Skip to content

IAI Actuarial Core Principles · Business Management · Characteristics of a profession and the Actuaries' Code

Rahul, an actuary, advises a pension fund trustee board and learns that his firm is also bidding to advise the sponsoring employer on a related restructuring that could weaken the fund's funding. Which course best reflects the Actuaries' Code?

Rahul should identify the conflict, disclose it to those affected, and either manage it with safeguards or decline one of the engagements if it cannot be managed. The Code does not allow conflicts to be ignored or concealed, and fees should not decide the choice.

  1. AContinue with both mandates, since the two clients are legally separate
  2. BResign from the pension fund mandate without telling anyone the reason
  3. CIdentify the conflict, disclose it to the parties affected, and manage it or decline one engagement if it cannot be managedCorrect
  4. DAdvise the employer only, as it pays the larger fee
  5. Keep the information confidential from both and proceed unchanged

Explanation

The Code requires conflicts of interest to be identified, disclosed and managed, or the engagement declined if the conflict cannot be managed. Ignoring the conflict or hiding it fails this duty. Choosing by fee size puts commercial interest above the duty to clients.

Did you get it right without looking?

One question tells you little. A timed set on Characteristics of a profession and the Actuaries' Code shows your real accuracy, how long you take and where you lose marks.

Practise Characteristics of a profession and the Actuaries' CodeFree diagnostic mock

More Characteristics of a profession and the Actuaries' Code questions