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Actuarial consultants analyze a company’s financial condition to increase profits, using a cyclical methodology to identify problems, apply solutions, observe results, and start over if necessary. They focus on insurance, pension plans, investments, and risk management. Educational requirements vary, but most require a bachelor’s degree and certification.
An actuarial consultant helps companies and government agencies increase profits by analyzing their current financial condition and making recommendations for future tax decisions and actions. The consultant may work for a financial advisory firm or as an independent contractor. She typically works alone during the analytic period and regularly talks with colleagues to develop solutions.
What distinguishes an actuarial approach from that used by other finance professionals is that it is cyclical. The traditional approach is to identify a problem and come up with a solution. An actuarial consultant’s methodology, often called the control loop, consists of identifying problems, applying a solution, observing the results, and then starting over if the desired results are not achieved. This approach embraces the concept, at least philosophically, that no problem is unsolvable.
This approach is commonly associated with examining a company’s insurance and pension plans. In recent years, however, actuarial consultants have applied it to other areas such as investment and risk management. All scenarios typically require regular consultant reviews to monitor progress and review less successful approaches.
When a company experiences dwindling profits, its managers and owners are often unclear as to why. An actuarial consultant is often called upon to review all financial records. She usually focuses on the statistical aspects of finance and investing, an area often overlooked by a company’s business or finance manager.
The consultant typically looks at insurance and pension expenses first, because these costs are the easiest to analyze statistically. By studying the risk and likelihood factors for these plans, she can usually recommend cost savings that will not significantly affect benefits. Her proposal could include increasing employee contributions or extending the duration of employment required for activation of pension plans.
These systematic review techniques are routinely applied by the actuarial consultant to other areas of the firm’s finances. It is expected to examine the company’s current investments, acquisitions, mergers and related expenditures. Their suggestions typically include risk management strategies as well as simple ways to cut costs. These plans may involve actions that can be activated or integrated immediately over a period of time.
Educational requirements for this position vary. Most employers typically require a bachelor’s degree in mathematics, statistics, or statistical analysis. Graduate studies in a related field may be required for some actuarial consultant jobs. In addition to formal education, many jobs require certification from an accredited actuarial licensing institution.
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