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The Actuary The magazine of the Institute & Faculty of Actuaries
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Profession merger: The way forward

FOR THE MERGER: Ready for the future

Do you want to be part of a Profession that is seen as modern and dynamic, or to be associated with failure?

The Profession’s strategic aim is to support actuaries throughout their careers. The objective is to increase the contribution actuaries make and the value they add for their employers and their clients. This is not a matter of narrow self-interest but rather a desire to ensure that actuaries can make the fullest possible contribution to society, for the benefit of all. As long as we have two separate professional bodies we believe we make it harder for us to achieve our strategic aim.

It used to be common to see references to the Actuarial Profession that described it as “small in numbers, but wielding influence out of proportion to its size”. Such descriptions are nowadays rare. It is more common for actuaries to be referred to in somewhat disparaging terms — “number crunchers” or “backroom mathematicians”. In the popular mind, if we are associated with anything at all, it is with failure: mortgage endowment shortfalls, pension scheme deficits, Equitable Life. In the language of marketing, our brand has become devalued. We are failing to attract our share of the most able among the new graduate population.

Does any of this matter?
It matters to us because we care about our profession and want to see it recognised for the unique contribution actuaries make across many fields. However, it matters much more if society is being deprived of some of the contribution that actuaries should be making because their potential is not properly recognised.

Our brand is devalued, and there is confusion about it in the media, among opinion-formers and even among our own members. We have three identities: the Faculty, the Institute and the UK Actuarial Profession. Merging the Faculty and the Institute will create a new body with a single identity and give added impetus to the changes needed to put the new strategy into effect. It will give us the opportunity to develop and present a fresh, modern and clear view of the Profession both externally and internally. It will enable us to create an exciting brand that will help us to attract the very best into our ranks.

The confusion about our brand contributes to confusion about who exactly is commenting on a particular issue, lessening the impact of what we want to say. A merger will create a single, stronger and more powerful presence and voice with which to engage with external partners. This will bring considerable benefits as we develop our public affairs responsibilities and seek to influence legislators and others at Westminster, Holyrood, Brussels and beyond. A merger will help us clarify our messages and the processes for delivering them.

Are you brave enough to vote for change?
A merger will enable us to update public perceptions of actuaries and to identify and develop a new purpose, role and objective for the new body. This will allow us to reposition the new body as the public and professional face of actuaries, to rekindle interest in actuarial practice and to raise the profile of actuaries and their contribution to business and society. The very fact that we are undertaking a merger (seen by many as long overdue) will of itself indicate to the outside world that actuaries are dynamic and positive — they are looking to the future, embracing fresh approaches and moving in new directions. It will signal a real desire to change, when all too often actuaries have been seen as backwardlooking and slow-moving.

Will a merger bring other benefits?
Of course — there will be greater efficiency in the governance of the Profession, and there might even be some cost savings. Such benefits could be realised through ever closer co-operation between the Institute and the Faculty, without the complication and upheaval that a merger will undoubtedly entail. But without a merger we will fail to realise the full potential of our profession.

We have a unique opportunity, at a time when we are driving forward our new strategy, to make a dramatic change both to the image and to the reality of our profession. If we fail to grasp this opportunity our successors will see us as having thrown away the chance to build on the strengths of the Profession and instead having allowed it to lose focus and lose influence, to the detriment of those we serve.

The time is now
The time has come for us to move forward together. In bringing about the merger we can draw on what is best about each of the Faculty and the Institute. This is not a takeover of one body by another. There is no desire to throw away 150 years of history and we can preserve the best bits while taking the opportunity to remove some of the clutter and bureaucracy.

We can create a single body that speaks with one voice and of which we can all be proud to be members. When the time comes we urge you to vote for the merger.


AGAINST THE MERGER: No way back

The Faculty Task Force Report, 1 October 2007 (TFR 1) states: “We have increasingly come to the view that…merger is just one option in the debate.” It is noticeable that none of the options put forward included maintaining the status quo, so presumably the Task Force thinks that, notwithstanding the substantial progress made over recent years, there is still some way to go before “the management and operation of the UK Actuarial Profession is as if we were a single profession” (TFR 3.1). To attain this purely tactical objective, however, does not in our view require an end to the separate existence of Faculty and Institute. Nor, we feel sure, was the Task Force arguing that it does.

In fact, the more we study TFR the less we are able to identify any problem with the status quo which only a merger could solve. For instance, it can’t be the subscription level, surely — the joint working arrangements appear to be very effi cient, and the savings from running just the one Council body must be marginal. Indeed organising a merger could see signifi cant short-term increases in costs. A sight of the business plan is needed.

TFR 3.3 suggests that ‘the profession’s effectiveness with the UK media and other opinion-formers would be enhanced if it would present as a single body’. However, if the outside world really is seriously confused by our being two bodies then we must be appalling communicators, and it would be absurd to imagine that merger would turn us into good ones. Of course, the Faculty and Institute might not always have the same perspective on every issue, but we think this is a strength, not a weakness. Moreover, the UK environment addressed by the Profession is not homogeneous, as TFR 3.4 seems to indicate. So we do not consider communications to be a problem requiring a solution as drastic as merger.

Cultural differences
We do identify some differences of culture between Faculty and Institute — in their Councils’ respective Constitutions, for example, and in the differential importance placed on academic/professional/business characteristics, but we believe this makes the UK Actuarial Profession greater than the sum of its two parts.

A conceptual ‘drawing together’ framework is set out in TFR 4. Our comments on the three possible framework models (TFR 5) are that the Profession in the UK would be qualitatively the poorer if the Faculty disappeared into a merger, with the loss of our older (superior?) Royal Charter, and those we serve would suffer. The costs of negotiating a new Royal Charter would be heavy, if it could be done at all, and the new structure more complicated to administer. The contractual agreement is the best way forward as, without burning any boats, it:

1 Awards increases in efficiency
2 ‘Makes continuation of Scottish sessional meetings clearer’ (TFR 5.3)
3 ‘Maintains a vibrant and effective actuarial presence in Scotland (through media representation, links to academia, networking etc.)’ (TFR 3.4)
4 Maintains flexibility to cope with any changes in the national environments of Faculty and Institute.

Beyond borders
TFR Appendix 1 gives relevant statistics: ‘35% of active Faculty fellows are based in other regions of the UK outside Scotland, 42% of Faculty members live outside the UK, 61% live outside Scotland, South African members form 53% of members outside the UK and there are more Faculty students in South Africa than in Scotland’. The figures point to the dignity and spread of influence over time of the Faculty beyond the national frontier, and also to our traditions as ‘custodians of 150 years of history and the possessors of a Royal Charter’ (TFR 2.4). The reservation of a vice-presidential seat on Council for an overseas member and the increased services to be given to overseas members recognise this.

Such considerations, we believe, validly underwrite the ‘emotional investment some members have made in the Faculty’ (TFR Appendix 1), which those who belong to what might be called the ‘Arbroath Tendency’ will also attach to the importance of the Faculty remaining a distinctively Scottish professional body.

Some presumption is evident in TFR Appendix 3: ‘The majority of the wider membership expects merger to happen and will believe its leadership to be out of touch if they continue to deliberate on the issue.’ Do they indeed! We consider it premature for anyone to speak at this stage as if merger is a fait accompli, and we believe that more than a simple majority of Faculty votes is needed to endorse such a momentous step as the dissolution of the Faculty.

Professional ethic
The most important factor relating to merger, in our view, is the maintenance of the Faculty’s professional ethic. We hold that the twin pillars of any profession are the judgement and integrity of its members, who should never sublimate their judgement to that of any external infl uence. As long as they act with integrity they should always be able to rely on support from their ‘brethren’. The need to serve the common good by high professional competence and principled standards of behaviour overrides commercial considerations. The safest way to preserve this ethic, from among the models put forward in TFR, is the contractual agreement.

We would finish by saying that the UK Profession itself has twin pillars, and is the stronger for it. The TFR does not, in our view, advance a single compelling reason to knock one of them down.

“If we merge with the Institute … there will be no way back.” (TFR 2.4)

Faculty Task Force Report
» To view the Faculty Task Force Report, please visit: www.actuaries.org.uk/files/pdf/members/news/FacultyTaskForce_Report20071001.pdf


Share your views
» If you would like to share your views on the proposed merger, please write to letters@the-actuary.org.uk The letters page in the May edition of The Actuary will mainly feature comment on this issue. The deadline for inclusion is 28 March.
» For more information about the proposal, please visit the Profession’s website www.actuaries.org.uk