What Would You Do? Responses to “False Pretenses”
By John West Hadley
The Stepping Stone, January 2024
In the September 2023 issue of The Stepping Stone, I presented the actuarial hiring decision below. Here are selected responses and excerpts, edited for space and clarity, followed by the real-life conclusion. (Please note that inclusion of responses should not be taken as an endorsement by either the Leadership & Development Section Council or the Society of Actuaries of the positions presented.) Send your own ideas for situations to pose in upcoming issues to SteppingStone@JHACareers.com.
False Pretenses
Robert was a mid-career actuary working in the Midwest, who was offered a chance to become chief actuary of an east coast company. Although he and his wife loved the Midwest, this appeared to be a strong career move, so they uprooted and moved, which included taking his daughter out of her first year of high school to a new situation.
During the first month in the new job, Robert found out much about the company that had not come out during the interview process. The company was in such distress that it was in serious danger of receivership, and he felt that his new boss had lied to him about their situation and what would be expected of Robert. Further, he felt he would not be in a position to sign even a qualified actuarial opinion by year-end, and had concerns about what that would do to his position and actuarial credentials.
He considered whether he should resign, but they had just made the transition to a new home and neighborhood that they all liked, and he didn’t feel it was fair to his daughter to uproot her again after she had just settled into her new school. This role also put him at a significantly higher salary than before, and he worried about having to step back from that level, or face a potentially extended job search.
What would you do in this situation?
Have you ever experienced a situation where you felt misled by an employer?
What advice might you have based on that?
My thanks to the many respondents! One provided this helpful philosophy:
Through most of my career, I would have stuck it out hoping it would get better. This is not always the right thing to do. We should have resilience and not quit every time something goes wrong or it gets tough; we also should recognize when it is time to make a change.
This actuary had little sympathy for Robert:
The actuary who leaves to join a company on fire has no sympathy from me. Ordinarily, a company in dire straits or near receivership would have been well-publicized and he should have done more research. Furthermore, he should not have moved his family to the new job site until he had time to survey the situation. Now he is in a real pickle, but be that as it may, what should he do now?
Sign a qualified opinion. If management doesn’t like that, tell them to hire a consultant to do the opinion. If they say that is why they hired you in the first place, just tell them sorry. If they fire you, well, you’re in the big leagues now.
These two actuaries brought up the Actuarial Code of Conduct:
Robert should determine honestly whether he can meet Precept 1. If a qualified opinion is what the situation requires, in his view, then that is what he should do. Resigning may be an option, but it is not an alternative to signing an honest opinion, qualified or not.
Robert thinks his new boss lied to him. If the new boss is an actuary, Precept 13 says Robert has to talk to him about it. Even if he isn’t an actuary, logic says that Robert has to talk to him about it. Maybe the boss feels he didn’t lie, but simply did not divulge confidential information. If Robert can get over his feelings about being lied to, they may be able to combine efforts to come up with some resolution. If Robert truly was lied to, then he needs to consider Precept 1. He has accepted a role, and he and the profession look bad if he does not perform the role with integrity. He could contact the ABCD for ideas on what to do. I did that once, and was tremendously relieved. This might be similarly useful to Robert.
This respondent boiled the situation down to three choices:
- Quit now. His family will have to pay. Odds are his new house was an upgrade and was based on the new salary. The company will claw back any signing bonus. This could be financially devastating if he doesn’t get a new job quickly, and his daughter is unlikely to enjoy another move.
- Don’t quit now, but immediately start a job search. This could backfire if his company finds out about the search, and it could have a similar result to the first choice by making his daughter and wife unhappy. It could also take a lot of time and he can’t just half do his job in the meantime.
- Prepare for battle. Talk with the new boss about lies and expectations. Talk to the ABCD about what the precise challenges are and how this comes into play. Come up with a plan based on open and clear communication with the new boss. It will work or it won’t, but attack it like it will work.
Many felt that more time or communication was needed:
Robert should first talk with his boss. Make sure that things are really as bad as he thinks; he has only been there for a month and may not have all the information or what the company may be doing to right the ship. He should also clarify his boss's expectations. Assuming he is right about the company's poor financial health or the misalignment of expectations, Robert should begin a job search. If he was wrong about the company's financial footing and he and his boss can agree on job expectations, give the new job a shot and see how things go over the next few months.
They say the grass is always greener, and a change in employers doesn’t stop our strengths and development items from following us from one company to the next. In other words, giving some time to get acclimated to the culture, figuring out the unwritten rules, and learning how to be successful comes with almost every external move, and just changing companies won’t absolve us of difficulties we faced at the last one.
The recruiting process is filled with misleading information, posturing, and beautification of the facts. Nothing can be done about past decisions but expectations can be reset.
Robert should have done better due diligence before accepting the new role:
- Consult with the prior chief actuary / appointed actuary, and if that actuary has left the company, Robert might get an objective assessment.
- Review the last two actuarial memoranda submitted to regulators.
- Contact the company’s regulator; they might share any regulatory concerns. Furthermore, it is always a good idea to establish a good relationship with the regulatory actuary.
If the company was in such bad shape that Robert feels there could not be a successful long-term outcome, he should resign. If there is hope, maybe he could bring in consultants to help plan out a strategy to move the company to a more stable and solvent status. This would also provide a second opinion on the financial status, letting him assess the material weaknesses and write an actuarial statement giving an accurate picture of the situation. Robert should be honest with his employer and not feel obligated to sign any qualified statement that he does not agree with. If the employer is urging Robert to hide information or diminish the severity of the problems, he should resign immediately.
This actuary felt it was too early to jump ship:
Robert should tough it out at least for the short run. First, document everything, even what was said at the interview. He needs to be prepared that he may come under the microscope, internally, externally or both. Second, he should be absolutely sure he is abiding by actuarial standards. I imagine there will be pressure to do things he’s not comfortable with. Don’t do them, and let the chips fall where they may.
Does leadership above the new boss know about the problems (how far up does this go)? Consider being a whistleblower if necessary and going as high as needed. Not great for internal reputation, but he should be most concerned about being above board and not ending up a fall guy. There are other jobs, but this is the only set of credentials.
While this actuary felt the opposite:
Robert should see if he thinks this company actually has a shot of turning around, and only stick it out if he thinks it will. Otherwise, leave immediately. It’s not worth putting his credentials at risk. Just because he changes jobs again doesn’t mean he has to relocate or pull his daughter out of school, so that shouldn’t hold him back. Also, never sign something you are uncomfortable with (so don’t sign the opinion).
These two respondents felt staying has value:
While the company was not as forthcoming as they should have been, and this job may not have long-term prospects for Robert, the experience can be very valuable. I believe it would reflect worse on Robert to bail out and run than to complete his duties with integrity, skill, and professionalism, and let the future play out. Often there is more to learn and grow from in difficult circumstances than there is from a situation without challenge.
Before Robert decides to resign, he should be open with his manager about his concerns and conduct a comprehensive assessment of the company’s financial situation. He could then assess the potential methods and steps to secure the company's financial strength and continue the open discussion not only with his manager but also with the senior management team. Professional integrity should be his top priority as an actuary. But it doesn’t mean that Robert should quit his job, he should work with the management team and potential regulators to resolve the potential crisis. It would be a better solution for both his career and his family.
These respondents shared considerations for a possible search:
Perhaps Robert can find something locally and perhaps he will have to move again. He should not be afraid to tell his family that he made a mistake. He has already assumed that a new move would be a problem for them and he may be wrong. Regardless, this is an excellent life lesson for his daughter. People act in their own interests, like the hiring manager, and they will lie for what they want. It also helps build resilience for his daughter as she will have to deal with another unwanted change and she will learn that she can handle it. Money should not enter into the equation. If the company is going under, Robert will lose his salary (and job) anyway. There is also nothing to say that he cannot get a similar high-paying job. If he cannot, he and his family will be fine financially with whatever job he is able to find.
These days, there are more jobs in remote and virtual capacities; staying because of the location isn’t as important as it once was. Staying with a company because the pay is high, especially if you don’t feel good about signing your name to the results, isn’t good. After taking steps to address the hesitation about actuarial opinions, if he still didn’t feel good, Robert should resign, stay in the area, and look for a remote or virtual opportunity that would best match his skills, even if it took a while to find.
As to the misleading/red flags: yeah, that stinks. One really cannot stick around, at least not under such management. Here's the great news—there are loads of insurance companies on the East Coast. Robert might be able to find a new job within a "reasonable" distance, so he should start looking immediately! This doesn't mean he should resign immediately, though. And I don't think it's a big deal to take a step down from chief actuary—there are only so many such positions. One can be a senior-level actuary, without being chief.
A number of actuaries dug into the issue of Robert’s concern about signing a qualified actuarial opinion:
It’s not a good situation. Speaking with peers and mentors, specifically those who are actuaries, is a good start. Evaluate the specific circumstance with the financials: do the assumptions seem sound, the models seem correct, or is there something concerning in the numbers? Lastly, a call with the ABCD is always a good option for an actuary truly struggling with their responsibilities and wanting to represent their profession in the right way.
Regardless of the false advertising during the interview process, Robert still made the decision to take the job. Yes, the integrity of those he works with is broken, but it's up to him to decide whether or not to take on the challenge. The lies give an indication that he shouldn't trust others to have his back, so he has to cover his basics and document everything. Use the situation to improve his skills. If things go south, the documentation can protect him from false accusations and taking blame. If the concern is not being able to sign statements of opinion because they don't meet ASOP, the right thing to do is not sign and uphold the integrity of the profession. It's Robert’s job to make it ready so, given the power of the role, he can expect the team to address the issues.
What Actually Happened?
A month after joining the company, the person who had hired Robert was fired. Robert found that his personal integrity was on the line within the new role, but he didn’t feel it was fair to his family to uproot them again so soon. He resigned as chief actuary and negotiated a new position as director of the actuarial group. He then set out to make the best of a bad situation.
Over the next few years, Robert was able to establish a strong reputation with the regulators, overcoming what had been an adversarial relationship between them and the company. He secured their approval for rate and product actions critical to the company’s health, and got the chance to work on a number of interesting projects that helped build his repertoire.
When his daughter graduated from high school, he sought and landed a great new actuarial job back in the Midwest.
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the newsletter editors, or the respective authors’ employers.
John Hadley was an FSA for many years, and now works with job seekers frustrated with their search. He can be reached at John@JHACareers.com or 908.725.2437. Find his free Career Tips newsletter and other resources at www.JHACareers.com. LinkedIn: https://www.linkedin.com/in/johnwesthadley/