IAI Actuarial Core Principles · Business Management · Professionalism and ethics case studies
An actuary advises a trustee board of a company pension fund and learns that her spouse holds a substantial shareholding in an asset manager the board is about to appoint. She believes her advice on the appointment would be unaffected. What should she do under the Actuaries' Code?
She should promptly disclose the conflict to the board and then either manage it transparently with their agreement or withdraw from that advice. Actual or perceived conflicts must be revealed in time for the client to decide, and self-assessed objectivity is not a substitute for disclosure.
- ASay nothing, because her advice would in her view remain objective
- BDisclose the conflict to the board promptly, and either manage it transparently with their agreement or step aside from that adviceCorrect
- CDisclose the conflict only after the appointment is made
- DRecommend the asset manager more strongly to show she is not biased against it
- Resign from the engagement without telling the board the reason
Explanation
A conflict of interest, even a perceived one, must be disclosed in good time so the client can decide how to proceed. Her own belief in her objectivity is not the test. Late disclosure, overcompensation or unexplained resignation fail transparency.
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