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Pioneers: The Thrill of it All

Pioneers: The Thrill of it All
by Jacque Kirkwood

Business is a Big Game to Shane Chalke and He Plays to Win!

Shane Chalke, FSA, MAAA, is no stranger to starting a business. Since 1983, he has been creating software for the financial services industry. He started his first company, Chalke Incorporated, when he was 25. After merging with another company and going public, he left and launched his second venture, AnnuityNet. He is now founder and CEO of Finetre Corporation, which processes well over $1 billion of annuity sales for more than 20 brokerage firms each month over the Internet.

Shane Chalke says he'll always work, as long as it's fun. No matter how successful he is, the vim, vigor and vitality that he has keeps him moving at the speed of sound and he shows no signs of slowing down. He refers to business as a big game–you take risks; sometimes they don't work the way you initially planned; but more often than not, you make the right moves and the victory is sweet!

The Actuary recently chatted with Chalke (the youngest person ever to be elected to the SOA Board of Governors–he served as vice president from 1993-94) about his knack for making the right business decisions; how his actuarial background has played a role in his success; and what makes him a winner.

What part of a start–up business is the most satisfying? What is the most challenging? I think the coolest part is bringing together a group of people who are all excited and passionate about a single theme. That clearly is the best part of a start–up. That period of intense excitement lasts about two or three years and you have about that amount of time to get things off the ground and running well. The hardest part is figuring out just what business to attempt. If you choose the right endeavor, executing a business is not that hard if you have the key players and a solid business plan in place.

What does the future of annuities hold? How will the product or acquisition and delivery system change as you see it? The future of annuities is bright simply because the industry has now found a set of benefits that actually resonates with consumers. I'm excited because for the first time the value proposition of annuities is not entirely tax based; it's product design based. I think the future is strong. The challenge we have as an industry is to continue to mainstream the product so that it's not sold only by specialists out in the field, but becomes as mainstream a financial product as mutual funds.

How does your company, Finetre Corporation, stand out from others like it? What sets it above the rest or makes it different? We set out to do something that hadn't really ever been done before–fully digitize the sale process around annuities in hopes that they could become as ergonomic to the broker as mutual funds.

We started Finetre in 1997 before people really understood why we were doing it or why it was even important, and here we are seven or eight years later, and the industry as a whole has really transformed itself. The proportion of business that's being processed electronically is significant and I think more and more brokers have access to the ability to trade annuities as easily as they trade mutual funds or any other kind of financial asset. It's pretty exciting stuff and I think if we look ahead five years perhaps, annuities will be well accepted in society.

So, have many of the same employees stayed with you? Well, I still have pretty much the exact management team that I started with. That's always a good sign. I look at each company as a project. Granted, it's a multi–year project and you assemble a great team around this project. You have a common vision. You reach a sort of equilibrium where you learn each other's strengths and weaknesses and fill in for each other when necessary. That is a very delicate balance and if I can hold a dynamic management team together through the course of the project, well that's a recipe for success.

You said that the peak of excitement in a business is the first three years. What stage is Finetre in right now? We're in what I call the blocking and tackling phase. We've proven the business model; we have a solid gold–plated client list; and we're growing very rapidly. It's all about quality at this point–making sure the gears turn well.

You've been referred to as a math and science whiz who just drifted into actuarial science. Is that an accurate assessment? Not entirely. I actually went to WPI (Worcester Polytechnic Institute) and they had an actuarial program at the time. I was a sophomore in college when I decided that actuarial science was the path I was going to take. I loved statistics and finance and I took my first couple of actuarial courses and really enjoyed them.

Has your actuarial background helped you on the job? Absolutely. I'm still in the annuity business and it's still beneficial to understand the intricacies of product design and the financial constructs and engineering products. Even though I don't do actuarial work per se, I'd say I still think like an actuary and that's enormously helpful. It's interesting where the actuarial profession has gone. I think it's become somewhat less of a profession and more of a system of thought that's usefully applied to a wide variety of business issues. It's an exciting time for the profession because there are so many exciting opportunities for actuaries now. The best compliment I hear from people is that I "think like an actuary."

What intrigues you most about the business world? Business to me is like a complicated form of chess. Every day you wake up and you face a set of problems that are intricate, sophisticated and complex. Finding answers and solutions is what keeps me going. It's fun to look at the Rubik's Cube every day and deal with a set of challenges that are a bit off the beaten path–not routine–and apply different strategies and forms of thought to them. Now that's a lot of fun!

Many people say you operate at the speed of sound. Do you think you'll ever slow down? I'm too scared to. The recipe I have going in my life works for me; it works for my family. I'm afraid to change anything. I like facing complex problems every day. I imagine slowing down as if you're used to playing chess every single day and one day someone takes your chess board away–I don't think you're going to be a happy person–I know I wouldn't be.

How do you manage the delicate, sometimes overwhelming task of balancing your work and personal life? At this point in my career, it's not that difficult. But, in the early days I didn't even try to maintain a balance. If I was awake, I worked. My wife would tell you that during the first years of our marriage, I might have taken afternoons off at Christ– mas. It was literally that bad. Now I'm pretty strict about spending time with my wife and daughters. I hire very good managers who I trust completely. And I try not to communicate with my people on weekends very much. I basically work 10–hour days during the week and weekends I'm off. It's a good mix.

How do you personally measure success and to what do you contribute yours? I think success comes in several forms. I make a practice of hiring a number of younger people who can learn from being in my companies. Hopefully, when they "graduate," they will go on to do great things. I've been in business long enough that I can see this pattern and it's very satisfying to me when some of my former employees become presidents and CEOs of other companies. That's a really great feeling. That's one measure of success. The other measure obviously is the significant impacts you make on the industry.

I'm proud of Finetre and Chalke Incorporated, the actuarial consulting firm I started. We changed the face of asset liability management. We were really the pioneers in developing software for actuaries to continue to further that science and make that science practical. We really changed the whole face of that industry for the better.

We touched on this briefly earlier, but how does your background as an actuary figure into your equation for success? People know me now as coldly analytical and that I think that comes from my actuarial background. If an idea for a project or a proposal surfaces, I'm a stickler for having the numbers in order and well thought out. If the numbers component isn't right on the money, it's back to the drawing board. That comes from my mathematical and actuarial training. Actuaries have good methods for analysis and that has served me well in business.

As you look back, what has been your biggest challenge or most memorable achievement? I don't think in terms of one particular moment of glory. I think life is a series of single accomplishments. For me there's never been any one defining day. Coming to work every day, applying your best skills and making forward progress all the time are both challenging and memorable. I think business is more about tenacity than anything. Obviously in business sometimes things go really well and sometimes things go really poorly. I've learned that when things are going really well, they're never as good as you think, and when they're going really poorly, it's never as bad. Achievement is all about working hard, never giving up and moving the ball forward every minute. That's how people win.

Among your many hobbies, what is your favorite and why? My favorite hobby right now is rebuilding antique motorcycles. When I'm not at work or spending time with my family, I'm down in the workshop rebuilding an old Italian or British bike. I've been doing it off and on for probably 20 years, but just in the past three or four years it's really become a passion.

If you could turn back the clock, would you pursue a degree in actuarial science or would you do something totally different? The only thing that I have some regrets about is that I didn't pursue an academic career. I taught finance theory for one year at the graduate level at George Mason University about ten years ago and that was a blast. It would have been fun to follow the professor track. I might still do it, you never know.

What advice do you have for up and coming actuaries? Concentrate on the learning and not so much on passing the exams. I think people focus so much on the exam process itself that they put learning secondary. Then one morning you wake up and you're an FSA. Looking back, you might be thinking to yourself, "Studying was more important than simply checking the box." It's important to remember that people care about what you know and what you can do more than the initials after your name.

What legacy would you like to leave? How would you like to be remembered most? Like anyone else, I'd like to know that I've made a difference in my profession, so I hope I'm remembered for Macro Pricing. I published a paper on the subject in the late 80s, early 90s. It was on the exam syllabus, maybe still is. I invented a different method of product pricing which I think is the best mark I could leave on the profession. On a personal level, I would hope to be remembered as a good husband and a fun dad.

Jacque Kirkwood is senior communications associate for the Society of Actuaries. She can be reached at jkirkwood@soa.org.