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Up Close and Personal with a Personal Actuary
Session 16

Moderator: Stacy Powell Litka, JPMorgan
Presenters: Janet G. Deskins, National Finance Partners
Recorder: Richard H. Bailey, Mercer

As a Personal Actuary (PA), the speaker offered first hand knowledge of this market and how to be successful in it.

Background: With competition increasing (from banks, legal, tax, other financial planning outlets) and with certain segments of the actuarial profession (pension) seeking new ways to add value, moving into the “personal” space may be an attractive option to some actuaries now or as a second career after retirement from their current roles. At its core, being a personal actuary puts the actuary’s skills to work for individuals. Many of us get asked questions by friends and relatives related to benefits, planning, tax, etc. and we’re usually happy to give (sometimes unofficial) advice. Being a Personal Actuary is ultimately an extension of this idea.

Models: Deskins described the Direct model and the B2B model. Direct entails working directly with individual clients, while B2B implies being part of a team (including financial planner, tax advisor, and attorney) that ultimately also works for individual clients, though this admittedly works best in the high net worth arena.

What the actuary brings to the table: A better understanding of risk than tax, legal or financial planning professionals possess (for example, changing or improving mortality and the effect on future income needs in financial planning).

Opportunities: While there is growth in the high net worth area, the “middle market” is largely untapped. The significant advice needed by individuals in this area creates enormous opportunity there.

Challenges: Compensation arrangements in the middle market can be problematic. Subsidized approaches were discussed in a “Not-for-Profit” model where part of an actuary’s pay may come directly from the client, and part from either government or company sources that have a vested interest in middle market individuals successfully navigating their planning needs.

The Issues Advisory Council studied the future prospects for PA as an area of concentration and concluded it was not currently a significant market opportunity. PAs are currently on their own to make this a viable market, and many, including Deskins, are not deterred and are continuing to work on the issue.

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