From the Leadership Council

By Karen Smith • September 12, 2016 • 0 Comments

Judy Miller has written an excellent article about what the ACOPA LC has been up to, so I wanted to take this opportunity as my term as ACOPA President is beginning to wind down to make the case on a personal cause of mine. Maybe I have been hanging out with my Millennial employees too much, but I think we need to rebrand Actuarial Code of Professional Conduct Precept 13 from the “Snitch Clause” to the “Coaching Clause.”

Millennials are good at resolving conflicts, giving feedback and taking feedback without letting emotion get the best of them. Those of us who bristle at having our work corrected or avoid giving feedback can learn from Millennials. 

Precept 13 states:

"An Actuary with knowledge of an apparent, unresolved, material violation of the Code by another Actuary should consider discussing the situation with the other Actuary and attempt to resolve the apparent violation. If such discussion is not attempted or is not successful, the Actuary shall disclose such violation to the appropriate counseling and discipline body of the profession, except where the disclosure would be contrary to Law or would divulge Confidential Information."

I hope that we all agree that it is preferable to consult with another actuary rather than report another actuary to the ABCD or the Joint Board. While from time to time it may still be necessary to “snitch,” maybe we should embrace the coaching element of Precept 13. Reporting people to the ABCD is so unattractive that it might paralyze us into inaction. We might be tempted to look for reasons that we can’t take action or don’t need to take action. Those results are not good for the profession. While we absolutely need to respect the client’s confidentiality, we also need to participate in the self-regulation of the profession. If we don’t self-regulate, we will face increased regulation from outside parties. 

Here are three of my close personal encounters with Precept 13.

Coached me — Several years ago, an actuary who I know approached me at an actuarial luncheon and told me that he could not match the numbers on a cash balance illustration issued by my firm. He thought the stated deduction limit was too high. He was extremely diplomatic, and it turns out he was right. It was an illustration that I had not personally reviewed. Based upon his feedback, I went back to my office and implemented a couple of changes. First, I dealt with the particular issue that had caused the deduction to be too high. Second, I strengthened our review procedures. I was truly grateful to this actuary for bringing the issue to my attention. Yes, it was embarrassing — extremely embarrassing — to be wrong in front of a colleague. But I needed to be told so that I could address the issues.

Reached out to another actuary — Recently, on a takeover plan I was concerned that the report I received did not include all of the information required by ASOP 41. I shot the prior actuary a quick email nicely suggesting that he review his reports and procedures to ensure that he was complying with ASOP 41. In my email, I offered to discuss the matter on the phone if he wanted to schedule a call. I never expected to hear from him. But almost immediately I got an email from saying that he would like to do a call. I was on the road and did not get back to him promptly, so he followed up to get the call scheduled. When we spoke, he explained why this particular report was done this way. It had been a client request many years ago and he had reviewed the ASOPs at that time and felt the report was okay. He acknowledged that he had not reviewed this report when the ASOPs got updated, and he appreciated the feedback. He offered to provide me any additional information I needed and to issue a supplemental report or letter to the client. When I got off the phone, I was convinced that he was a good actuary who tried to comply with the ASOPs. He had fallen into the trap of repeating what he had done last year — a trap that we all have to be diligent to avoid. 

Third-hand — There was an occasion when another actuary took over one of my plans, and I heard through the grapevine that the new actuary thought my plan design was abusive. The new actuary never reached out to me personally though, and I wish he would have. I was very comfortable with the design and felt that the new actuary was misunderstanding some IRS guidance. If the new actuary had reached out to me, we could have had a discussion about his concerns. Maybe if we had spoken, one of us would have changed our minds. But even if neither us budged, I am sure that if we had gotten on the phone, we both would have learned something.

I would love to see ACOPA members commit to constructively coaching each other and at least listening to coaching from others. It would improve our service to our clients, often give us an easier way to comply with Precept 13 and be a service to the profession. And, significantly, embracing the coaching element of Precept 13 is also consistent with the collegial nature of ACOPA — we already support each other so much through conferences, the listserv and personal relationships. There is no other actuarial organization in such a strong position to raise the bar on professional coaching.