I FIA this my actuarial exit

My views are my own and are a personal reflection on how the new actuarial standards' application will impact me. They do not represent the view of my employer or other actuaries at that firm.

Passing the actuarial exams and becoming a Fellow (FIA) of the Institute and Faculty of Actuaries (IFoA) was hugely worthwhile, but cost me a lot. I lost contact with friends, missed out on holidays and gave up a chunk of my 20s to focus on them. The qualification opened the door to my last two career moves to RBS and then to Legal & General Investment Management. To give it up would hurt greatly, but I'm increasingly concerned I will have to do so at the end of the month.

Following failings in the profession and the Morris Review in 2005, the Financial Reporting Council (FRC) took responsibility for setting professional standards for UK actuaries. The latest changes, which come into effect from the 1st July, will apply those requirements more broadly, including potentially to the pure investment work I do. As head of the team, the standards would apply to any other work I could "veto" where actuarial techniques were central to the analysis (as set out the Framework for FRC technical actuarial standards 5.13).

But the problem is "actuarial techniques" are not well defined and so the application of the standards is not well defined either, leaving me personally open to their future interpretation by others. In the IFoA guidance they say the following counts as actuarial work:

"Asset/liability modelling work which uses techniques of actuarial science to project and value asset and/or liability cash flows, which might be carried out by members and other investment professionals".

That definition is so broad as to potentially include all asset related analysis that projects asset cashflows, as is standard within much of our investment analysis and risk management. The IFoA's guidance look to allay such fears with the statement that:

"TAS 100 does not require work to be performed in order to comply with the standard if or where such work would be disproportionate to the needs of users".

My view is that no single decision in our investment process is sufficiently dependent on actuarial techniques to justify any changes to our current approach for managing data, assumption setting, models communication and documentations. But I have no way of establishing ex ante if others would share my view and so the personal risks seem unquantifiable. Ultimately our decision making is discretionary and draws on the wider experience and knowledge of team members to deliver diversified portfolios. To achieve high quality outcomes for investors we hire the best people we can and rely on a combination of their skills and peer review to balance the robustness of analysis against the opportunity cost of excessive structure and rigidity. Ensuring the systematic application of the actuarial standards, to a sufficiently rigorous level to cover the significant uncertainty around how they should be applied, would be excessive and value destructive in my team.

Therefore it seems that I need to make personal sacrifice and give up membership, to ensure I can complete my role to the best of my ability. I absolutely understand the importance of quality control within work that is aimed at informing actuarial decisions, but I fear that their potential application more broadly to any technique that could be considered actuarial will limit the scope for actuaries to take senior roles in non-traditional fields.

I still cling on to the hope I've misinterpreted the new rules and am worrying unnecessarily. If others feel they can be of help in that regard then please get in contact, otherwise by the end of June my time as a member of the actuarial professional will be at an end.