Canadian Institute of Actuaries L’Institut canadien des actuaires

2007 General Meeting Assemblée générale 2007 Montréal, Québec

IP-23 The Non-Traditional Actuary: A Non-Endangered Species

2007 General Meeting Assemblée générale 2007 Montréal, Québec

Non-Traditional Actuaries

• More and more actuaries working in various roles other than the traditional pricing, valuation and corporate functions

Quizz

• How many members of the CIA show “Non-traditional actuarial work” as their practice area in the on-line directory?

A. 75 B. 175 C. 275 D. 375 E. None of the above

Non-Traditional Actuaries

• We will examine: – how we became non-traditional actuaries – what our jobs are all about – how our actuarial background comes into play in our role

Jean Roy

David Forest Financial Services

2007 General Meeting Assemblée générale 2007 Montréal, Québec

Non-traditional actuary

• • In short, First 15 years Last 1.5 year

First 15 years

• Started in a small life insurance company – Lasted 2 years – Product and special quotations/illustrations on life and money products – Product pricing & development – Phone calls from the distribution force – Stats geek – Federal government pull the plug on December 21, 1992 – Was eventually bought by a larger company

First 15 years

• 13 year experience in a large scale company – Work on integration of the small company.

• Allowed me to meet senior people in the organization early in my career.

– Pricing and marketing of life insurance products – Systems: computer based and mainframe – Compliance / Ombudsman – Contracts / Reinsurance treaties – Support to Client Services

First 15 years

• 13 year experience in a large scale company – Lead policy customization unit for 5 years on a national basis.

• Actuarial life insurance at start – Developed expertise in large case market • Added annuities and all money products later • Then Sales Support team too – Lead product development and management unit.

• Life, CI and annuities

Non-traditional: Why not?

• • • • Entrepreneurship side always fascinated me – Was raised in a family business Practical aspect of life insurance too – Who buys the stuff?

– Why do they buy it?

Technical knowledge has to be of value – Problem solving – Different approach in analysis Overall, will I add value or only cost?

New role since June 2006

David Forest Financial Services • • • Life insurance oriented shop – Bits of CI, DI, Annuities & money products Operate in the Montreal market – Bits in Ontario Target market – High Net Worth (HNW) and Ultra HNW – Bits in family market

David Forest Financial Services

Operational side – People management: 7 people to manage • Lots of skills learned in the life companies are useful – Coaching • Help people to improve work methodology, autonomy.

• Another person to talk to when facing a problem – Internal procedures and process • This firm was already well organized

David Forest Financial Services

Operational side – Quality control – Problem solving – Handle difficult clients – Enhanced credibility of the firm Indirect help to David – He can better focus where he should

David Forest Financial Services

• • Technical / New Business side Analyze all products, services and concepts available in the market – Features, risks, competition – – Similar to what I was doing in the insurance company but can now better understand the market Actuarial knowledge is a very useful tool Develop or articulate concepts – Actuarial knowledge is a very useful tool here too

David Forest Financial Services

• • Technical / New Business side Optimization of in-force policies – Analyze existing policies for new prospects – e.g., Rule of 250% in UL – Show a different approach from competition Participate in sales meeting – Meet client, answer questions – Do all the support with the accountant, tax lawyers or whoever the client appoints to do their due diligence

Before & After: The Differences

• • • • Independent – Find the best from the market instead than the best from my insurance company Lot less bureaucracy – 0 or 1 person to go for approval No one to blame if you fail – Mistakes has direct hit to the bottom line – Fully accountable Fewer people you can turn to – Can’t walk in Legal dept for free advice

Before & After: The Differences

• • • • • More time for analysis – Management tasks are minimal Very little time to react Less control on your daily agenda 25 to 35 emails a day instead of per hour Credibility building – Client sees you for the first time; You need to build from scratch with every new person you meet

Before & After: The Differences

• • • Client satisfaction or dissatisfaction has a direct impact on your results.

More room for creativity Your opinion really counts

In conclusion

• Takes a bit of courage to get out of the comfort zone – Give you a broader view – No risk, no new results – Staying in your zone may have some risks, what if it disappear?

– Follow your business instinct

François Carrier

SEI Investments

2007 General Meeting Assemblée générale 2007 Montréal, Québec

Actuaries in non traditional roles

• • •

Actuarial careers in 1980 Six Employers (and counting?!) Current Employment

Actuarial Careers in 1980

Six Employers (and counting?!)

• • • • • • MET BELL ABN AMRO KBSH AON SEI

Current Employment

•

Financial Management Assessment

Goal:

•

Elevate the importance of the pension plan in corporate context.

•

Do so by providing quantifiable examples of the value-add of Firm’s advice process and investment solution.

•

Data collected:

• • •

2 recent actuarial valuation reports Recent investment report Financial statements (if private)

•

Output:

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Modeler Investment observations and performance comparison

•

Pension observations and portfolio “recommendations”

Advice Role

Manage & monitor progress towards goals Establish Goals

1 4

Strategic Advice Process Develop optimal risk management strategy

3 2

Identify, quantify and prioritize risks

Relationship Management: Owner of the client experience

•

Development and execution of a written account strategy for each client.

•

Deepening and broadening the clients’ experience (fostering and developing multiple contact points at the client).

• •

Continue to establish the Firm’s point of view; Utilization of multiple metrics for evaluation.

Provide investment advice.

•

Grow the business: additional products, develop referrals, additional assets.

•

Improve client rating of Firm.

Jean-François Leroux

Assistant Vice President, Actuarial Consultant Manulife Financial

2007 General Meeting Assemblée générale 2007 Montréal, Québec

How Did I Get There?

• Worked in Group Insurance in Ottawa • Worked in Reinsurance pricing, marketing, valuation in Montreal and Toronto • Position of Actuarial Consultant created in 2000

Actuarial Consultants

• Experienced actuaries • Focused on assisting high-end advisors • Support is channel neutral • Focus on new business

What Attracted Me?

• Change in focus • Developing a new position • Using my teaching and presentation skills • Becoming a key resource person • Being on the line of fire!

Professional Services Team

Want to be recognized as the company with the most knowledgeable and professional sales support • Actuarial consultants • Underwriting consultants • Tax & Estate Planning consultants Work in tandem to give the company a competitive advantage

Part of a Team...

Actuarial Consultant Underwriting Consultant Tax & Estate Planning Consultant Wholesaler

Structure

• Actuarial Consultants located in regional offices – Montreal, Toronto, S/W Ontario, Winnipeg, Vancouver (vacant) – Back-up team in Head Office – Marketing specialists – National consulting actuary

Skills Needed

• Extensive experience in pricing and product development • Strong relationship manager • Excellent communicator – Ability to take the complexity out of complex issues • Exceptional presentation skills

Skills Needed

• Knowledge: – insurance and tax legislation – tax and estate planning – financial services industry – underwriting and issue process

Actuarial Consultant Role

Competition Analysis Continuous Education

Actuarial Consultant

Case Work Support CA/Client Meetings Professional Community Special Case Pricing

Other tasks

• Assist in product launches • Actuarial resource for Legal Department • Involvement in complicated in force business issues

What I like about this position

• Diversity • Dynamic environment • Meeting clients and their professional advisors • Teaching role • Rapid feed-back • Constant learning

Challenges

• Dealing with advisors and their ego!

• Many files to deal with at the same time • Travel to meetings/presentations can be time-consuming • Need to think quickly on your feet

The Non-Traditional Actuary: A Non-Endangered Species

“It is not the strongest species that survive, nor the most intelligent, but the one most responsive to change.” Charles Darwin (1809-1882)