Message from the President about the Composition of the Academy's Selection Committee

Sept. 7, 2018

Dear Academy Member:
 
On Sept. 4, 2018, the Academy’s Board of Directors, after careful deliberation, voted to amend the Academy’s Bylaws to change the composition of the Academy’s Selection Committee. This committee is established by the Academy Bylaws and appoints members of the Actuarial Standards Board (ASB) and the Actuarial Board for Counseling and Discipline (ABCD), both of which are housed within the Academy. Effective immediately, the Selection Committee will be composed only of the presidents and presidents-elect of the Academy, the Society of Actuaries, and the Casualty Actuarial Society.
 
The Board’s vote was the result of a careful process that began last year and continued over many months with an in-depth study of the functioning of the Selection Committee by the Academy’s Strategic Planning Committee, followed by deliberations of the Executive Committee and ultimately the full Board. During this process the Strategic Planning Committee, Executive Committee, and Board all considered and evaluated a wide range of alternatives. The change adopted by the Board is intended to improve the effectiveness of the committee, reduce conflicts of interest, and safeguard the important roles that the ASB and ABCD play for the U.S. actuarial profession and for the public.
 
A detailed discussion of the matter has been provided in letters to the two organizations whose officers will no longer participate on the Selection Committee—the ASPPA College of Pension Actuaries (ACOPA) and the Conference of Consulting Actuaries (CCA). We are sharing those letters with the Academy’s full membership: the letter to ACOPA is here and the letter to CCA is here.

While we encourage you to read the full detail provided in those letters, we want to emphasize two points:
  • We continue to welcome the participation of all members of the profession in the ASB and ABCD process. The Academy’s Bylaws continue to require that both entities serve the entire U.S. actuarial profession, and we are fully committed to that.
  • The Board believes that ACOPA and CCA perform important functions for their members. Those functions, which include advocating for the commercial interests of their members and their members’ clients, are highly valued by many in the profession. They are, however, incompatible with maintaining the independence and objectivity of the ASB and ABCD. Preserving this independence is vital to the public’s confidence in the U.S. actuarial profession’s ability to regulate itself.
 
The Board believes this change is essential to the functioning of the Selection Committee and to public confidence in our profession. Again, we encourage you to read the detailed discussion the Board provided in the letters to ACOPA and CCA, as well as the Q&A below. If you have any questions or comments, please email us at SteveAlpert@actuary.org.
 

Q&A

 
Why did the Board choose to remove those two organizations?
The Board concluded that those organizations’ missions diverge significantly from the others, particularly with respect to lobbying and advocacy. Every industry and segment of the profession has the right to advocate for its own interests. ACOPA seeks to “promote the expansion of the private retirement system,” while the CCA is active in “supporting the ... career success of consulting actuaries.” These are honorable missions, but they are fundamentally different from the professionalism role played by the ABCD and ASB on behalf of the Academy.
 
How will members of those organizations be included?
All but about 30 members of the CCA are members of the Academy or the SOA or the CAS. All but about 170 members of ACOPA are members of one of the other organizations. And, the ASB and ABCD were never intended to represent organizational interests of specific organizations’ members, but rather must be broadly representative of all areas of actuarial practice. The Board found that actuaries from all areas of actuarial practice are well represented by the Academy, the CAS, and the SOA. Actuaries who are only ACOPA or CCA members are less than 1 percent of all U.S. actuaries, and they are and will continue to be able to participate fully in the robust notice and comment process of the ASB, and are eligible for appointment to either board. As always, each organization decides for itself whether and how to discipline its own members based on the findings and recommendations of an ABCD investigation.
 
What was the problem the Board attempted to address?
Over the last few years, while appropriate appointments have been made, Selection Committee meetings have become increasingly contentious, and some have sought to advance candidates for the ASB and ABCD to advance narrow agendas rather than the broader actuarial and public interest. The Board concluded that this was, at least in part, the result of some advancing their organizational interests.
 
Were there other alternatives available?
As you will see in the discussion provided to ACOPA and CCA, the Board considered a variety of other approaches, including voting rules and different changes to the Selection Committee’s structure. It concluded, after much discussion and evaluation, that the approach it adopted best addresses the issues.
 
Why now?
This is the time of year when the Selection Committee will soon be asked to appoint new or continuing members of the ASB and the ABCD. The Academy Board began the process of examining whether the composition of the Selection Committee served its intended purpose last year. The process has been careful, deliberative, and thorough. Given the importance of the ABCD and ASB appointment process to the profession, and given the Academy Board’s conclusion that these changes are both appropriate and necessary, the Board also concluded they should be effective immediately.
 
How does this change affect the Academy’s relationship with ACOPA and CCA and their members?
We expect to continue a cordial and productive relationship with those two organizations. Both organizations participate in the North American Actuarial Council (NAAC) and have liaison representatives on the Academy’s Council on Professionalism. The Academy and the CCA have long jointly sponsored the Enrolled Actuaries Meeting each spring, which is another forum for positive interactions. In addition, the ASB’s process of exposing proposed standards for public comment is not changing. Either may choose to file organizational comments on exposure drafts and requests for comments, as they have in the past and that continues to be an appropriate and fully transparent way—equally available to all interested parties—to communicate organizational interests or perspectives.
 
Individuals who are members of multiple actuarial organizations have always been members on Academy committees. Academy volunteers and interested parties are required yearly to acknowledge the Academy’s Conflict of Interest (COI) policy in order to participate in our committees. The expectation that everyone who participates in Academy work does so with independence from any specific interests of their employers or other interests is long-standing and has not changed.
 
Sincerely,

Stephen A. Alpert
President, American Academy of Actuaries