How can other professionals help an actuary?

[Peter Gulia]

Actuaries, for situations in which you must integrate or at least align your work with others’ work—or doing your work depends on information from another professional’s work—what can other professionals do to help, or at least not interfere with, your work?

My law school courses for LLM and MST students include lessons on how professionals of all stripes should be respectful of another’s profession, and should do one’s own work in ways that support another professional’s work. I hope to fill out an explanation of how lawyers, accountants, and other professionals can work in ways that help an actuary do her work.

This can be about an actuary’s work for health, disability, and other welfare benefit plans; pension and other retirement plans; or pricing any kind of insurance.

What could someone else do to make your work as an actuary a little easier?

And for a BenefitsLink neighbor who is not an actuary, what work steps improve your working relationship with an actuary?

[Paul I]

I am not an actuary but I do share several clients and have close working relationships with actuaries.  One of the challenges is most companies who have a Defined Benefit Plan or a Cash Balance Plan also have a 401(k) Plan.

One strength in all of the relationships is we work together with the actuaries to service the client.  A big part of our role is educating the client about the differences between their DB/CB plan and their 401(k) plan.  Clients struggle with the notion that a participant with an accrued benefit in a DB/CB plan does not have assets in the trust that essentially are earmarked for an individual participant and the participant cannot direct how the assets underlying the accrued benefits are funded.

Clients also struggle with the concept of funding requirements ranging between a minimum and maximum funding level.  They also struggle with the concept of a maximum deductible contribution.

When working with the actuaries, we welcome their participation in discussions with the clients where we collectively explain the differences between types of plans.

One task that we perform for the actuaries is collecting the data they need to do their magic.  This includes collecting and validating census data, and confirming that the data the actuary needs to apply the service and compensation data is accurate.

We gather and report to the actuaries asset information.  We pay special attention to details that the actuary needs such as dates of deposits of contributions and dates of distributions.

We will facilitate gathering participant elections concurrently for all plans.

While we could say this work that we do is the actuary's job, not ours, we have found that having the client work with a single contact avoids a lot of confusion on the part of the client, payroll and their accountants.  Yes, we do get paid for our efforts.

To summarize at a higher level, we look at what it takes collectively for us and the actuaries to service the client's plans, we do the tasks that are well within our skill to do, and we defer to the actuaries on those services for which we are not qualified to do.

[Peter Gulia]

Paul I, thank you.

BenefitsLink neighbors, further thoughts on how to help an actuary?

[truphao]

Integrate into data collection process, anticipate and respect their professional needs and deadlines, engage them into post-cycle planning process. To sum it up - COMMUNICATE.

[John Feldt ERPA CPC QPA]

If I were an actuary, I would be tempted to respond to the question with, “Some of us are beyond help, but thanks for asking.”

[david rigby]

Well, I am an actuary, and I'm also grateful for the question.

Discussion above about communication is the central issue and answer.  This works both ways; when there is turnover, the best action is to proactively introduce the new staff member (such as assistant, banker, investment advisor, auditor, attorney, analyst, actuary) to all the other teams who have an interest in the project/client.  In addition, make sure there is clear understanding of who needs what information, who provides the information, and when it is needed.  

There are many examples of other professionals who have a specific responsibility, but the actuary has the expertise to help, even without credit.  Example 1, in the case of a DB plan sponsor with GAAP financial reporting, there is a need to develop a market-based discount rate; the actuary will have significant ability to help with this (probably having done so many times), even though not the final decision.  This will be of use to both plan sponsor and auditor.  Example 2, the attorney may draft a new plan document or various documents related to merger or acquisition; the actuary will appreciate being asked to review any such documents in advance; if related to M&A, the actuary will opine on all types of employee benefit plans but also contributing w/r/t administrative procedures outside the attorney's knowledge base.  Example 3, when a company-to-be-acquired has nonvested or partially vested participants in one or more qualified plans, the actuary can provide help with evaluating the cost of awarding 100% vesting immediately prior to the transaction, information that could be useful to both the company and any other negotiators.  Example 4, the actuary knows to ask about other possible plans when there is a Top-Heavy concern or a 415-limit concern; I've seen many prior cases where a DC plan vendor was not aware of the DB plan existence, and when so informed, that DC vendor did not understand the concept of "required aggregation group".

[Peter Gulia]

David Rigby, thank you for those fine examples of another profession's task that one can do more efficiently or effectively with an actuary's help.