Actuarial work typically involves determining the financial amounts needed today to provide for payments in the future, the timing of which is uncertain. This can be seen in insurance contracts, pension plans, and numerous other areas where actuaries practice. A major component of this work is the determination of an assumption for future rates of return. The rate of interest that can be earned on a fund or a reserve can have a significant effect on future growth, and is a key factor in determining the rate at which future financial obligations are discounted. Because of this, a number of actuaries work in the investment practice area.
Actuaries can be found working in the investment operations of an insurance company, or providing advice on defined benefit pension plans, both which need to accumulate substantial asset pools to support the underlying obligations to policyholder or plan members. Some actuaries are also employed with investment firms, bringing their risk management expertise to their operations. A particular area of focus for many investment actuaries is asset-liability matching, which aims to reduce risk through an appropriate choice of assets for given obligation.