PROFESSIONALISM: OVERVIEW, TOPICS, DISCUSSION AFA ANNUAL WORKSHOP MAY 23, 2018 --- SESSION XX PROFESSIONALISM: OVERVIEW, TOPICS, DISCUSSION Welcome. Good morning. Please take a seat at one of the tables with a Table #. The next two slides are housekeeping --- don’t bother to take notes! AFA May, 2018

DISCUSSION LEADER Jay M. Jaffe, FSA, MAAA President, Actuarial Enterprises, Ltd. jay@actentltd.com 312-397-0099 AFA May, 2018

SOCIETY OF ACTUARIES Antitrust Compliance Guidelines Active participation in the Society of Actuaries is an important aspect of membership. While the positive contributions of professional societies and associations are well-recognized and encouraged, association activities are vulnerable to close antitrust scrutiny. By their very nature, associations bring together industry competitors and other market participants. The United States antitrust laws aim to protect consumers by preserving the free economy and prohibiting anti-competitive business practices; they promote competition. There are both state and federal antitrust laws, although state antitrust laws closely follow federal law. The Sherman Act, is the primary U.S. antitrust law pertaining to association activities. The Sherman Act prohibits every contract, combination or conspiracy that places an unreasonable restraint on trade. There are, however, some activities that are illegal under all circumstances, such as price fixing, market allocation and collusive bidding. There is no safe harbor under the antitrust law for professional association activities. Therefore, association meeting participants should refrain from discussing any activity that could potentially be construed as having an anti-competitive effect. Discussions relating to product or service pricing, market allocations, membership restrictions, product standardization or other conditions on trade could arguably be perceived as a restraint on trade and may expose the SOA and its members to antitrust enforcement procedures. While participating in all SOA in person meetings, webinars, teleconferences or side discussions, you should avoid discussing competitively sensitive information with competitors and follow these guidelines: Do not discuss prices for services or products or anything else that might affect prices Do not discuss what you or other entities plan to do in a particular geographic or product markets or with particular customers. Do not speak on behalf of the SOA or any of its committees unless specifically authorized to do so. Do leave a meeting where any anticompetitive pricing or market allocation discussion occurs. Do alert SOA staff and/or legal counsel to any concerning discussions Do consult with legal counsel before raising any matter or making a statement that may involve competitively sensitive information. Adherence to these guidelines involves not only avoidance of antitrust violations, but avoidance of behavior which might be so construed. These guidelines only provide an overview of prohibited activities. SOA legal counsel reviews meeting agenda and materials as deemed appropriate and any discussion that departs from the formal agenda should be scrutinized carefully. Antitrust compliance is everyone’s responsibility; however, please seek legal counsel if you have any questions or concerns. AFA May, 2018

Presentation Disclaimer Presentations are intended for educational purposes only and do not replace independent professional judgment.  Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of the Society of Actuaries, its cosponsors or its committees.  The Society of Actuaries does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented.  Attendees should note that the sessions are audio-recorded and may be published in various media, including print, audio and video formats without further notice. AFA May, 2018

BACKGROUND 3rd presentation in last 7 months Each time about 1/3 of the content changes Input from prior presentations included in this material: SOA 10/17 Annual Meeting CAA (Elliot Chanen) 3/18 AFA May, 2018

AFA May, 2018

SESSION BROAD OBJECTIVES An interactive discussion about professionalism Meet CE requirement Expand your professionalism perspective AFA May, 2018

SESSION GENERAL AGENDA Overview: The concept of professionalism Discuss CE requirements/value Topics: Email professionalism COI’s (conflicts of interest NOT cost of insurance) Fraternal professionalism Inflection points AFA May, 2018

WRAP UP DISCUSSION (Time Permitting) Potential feedback to SOA about CE Meeting professionalism CE requirement: What areas of professionalism should be emphasized? How best to discuss and/or teach professionalism? AFA May, 2018

THE PLAN FOR EACH TOPIC Introduction (Jay) 5 discussions (You, the audience) Reaction to discussion (All of us) AFA May, 2018

2 RECORDERS NEEDED #1 #2 #3 The recorder will take notes of the table discussion. The recorder or someone else will present the table’s thoughts to the entire group. Because of the size of the audience, we’ll only hear from 2 groups per topic unless a group has a major comment to make about the topic. The recorder should also remind the group that the program has been modeled on the concept of a “speed dating” event and we want to move quickly to get through the entire agenda. When the recorder returns to his or her office, I’d appreciate receiving a summary of your table’s discussion so that I can summarize the comments and convey them to the appropriate person at the SOA as input from members about professionalism. AFA May, 2018

THE MEANING OF PROFESSIONAL AND PROFESSIONALISM Chris Daykin “Professionalism and Trust” Chris was the UK government actuary for nearly 20 years. Widely respected. He has been a deep thinker about actuarial practice topics. I’d describe Chris as a “good guy” and definitely someone with whom you’d enjoy having drinks and dinner. AFA May, 2018

WHY START WITH THIS SESSION WITH A DISCUSSION OF PROFESSIONAL AND PROFESSIONALISM? Answer: to establish a common knowledge base AFA May, 2018

ELEMENTS OF A PROFESSION A skilled intellectual technique A voluntary association bound by a code of conduct A formalized mode of enforcing the code of conduct upon the membership AFA May, 2018

10 DISTINGUISHING FEATURES OF A PROFESSION Advanced educational requirements Accreditation of the educational standard by a professional body Requiring work experience in a professional context Professional code of conduct Written standards of practice AFA May, 2018

10 DISTINGUISHING FEATURES OF A PROFESSION 6. Collective responsibility for maintenance of competence and standards 7. Requirement to remain a member in good standing 8. Continuing professional development requirements 9. A comprehensive discipline process 10. The possibility of a common voice to participate in public debate AFA May, 2018

THE BENEFITS TO THE PUBLIC OF PROFESSIONS Quality assurance: Education CE and professional development Professional norms and standards of practice Degree of consistency in professional advice Availability of the professional service Fiduciary responsibility between professionals and their clients 3rd parties being able to lay a complaint and seek redress AFA May, 2018

A PROFESSIONAL’S FIDUCIARY RELATIONSHIP Mutual trust between a client and professional No material info withheld by client Client trust in a professional because of education and membership in a professional body Tailoring advice to a client’s needs and in accordance with professional standards Remuneration is fee based and all other relevant interests are disclosed AFA May, 2018

Someone who follows the principles of his or her profession PROFESSIONAL Someone who follows the principles of his or her profession AFA May, 2018

ARE SOA, CAS, CCA, ASPA AND MAAA MEMBERS PROFESSIONALS? YES AFA May, 2018

WHY CE? CE is necessary regardless of any requirements Professionals need to be prepared for change and innovation --- staying current is a must: hence, CE Reviewing CE related materials may look different now as compared to the last time you read the document Change and innovation stimulation is often found in non-actuarial meetings and publications --- consider a broader definition of CE Engage with actuaries outside of your environment (international, other specialists, volunteer, etc.) --- not only to establish personal contacts but for cross-fertilization of professionalism AFA May, 2018

TIPS FOR YOUNGER ACTUARIES A new or aspiring SOA member’s responsibility for CE should be communicated earlier rather than later in the accreditation process Ingrain CE into the actuarial DNA Know and understand both professional association and employer discipline options AFA May, 2018

DISCUSSION TOPIC #1: CE Should the actuarial profession require CE? Should professionalism CE be required? If CE were NO longer required, how would you maintain your actuarial and professionalism skills? If CE continues to be required, what improvements to the present SOA system would you recommend? It may turn out that you get more from this session during the table discussions than from my remarks. If so, my feelings won’t be hurt. In fact, as noted earlier, this is the goal of the session. You won’t have time for all of the discussion topics. I’ve usually highlighted one of the topics but if your table would prefer to concentrate on any of the non-highlighted topics, definitely do so. AFA May, 2018

AFA May, 2018

A BRIEF HISTORY OF PROFESSIONAL COMMUNICATIONS AFA May, 2018

EMAIL PROFESSIONALISM: 16 REMINDERS* Use a clear, direct subject line Use a professional email address Think twice before hitting “reply all” Include a signature block Use professional salutations Use exclamation points sparingly Be cautious with humor *Inc.com, 2/2/16 AFA May, 2018

EMAIL PROFESSIONALISM: 16 REMINDERS 8. Know that people from different cultures speak and write differently 9. Reply on a timely basis to all emails 10. Proofread/spellcheck every message 11. Add the recipient(s) email address last 12. Double-check the recipients 13. Use classic fonts 14. Monitor your language AFA May, 2018

EMAIL PROFESSIONALISM: 16 REMINDERS 15. NO EMAILS, TWEETS, OR OTHER ELECTRONIC COMMUNICATIONS ARE CONFIDENTIAL! AFA May, 2018

EMAIL PROFESSIONALSIM: 16 REMINDERS 16. EMAILS ARE PERMANENT! AFA May, 2018

OTHER EMAIL WARNINGS Become familiar with and follow your employer’s email protocols Keep your private communications on non-business devices If you mess up, immediately notify unintended recipients Review ASOP #41 (Communications) which covers all communications such as emails but also verbal interchanges AFA May, 2018

MORE ABOUT EMAILS Emails are probably always discoverable communications. If an email is to be confidential, see your lawyer before sending. Carefully use “bcc” and “reply to all.” AFA May, 2018

WHAT’S DISCOVERABLE? The short answer is everything --- even phone messages! Time may dampen memories but NOT obscure electronic communications Electronic communications provide an accurate picture of “what you were thinking” AFA May, 2018

and your emails! AFA May, 2018

BIG BROTHER AND YOUR OPPONENT’S ATTORNEY ARE WATCHING YOUR EMAILS Assume all email are discoverable Be careful what you put in an email; the things that you think are funny today may not seem funny to a jury five years from now. If you would be embarrassed to see your e-mail published in the New York Times, don’t press “send.” Employees have no privacy rights in e-mails sent on corporate computers. AFA May, 2018

SOCIAL MEDIA AFA May, 2018

ACTUARIES’ EMAIL THOUGHTS* Provide context and caveats even when they are not required. For example: “This is an email of my full opinion. Please contact me for more information.” Consider the appropriate level of formality or informality that is appropriate for a particular email. Don’t become someone who opens SPAM! Avoid multiple topics in a single email and email chains. Color coding (such as yellow for a question) may help to increase readability and clarity of an email. Use personal conversations, phone calls, etc. for sensitive matters r/t email. Avoid negativity in emails. Respond, respond, respond! *Discussion at SOA 2017 Annual Meeting AFA May, 2018

TEXTING AND PROFESSIONAL COMMUNICATIONS AFA May, 2018

DISCUSSION TOPIC #2: EMAIL Email preservation/discovery? Any electronic or clear professional communication tips to pass along to the group? AFA May, 2018

CONFLICTS OF INTEREST In a second you’ll see the connection between this slide and conflicts of interest. AFA May, 2018

CONFLICT OF INTEREST A situation in which a person or organization is involved in multiple interests, financial or otherwise, one of which could possibly corrupt the motivation or decision-making of that individual or organization (Wikipedia) AFA May, 2018

HARVARD MEDICAL SCHOOL (HMS) HMS is about a mile and a half from the Hynes Convention Center. It has recently wrestled with conflicts of interest and offers an example of how another body and professional group has addressed conflicts of interest. AFA May, 2018

HMS CONFLICT OF INTEREST (COI*) POLICY INTENTS Reduce research risks Maintain public trust Identify conflicts Manage conflicts *COI is not Cost of Insurance! AFA May, 2018

HMS PRESUMPTIVELY PROHIBITED ACTIVITIES* Faculty may not have financial interest exceeding de minimis thresholds De minimis income defined as <$25,000 from research activity Faculty who serve in a fiduciary role to a for-profit business may not receive sponsored research support from the business Faculty are prohibited from soliciting or accepting any industry sponsored gifts, meals or travel *Harvard University Faculty of Medicine Policy on Conflicts of Interest and Commitment, updated 5/16 AFA May, 2018

JOURNAL OF THE AMERICAN MEDICAL ASSOCATION (JAMA) May 2, 2017 Issue (v. 317, #17) devoted to Conflicts of Interest About 30 articles! Wide range of COI topics (> the obvious COI issues) Recognition of a major area of concern for professionals AFA May, 2018

SOA VOLUNTEER COI DISCLOSURE I affirm that the following are all my (including anyone with whom I directly share income) material business, financial and organizational interests and affiliations which are or could be construed to be reasonably related to the interests, activities and programs of the Society of Actuaries.* * Also refer to Explanation of COI Policy AFA May, 2018

DEALING WITH CONFLICTS OF INTEREST Disclosure is a must Do it upfront Put it in writing Recusal is an option After-the-fact realization is too late --- avoid the problem in the first place! AFA May, 2018

PRACTICAL COI QUESTIONS What if I’m not sure if I have a conflict of interest? Who can help me? Where can I find the actuarial professional guidelines for COI’s at the start of my career and avoid any COI issues? AFA May, 2018

DISCUSSION TOPIC #3: CONFLICTS OF INTEREST Do you see any COI’s (or potential COI’s) in your work? For example, as the Valuation Actuary for an insurance company, do or could you have a conflict of interest such as: A financial interest in the insurer; A bonus dependent on earnings How to avoid or handle COI’s? Would it be helpful for the actuarial profession to have more definitive and broader COI guidelines? AFA May, 2018

ARE FRATERNAL ACTUARIES A SPECIAL CASE? AFA May, 2018

ARE FRATERNAL ACTUARIES A SPECIAL CASE? --- MAYBE NOT Scope section of some ASOP’s specifically includes fraternal actuaries Understand which ASOP’s apply or don’t apply to fraternal actuaries AFA May, 2018

ARE FRATERNAL ACTUARIES A SPECIAL CASE? --- MAYBE YES Fraternal companies are different! Authorized by a specific model act IRC §501(c)(8) Obligations to members: Know your fraternal association’s special member obligations Consider any such obligations when performing your actuarial duties AFA May, 2018

FRATERNAL BENEFIT SOCIETY* No capital stock Not for profit Conducts itself solely for the benefit of its members *Uniform Fraternal Code AFA May, 2018

AN IRC §501(C)(8) ORGANIZATION Requires a fraternal purpose Operate under a lodge system Provides for the payment of life, sick, accident or other benefits AFA May, 2018

National Union v. Marlow 374 F. 775, 778 (8th Cir. 1896) A fraternal-beneficial society would be one whose members have adopted the same, or a very similar calling, avocation, or profession, or who are working in union to accomplish some worthy object, and who for that reason have banded themselves together as an association or society to aid and assist one another, and to promote the common cause. AFA May, 2018

GIVEN WHAT YOU NOW KNOW, ARE FRATERNAL ACTUARIES (OR CONSULTANTS TO FRATERNAL ASSOCIATIONS) A SPECIAL CASE? IF “YES,” WHAT ARE THE IMPLICATIONS? AFA May, 2018

AN “ACTUAL” SITUATION: PREMIUM INCREASES Facts at Fraternal Association ABC: A small block of health type business Inadequate premiums Business concentrated in a few states AFA May, 2018

AN “ACTUAL” SITUATION: PREMIUM INCREASES Actuarial professionalism related topics: Ensuring that there is equity between members covered and not covered by the underpriced product Achieving the fraternal association’s purpose Maintaining the reputational risk of both the fraternal association and the individual actuary AFA May, 2018

DISCUSSION TOPIC #4: FRATERNAL PREMIUM INCREASES The fraternal association’s actuary determines that that a rate increase is appropriate QUESTIONS: What are a fraternal association actuary’s responsibilities? How can a fraternal association actuary measure if equity is achieved? Are there any other options other than implement or not implement a rate increase? AFA May, 2018

PROFESSIONAL INFLECTION POINTS AFA May, 2018

INFLECTION POINTS DEFINED Decisive moments that mark the start of significant change. The term comes from math, where it describes the point at which a convex (upward) curve turns concave (downward) or vice versa. AFA May, 2018

THINGS THAT CAN GET YOU IN TROUBLE The usual ones: lying, stealing, cheating, moral turpitude*, etc. Doing stupid things Inaction once something happens Inadequate documentation Poor communications Missing deadlines Gross errors Failing to report misconduct by another actuary *Legal Definition of moral turpitude: (a) an act or behavior that gravely violates the sentiment or accepted standard of the community and/or (b) a quality of dishonesty or other immorality that is determined by a court to be present in the commission of a criminal offense. AFA May, 2018

PREVENTION TOOLS Give yourself time to let your work percolate Answer the following: is my result reasonable? Peer review Peer counsel (including ABCD) Legal counsel Mentor’s advice Don’t let something fester Explain your professional standards to your boss and explain that “you can lose your license” if … Use multiple approaches to test results AFA May, 2018

EXCUSES THAT WON’T WORK (PARTICULARLY IN COURT) I’m young and naïve I’m old and tired I did my best It is only a small lie or mistake I don’t recall The other person is more guilty than I am “No harm, no foul” AFA May, 2018

WHY YOUNG ACTUARIES SHOULD GET INVOLVED WITH PROFESSIONALISM Becoming a SOA member is problematic if: you have had any eLearning or examination discipline; and/or if you were convicted of a criminal offense while an SOA candidate that involved a) financial integrity; b) dishonesty; c) sexual offense; d) bodily harm and violence; and/or e) theft or damage to property. AFA May, 2018

THE PROVERBIAL SLIPPERY SLOPE AFA May, 2018

THE BIGGEST PROBLEM: WHEN TO WALK AWAY Always be prepared to walk away Discuss your predicament with you family --- they will usually steer you in the right direction Maintain your ethics and standards --- if you don’t, the next time it is easier to justify make a bad decision --- doubling down is NOT an option Avoid the slippery slope! AFA May, 2018

DON’T EVEN COME CLOSE TO A STRAW THAT MIGHT BREAK A CAMEL’S BACK AFA May, 2018

ACTUARIAL INSURANCE ADHERE TO YOUR MORAL COMPASS! AFA May, 2018

DISCUSSION TOPIC #5: PROFESSIONAL INFLECTION POINTS Ideas for checking your work for flaws Who do you turn to when you have a critical professional question? How to recognize you are at a professional inflection point? AFA May, 2018

AFA May, 2018

MENTORING* A relationship in which a more experienced or more knowledgeable person helps to guide a less experienced or less knowledgeable person. A learning and development partnership between someone with vast experience and someone who wants to learn. An experience and relationship that provides psychosocial support, career guidance, role modeling, and communication * From Wikipedia AFA May, 2018

AFA May, 2018

GOALS FOR A MENTOR* Empower your mentee to make positive choices Encourage your mentee to take ownership of their learning Develop appropriate skills Develop core values (i.e., professionalism) Strengthen mentee’s interpersonal skills and peer relationships * AFA May, 2018

WRAP UP DISCUSSION Potential feedback to SOA about CE Meeting professionalism CE requirement: What areas of professionalism should be emphasized? How best to discuss and/or teach professionalism? AFA May, 2018

AND / OR AFA May, 2018

1. Please summarize your notes 2. Email your notes to jay@actentltd 1. Please summarize your notes 2. Email your notes to jay@actentltd.com AFA May, 2018