Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • December 2012
12

President's comment: Investing in the future

Open-access content Thursday 29th November 2012

Widening the scope of actuarial influence in non-traditional areas will provide better solutions for the public, says Philip Scott

2

A question for you… Why should actuaries be interested in investment returns? My answer is that for those working in the traditional areas of life and pensions, investment returns are fundamental to producing benefits for the investor. Within general insurance, investment returns are integral for determining the right level of premiums to charge.

Traditionally, we have been able to see some level of guarantee of investment return. This has been important in providing a smoothing effect in our product charges and the benefits provided.

The challenge in today's market is that the level of guaranteed investment return - over both short and long periods - is now very low. Consequently, it has never been harder to provide good returns from investments and we are still far from cracking the secret to predicting and achieving long-term investment growth.

As mentioned in previous articles, I have been visiting each of the practice executive committees (PECs) in the various practice areas, looking at how best we can promote their work among members, stakeholders and the public.

A few weeks ago, I met the finance and investment (F&I) PEC and would like to share some aspects of the committee's work and how this relates to the above challenges.

The F&I PEC is setting up research working parties to look at the impact of current events for long-term investors, such as pension funds and insurers. For instance, it will look at the consequences of monetary policy, such as quantitative easing, political and economic crises, and effects on liquidity. The PEC believes that much of the thinking and research on such issues is done outside the Profession so, unlike in other actuarial practice areas, its task is often to adapt and disseminate this thinking into useful material for members working in this field.

The F&I PEC is also actively considering public interest in what we do. In practice, this means influencing regulation to ensure that future financial catastrophes are avoided. For example, it aims to flag up some of the systemic risks we see being brought in by regulation across banking, insurance and pensions and consider how these might affect asset strategy or asset-liability modelling.

The Financial Services Authority's (FSA's) recent Retail Distribution Review (RDR) will have a significant impact on the actuarial profession. On a basic level, actuaries who provide retail planning advice will now need to familiarise themselves with the changes.

As part of the RDR, the FSA has introduced professionalism requirements for retail investment advisers, which must be complied with by the end of 2012. This includes the requirement to hold an appropriate qualification and to hold a Statement of Professional Standing (SPS) issued by a body accredited by the FSA.

As the Institute and Faculty of Actuaries has not applied to be an FSA-accredited body, members have to apply to one of the following for their SPS:

> the Institute of Chartered Accountants in England and Wales (ICAEW);

> the Pensions Management Institute (PMI);

> the Institute of Financial Services (IFS).

Beyond this narrow aspect, RDR will have a more far-reaching impact on many other actuaries who work in wider areas, for example anyone who is involved in designing and developing products that are sold via advisers and banks. Under the new regime, the cost of providing financial advice will become more transparent to the end-user and products will reflect:

> the ban on commission for all retail products;

> the introduction of charging for consultancy;

> the change in the sales channels and distribution model for many retail products

> the impact of increased regulation from the FSA and the Pensions Regulator.

The issues that the finance and investment community needs to consider seem to me to reach beyond the narrow confines of their discipline. By getting expertise from others who have skill in areas that cross over, such as regulation, pension and life assurance as well as some of the non-traditional roles, many ideas can be formulated to provide better solutions for some of the critical actuarial problems facing us.

For anyone who is able and interested, there are plenty of opportunities to volunteer in working parties, research and conferences.

With your innovative thinking, we can help to provide the education, framework, context and research to help members of the Profession to act in the public interest.

This article appeared in our December 2012 issue of The Actuary.
Click here to view this issue
Filed in
12
Topics
Environment

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Deputy Head of Capital Modelling

London (Central)
£110000 - £130000 per annum
Reference
144789

Head of Analytics (Actuarial)

London (Central)
£130000 - £165000 per annum
Reference
144788

Pensions Actuarial Analyst - GMP Equalisation

London (Central)
£ dependent upon experience
Reference
143745
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ