You possess an aptitude for maths, coupled with an interest in the financial world. You may picture yourself on Wall Street. Prestigious, glamourous, cut throat. These are words that come to mind when we think of investment banking from the glamourised film portrayals, but what is the reality? You stumble across the career of an actuary. You have some understanding of what it entails, but it is its continuously highly ranking in best job lists, that sparks your attention. With CareerCast’s study ranking it the number one best job of 2015. What makes it so highly thought of? How are it and investment banking alike, and how do they differ?

Understanding the Work: Actuary vs Investment Banking

Fundamentally, actuaries and investment bankers make decisions based on their mathematical and financial analysis. Both careers require strong academic and analytical skills, as well as communication for dealing with clients. However, when we look deeper into what they are analysing and what they do with this information, we see how they differ.

Investment bankers usually work for an investment bank or investment banking department of an organisation. They are involved with a number of financial advisory activities for corporate clients:

While many have a general idea of investment banking, actuary remains a mystery to a lot of the general public. Contrary to what some people assume, you will not need to perfect your bow and arrow skills and become the next Katniss Everdeen! An actuary’s main role is to quantify risk and assess the financial impact it could have on their particular sector. Although there are exciting emerging fields for actuaries such as, climate change and cyber security, the traditional sectors are:

Work-Life Balance and Stress: Comparing Actuaries and Investment Bankers

“The sleep deprivation, the treatment by senior bankers, the mental and physical stress … I’ve been through foster care and this is arguably worse.”

This is a powerful statement from an analyst at Goldman Sachs. It highlights the extreme conditions experienced by investment bankers. A survey of these analysts at Goldmans produced staggering figures, that may shift your perspective from glamorous to gruelling. Working on average 98 hours a week, with an analyst quoting “What is not ok to me is 110-120 hours over the course of a week!

The math is simple, that leaves 4 hours a day for eating, sleeping, showering, bathroom and general transition time. This is beyond the level of ‘hard-working’, this is inhumane / abuse”. It isn’t surprising the detrimental impact these conditions would have on anyone’s health. The image below is taken from this Goldman Sachs survey. For a job to even slightly impact your mental health is not acceptable, but to this degree is shocking.

It is important to note, not only is this survey just Goldman Sachs employees, but only 13 of them. This is a small sample size, and these conditions may not be widespread. Unfortunately, it does seem to be common.

On top of the long hours and poor work life balance, investment bankers face high levels of stress. You need to be a certain type of person to deal with the pressure. The nature of the job is fast paced, with intense targets, deadlines and a constant need to outperform peers. Why would anyone choose this lifestyle? Some thrive in this environment, requiring constant challenge and excitement. It is like a game and could be compared to sport. Why spend hours training? For the thrill. The dedication to become the top, the competition and the feeling of scoring that goal, not so different from securing a deal.

If work life balance is a priority for you, actuary is undoubtedly more attractive. It was ranked number 1 for low stress, high paying jobs in 2017. With the hours usually ranging from 40-50 hours a week, maintaining a work life balance is definitely achievable. Although these may be extended at busy periods such as year-end or during particular projects, it is a huge difference to investment banking.

The pressure of the job can vary depending on the sector, but the general consensus is it is low stress, especially in comparison to its finance counterparts. The work is more predictable with significantly less competition with peers. To many (including myself) this sounds like bliss, however, if your brain is wired like an investment banker, it could appear dull.

The Journey to the Profession: Actuary and Investment Banking Paths

What has been discussed involving work life balance makes actuary seem like the obvious choice, but we are forgetting one key component of being an actuary. The exams. As seen below the route to become a fully qualified actuary is not easy. You will have many challenging exams in front of you. This will require great determination and willingness to learn for a long time, as they take years to pass.

This is where the disparity in actuaries and investment bankers free time narrows. These exams are completed alongside full time work, so the weekly hours dedicated to your career increase significantly.

Both actuaries and investment bankers can usually secure a job with just their bachelor’s degree. However, investment banking can be more competitive. Actuarial science degrees are becoming more popular but are still not widespread. With only 40 universities out of the 164 in the UK offering an actuarial degree program. This means actuarial students are sought after individuals who definitely do not need to worry about securing a job. There is no specialised degree program for investment banking, which means you can enter the profession with a range of degree backgrounds, most commonly, Finance, Business and Economics. Almost every university within the UK offers at least one or all of these degrees, usually with considerably larger classes than actuarial science.

Therefore, if you have your sights on the renowned and respected investment banks, you will have intense competition. This encourages some to complete masters to give them that edge, extending the length of the road to get there.

Although the investment banking route doesn’t have the extensive exams, long hours will be put in either way, whether these hours are dedicated to work or study. With actuary however an end goal is in sight, these long hours spent studying will come to an end once you are a fellow. The same can’t be said for investment banking.

Salary and Job Security in Actuary and Investment Banking Careers

Investment bankers may choose their profession as they are highly driven thrill seekers, but what is the main motivation? Money! Both actuary and investment banking are lucrative careers, but it is definitely possible to make a lot more with investment banking. Although salaries will differ depending on location, if we look at those with significant experience, an actuary can expect to earn between £70,000 to £110,000, while an experienced investment banker’s base salary would be in the region of £150,000 to £165,00.

While investment banking has the advantage, what really sets it apart are the huge bonuses that could almost double the salary. For some, money is what makes the world go round. If this is your main motivator in life, investment banking is where you want to be! But at what cost?

“The price of anything is the amount of life you exchange for it.” – Henry David Thoreau

This quote encapsules this. Making the money is great, but is it worth the hours spent behind the desk.

The outlook for job opportunities in both careers are positive. With the average occupation growth rates for each being considerably higher than the 5% average. Between 2021 and 2031, employment is projected to grow by 21% and 10%, for actuary and investment banking respectively. While actuary has the advantage here, either way the prospects are optimistic.

You have worked hard at university and working in your dream job, how secure are you? Job security is impacted by many factors, so we can’t give a definitive answer to this. However, generally, actuary is praised for its high job security. It is an extremely specialised field with greater demand, than number of actuaries available. Also, fields such as insurance are relatively stable. The demand will remain no matter the economic conditions.

Investment banking is more volatile. As discussed, it is a highly competitive world. Generating revenue, meeting targets and closing deals are the employers main concern and they seek the most talented employees that are achieving this. If you are underperforming compared to your peers, there is a chance you could be let go. This environment breeds competition and explains why it is so common for investment bankers to work themselves to the extremes. The industry itself is highly affected by the market. The state of the economy can determine the need for investment banking services. In periods of economic decline, there would be less deals being done, leading to less demand for investment bankers and unfortunately to job cuts.

Major global events can spark economic shifts and impact the industry in ways that are hard to predict. Famously the financial crash of 2008, arising mainly from the fall of the US housing market and risky securities. This event caused chaos for the world but had a direct impact on investment banking industry. With losses so large entire investment banks were forced into bankruptcy and the recession that followed meant the demand for investment banks that remained was at a low. 500,000 investment bankers lost their jobs in the US alone. This puts into perspective the risk, that events completely out of our control could have such an impact on the career.

That being said, the economic conditions can provide opportunities. In times of financial stress, companies may look to investment banks for support and guidance in the challenging times. And of course, in times of growth, they would be very well compensated for the deals they make.

Exploring Exit Options: Actuary vs Investment Banking

You have gone down your chosen route and find it isn’t for you. Are you trapped or can it open more doors? Both are well respected careers, therefore there are a variety of opportunities for both. However, the options tend to be more varied for investment banking.

With the world of finance being much broader than that of insurance, so too are the opportunities. Additionally, this role allows diverse industry exposure, making them ideal candidates as they tend to develop a varied skill set. These career options include:

The options for actuaries are typically in the insurance and risk world, such as:

Conclusion: Making the Right Career Choice

Both investment banking and actuarial science are high-stakes and high-reward careers, with investment banking being a more extreme case of this. Although the day-to-day tasks differ, the underlying analytical and quantitative skills that are required to flourish in each profession are similar.

Both careers have been analysed holistically and the pros and cons vary depending on what aspect you view. The high intensity and stress of investment banking leaves you extremely well rewarded, with superb salaries and career trajectories. Actuarial science will provide you with a more stable and predictable life, while still making a substantial income. The ability to enjoy life outside of work more freely and with greater relaxation due to higher job security.

Ultimately, both paths will lead you to lucrative and fulfilling roles. The choice comes down to what type of person you are. What are your interests? What aspects of life do you value most? Where will you thrive and be happy?

“Jade Melody was an Actuarial Intern at CNP Santander Insurance. Jade graduated from Queen’s University Belfast in 2023 with a BSc degree in Actuarial Science and Risk Management. You can connect with her on LinkedIn.”