IAI Actuarial Core Principles · Business Management · Characteristics of a profession and the Actuaries' Code
A member of the public asks why an actuary's advice to a pension fund trustee is held to a higher standard of conduct than the advice of an ordinary salesperson. Which characteristic of a profession best explains this?
The higher standard arises because professionals hold specialised knowledge that clients cannot easily verify, so clients depend on their integrity, competence and independence. This reliance and public trust is what distinguishes a profession, not high fees, immunity from liability or freedom to set prices.
- AProfessionals are paid higher fees than other workers
- BProfessionals work only for large institutions
- CProfessionals possess specialised knowledge, and clients must rely on it and trust their integrity and independenceCorrect
- DProfessionals are free from any legal liability for advice given
- Professionals set their own prices without any client agreement
Explanation
A defining feature of a profession is specialised knowledge that clients cannot easily check themselves. Clients must therefore trust the professional, and this justifies higher standards of integrity, competence and independence. Fees and freedom from liability are not characteristics of a profession; professionals remain liable for negligence.
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