Actuarial Enterprises, Ltd. MAY 14, 2019 HARTFORD-SPRINGFIELD ACTUARIAL CLUB MEETING HARTFORD, CT PROFESSIONALISM MAINLY BASICS Jay Jaffe, President Actuarial Enterprises, Ltd. Chicago, IL 60610 312-397-0099 jay@actentltd.com 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! H-S Actuarial Club 5-14-19

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. H-S Actuarial Club 5-14-19

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. H-S Actuarial Club 5-14-19

HOW I PREPARED FOR TODAY Personal experiences Open source research (Googling) Recollections from books I have read Feedback from other presentations Etc. H-S Actuarial Club 5-14-19

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SESSION GENERAL GOALS PARTICIPATE in important professional discussions Expand your concept of professionalism Gain insight into how non-actuary professionals deal with certain professionalism issues Potential feedback to SOA about professionalism Help meet professionalism CE requirement Make professionalism a fun experience rather than a dreadful requirement H-S Actuarial Club 5-14-19

THIS SESSION’S AGENDA The meaning of: Ethics Email professionalism Inflection points Q&A This session has been designed to be participatory. If I’m the only one to talk, it will not be as valuable to you as if we hear your thoughts and opinions. I will introduce each topic for about an average of 5 minutes. You will then have about 4-5 minutes for discussion at your table. This will be followed by reports from a couple of tables describing their key observations. Time permitting, other tables can present any comments for a topic that weren’t covered. Be sure to use the mic so everyone can hear. In the interests of time I will try NOT to cover too much detail shown on a slide because you can read the key points faster than I can speak and we have limited time to cover the agenda. TOPIC #1: Professionalism. Actuaries consider themselves professionals Expand your knowledge of the area c. Increase your sensitivity to professionalism TOPIC #2: Ethics TOPIC #3: Emailing / communications Email professionalism really is a subset of communications --- something we all do as part of our jobs It is particularly important because it has a lot to do with how well we do our jobs. TOPIC #4: Professional standards --- Going to look at professional standards from the point of view of what another and related profession has done may be helpful when thinking about actuarial professional standards TOPIC #%: Conflicts of interest: A fundamental aspect of professionalism A problem all professions must address H-S Actuarial Club 5-14-19

WHY START WITH THIS SESSION WITH A DISCUSSION OF THE 3 P’S WHY START WITH THIS SESSION WITH A DISCUSSION OF THE 3 P’S? PROFESSIONAL, PROFESSION AND PROFESSIONALISM? Answer: to establish a common knowledge base H-S Actuarial Club 5-14-19

PROFESSIONAL An adjective: a PROFESSIONAL athlete (as opposed to an amateur) A noun: A person engaged or qualified in a profession (such a lawyer, doctor, etc.) A person competent or skilled in a particular activity (such as an actor) H-S Actuarial Club 5-14-19

Someone who follows the principles of his or her profession PROFESSIONAL Someone who follows the principles of his or her profession H-S Actuarial Club 5-14-19

ATTRIBUTES OF A PROFESSIONAL Objectivity Respect Honesty Competence Honor commitments Project positive image H-S Actuarial Club 5-14-19

THE POINT IS THAT BEING A PROFESSIONAL (E. G THE POINT IS THAT BEING A PROFESSIONAL (E.G., AN ACTUARY) IS MORE THAN JUST KNOWING THE RULES AND TOOLS (E.G., ASOP’S OR HOW TO DO A CALCULATION) H-S Actuarial Club 5-14-19

THE MEANING OF A PROFESSION 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. H-S Actuarial Club 5-14-19

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 H-S Actuarial Club 5-14-19

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 H-S Actuarial Club 5-14-19

10 DISTINGUISHING FEATURES OF A PROFESSION 6. Collective responsibility for maintenance of competence and standards 7. Requirement to remain 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 H-S Actuarial Club 5-14-19

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 H-S Actuarial Club 5-14-19

THE 2 KEY QUESTIONS Are SOA, CAS, and AAA members: 1. Professionals? and/or 2. Members of a profession? H-S Actuarial Club 5-14-19

YES ARE SOA, CAS, AAA MEMBERS Professionals? Members of a profession? H-S Actuarial Club 5-14-19

WHAT IS PROFESSIONALISM? H-S Actuarial Club 5-14-19

WHAT IS PROFESSIONALISM? The competence or skill expected of a professional. H-S Actuarial Club 5-14-19

YOUR 2 AUDIENCES Outsiders Peers H-S Actuarial Club 5-14-19

YOUR 2 AUDIENCES Outsiders Peers H-S Actuarial Club 5-14-19

2 QUESTIONS REGARDING PROFESSIONALISM What do outsiders (i.e., non-peers) expect from a professional? What do peers expect from a professional? H-S Actuarial Club 5-14-19

WHAT DO OUTSIDERS EXPECT FROM A PROFESSIONAL? Appearance Demeanor Reliability Competence Ethics Poise Communication etiquette Accountability H-S Actuarial Club 5-14-19

WHAT DO PEERS EXPECT FROM A PROFESSIONAL? Professional integrity Qualifications Standards of Practice Communication and Disclosure Conflict of Interest rules Control of Work Product Confidentiality Courtesy and Cooperation Follow Advertising rules Deal with Violations of Code of Professional Conduct H-S Actuarial Club 5-14-19

A PROFESSIONAL’S FIDUCIARY RELATIONSHIP Mutual trust between client and professional No material info withheld by client Client trusts professional because of education and membership in a professional body Tailoring advice to client’s needs and in accordance with professional standards Remuneration is fee based and all other relevant interests are disclosed H-S Actuarial Club 5-14-19

PROFESSIONALISM AND CE: UNDERLYING REASONS A necessity regardless of whether it is required Prepares a professional for change and staying current Includes reviewing materials --- has there been a change since the last time you read a document? Stimulates innovation A mechanism to establish personal contacts outside of your environment (international, other specialists, volunteer, etc.) and generate professional cross-fertilization H-S Actuarial Club 5-14-19

PROFESSIONALISM AND CE: 3 PERSPECTIVES Stick to narrow professional/actuarial topics Take a broader perspective beyond the technical and actuarial specific topics: Issues raised by other professions Best practice concepts General business concerns The bare minimum CE standard is enough H-S Actuarial Club 5-14-19

DISCUSSION TOPIC #1: CE Should the actuarial profession require CE and, specifically, professionalism CE? 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. H-S Actuarial Club 5-14-19

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ETHICS (Moral Philosophy) Ethics --- the branch of philosophy that involves systematizing, defending and recommending concepts of right and wrong conduct H-S Actuarial Club 5-14-19

BUSINESS ETHICS A form of professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment H-S Actuarial Club 5-14-19

There is an Actuarial Code of Conduct REMINDER There is an Actuarial Code of Conduct H-S Actuarial Club 5-14-19

ACTUARIAL CODE OF CONDUCT ETHICS RELATED TOPICS Fulfilling responsibility to “the public”* (intro) Laws take precedence over Code of Conduct (intro) Acting with integrity and competence (P#1) Uphold reputation of the actuarial profession* (P#1) Disclosure of compensation (P#6) No false or misleading advertising (P#11) * Responsibility and reputation not defined H-S Actuarial Club 5-14-19

MAIN ETHICAL CONCERNS FACING ACTUARIAL PROFESSION* Being pressured to select inappropriate assumptions used in pricing and reserving Allowing false or misleading representation of products or service in marketing, advertising or sales efforts Failure to take appropriate action when another actuary misrepresents information or you otherwise see that something has not been done correctly (aka “the snitch rule”) * “New Ethical Concerns Facing the Actuarial Profession,” AAA Council on Professionalism, 4/15 H-S Actuarial Club 5-14-19

QUALIFYING PROFESSIONALISM ACTIVITIES: ETHICS* Business ethics: fiduciary responsibilities, corporate governance, discrimination, intellectual property rights, ethical standards around the world, etc. *SOA Panel Discussion, June, 2010 (Session #22) H-S Actuarial Club 5-14-19

AICPA ETHICS COURSE TOPICS Recognizing ethical issues; Exercising professional judgment; Addressing differences with your employer; Objectivity and independence standards; Identifying conflicts of interests; Gifts/entertainment from company vendors or customers; Competence; Due care; and The ethical decision-making model. H-S Actuarial Club 5-14-19

ETHICS: AICPA & SOA Area AICPA SOA Judgment Yes Implied Objectivity / Independence Conflicts of Interest Competence Ethical Decision Making Model Maybe H-S Actuarial Club 5-14-19

ETHICS IS AN OPEN ENDED TOPIC Often tough to get a “black or white” answer Other professions wrestle with ethics --- what can we learn from their efforts? Probably an area that is faced by actuaries with more experience --- but less experienced actuaries must be conscious of the area! H-S Actuarial Club 5-14-19

ETHICAL TOPICS YOU MAY ENCOUNTER WHAT SHOULD I DO IF ….? I work for a company and am confronted by: A professional ethical problem? A non-professional ethical problem? I am a consulting actuary and am concerned about an ethical matter with a client? I observe another actuary doing something ethically inappropriate? I do something stupid? H-S Actuarial Club 5-14-19

SUGGESTIONS FOR DEALING WITH ETHICAL PROBLEMS Recognize that ethical problems are “part of the job” Understand the consequences of unethical behavior Consider the ethical standards of your employer, partners, etc. + those of your profession Consult ABCD or other actuaries Is there ever a “safe harbor”? Ethics is part of your CE: Important topic Qualifies as part of your CE Professionalism hours Avoid the problem in the first place H-S Actuarial Club 5-14-19

DISCUSSION TOPIC #2: ETHICS Do we need to teach and discuss ethics? Is there a difference between “professional ethics” and “ethics”? If so, what is it? Does the threat of “loss of license” cause professionals to act more ethically? At what point should an actuary take action? Reporting another actuary? Resigning from a job or an assignment? Is a “no harm/no foul safe harbor” attitude OK? ALSO SEE NEXT PAGE OF DISCUSSION TOPICS H-S Actuarial Club 5-14-19

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EMAIL (COMMUNICATION) PROFESSIONALISM H-S Actuarial Club 5-14-19

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 H-S Actuarial Club 5-14-19

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 H-S Actuarial Club 5-14-19

EMAIL PROFESSIONALISM: 16 REMINDERS 15. NO EMAILS, TWEETS, OR OTHER ELECTRONIC COMMUNICATIONS ARE CONFIDENTIAL! H-S Actuarial Club 5-14-19

EMAIL PROFESSIONALSIM: 16 REMINDERS 16. EMAILS ARE PERMANENT! H-S Actuarial Club 5-14-19

OTHER EMAIL WARNINGS Become familiar with and follow your employer’s email protocols Keep your business and private communications on separate devices Immediately notify unintended recipients Respond to emails Review ASOP #41 (Communications) which covers all communications such as emails but also verbal interchanges H-S Actuarial Club 5-14-19

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.” H-S Actuarial Club 5-14-19

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” H-S Actuarial Club 5-14-19

and your emails! (George Orwell 1984) H-S Actuarial Club 5-14-19

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 email published in the New York Times, don’t press “send.” Employees have no privacy rights in e-mails sent on corporate computers. H-S Actuarial Club 5-14-19

QUESTION: TO TWEET OR NOT TO TWEET? Tweeting is NOT professional Tweeting is ok to say “I’m running late” Tweeting is a social r/t a business communication tool H-S Actuarial Club 5-14-19

SOCIAL MEDIA H-S Actuarial Club 5-14-19

DISCUSSION TOPIC #3: EMAIL Any email tips to pass along to the group? Alternatives to email, texts, etc.? Email preservation/discovery? H-S Actuarial Club 5-14-19

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. *Discussion at SOA 2017 Annual Meeting H-S Actuarial Club 5-14-19

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INFLECTION POINTS The point at which a convex (upward) curve turns concave (downward) or vice versa. H-S Actuarial Club 5-14-19

PROFESSIONAL INFLECTION POINTS The point at which you have to make personal decisions relating to your career. H-S Actuarial Club 5-14-19

INFLECTION POINT PERSPECTIVES Younger actuaries: Your future may depend on how you handle yourself at an inflection point Your reputation is at stake Older actuaries: H-S Actuarial Club 5-14-19

THE ULTIMATE INFLECTION POINT: 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 H-S Actuarial Club 5-14-19

DISCUSSION TOPIC #4: 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? H-S Actuarial Club 5-14-19

Please send me any comments: jay@actentltd.com 312-397-0099 H-S Actuarial Club 5-14-19

THE PM SESSION’S AGENDA Professional standards (Accountants v. Actuaries) Conflicts of interest Mentoring Checklists and professionalism This session has been designed to be participatory. If I’m the only one to talk, it will not be as valuable to you as if we hear your thoughts and opinions. I will introduce each topic for about an average of 5 minutes. You will then have about 4-5 minutes for discussion at your table. This will be followed by reports from a couple of tables describing their key observations. Time permitting, other tables can present any comments for a topic that weren’t covered. Be sure to use the mic so everyone can hear. In the interests of time I will try NOT to cover too much detail shown on a slide because you can read the key points faster than I can speak and we have limited time to cover the agenda. TOPIC #1: Professionalism. Actuaries consider themselves professionals Expand your knowledge of the area c. Increase your sensitivity to professionalism TOPIC #2: Ethics TOPIC #3: Emailing / communications Email professionalism really is a subset of communications --- something we all do as part of our jobs It is particularly important because it has a lot to do with how well we do our jobs. TOPIC #4: Professional standards --- Going to look at professional standards from the point of view of what another and related profession has done may be helpful when thinking about actuarial professional standards TOPIC #%: Conflicts of interest: A fundamental aspect of professionalism A problem all professions must address H-S Actuarial Club 5-14-19

AND / OR H-S Actuarial Club 5-14-19