with companies according to their assigned roles, e.g., managing companies' investment vehicles and/or giving suggestions. Actuarial consultants may also work with individuals to provide investment options according to their budget and comfort zone.

In insurance, actuarial consultants mostly involve themselves in life insurance, casualty insurance, and other types of insurance in the industry. For a client, to determine if purchasing a life insurance policy is worth it, actuarial consultants use mortality tables, general life expectancy, as well as other similar tools to find the probability of the insurance beneficiaries getting the benefit. They can also compare the cost and potential gain of such an arrangement.

Casualty insurance refers to a wide subtype of insurance coverage that protects policyholders against loss or damage to properties. This can range from vehicle insurance, home insurance, as well as health insurance. In this case, actuarial consultants' job is to crunch numbers to find the odds of policyholders claiming potential benefits based on safety. This may entail whether a client's resident house is in a safe spot, whether his vehicles are properly equipped with accident prevention features, or if the client is working in a risky environment.