Election Rules Need Amending

Letter from The President

Election Rules Need Amending

By Bruce Schobel

Since its founding in 1949, the SOA has had two membership classes: Fellows (FSAs) and Associates (ASAs and, since 2007, Chartered Enterprise Risk Analysts, or CERAs). In most respects, the SOA treats its two classes of members identically. Both Fellows and Associates serve on committees, make presentations at meetings and seminars, and write papers and articles for the SOA's various publications. Two notable distinctions, however, between Fellows and Associates are that only Fellows can (1) serve on the Board of Directors and (2) vote in the annual elections of Board members. (Note that Associates can vote today in Section Council elections.) In my opinion, the first distinction makes sense, but the second needs to be eliminated with respect to career Associates.

In February, the Board agreed and passed the following motion:

  • The Board of Directors recommends adoption of amendments to the Bylaws of the Society of Actuaries necessary to allow Associates who have been members of the Society for 5 years or more to vote in elections for President–Elect, Vice Presidents and elected members of the Board of Directors. ...

Two–Thirds Approval Needed

As you probably know, Bylaws amendments that affect members' rights cannot take effect without approval by two–thirds of the voters, and at least 25 percent of the eligible voters must vote. Fellows will have the opportunity to vote on this amendment in the 2008 election. Polls open on August 7 and close at 11:45 a.m. Central time on September 10.

Many members will recall similar proposals in the past. In 1992, the Board asked Fellows to give 10–year Associates the right to vote in Board elections. That proposal received just 41 percent support and lost. In 2003, eight years after substantially increasing the educational requirements to receive the ASA designation, the Board asked Fellows to allow five–year Associates the right to vote. That proposal garnered much greater support, with 63 percent of the Fellows voting to approve the amendment. Unfortunately, even that overwhelming level of support was insufficient, because two–thirds approval is required to make such a change. If only 171 people had voted differently in 2003, the amendment would have been adopted.

The SOA currently has about 20,000 members: 12,000 Fellows and 8,000 Associates–5,000 of those 8,000 have been Associates for five years or more. Those 5,000 career Associates contribute greatly to the SOA and to our profession and should have a say in who leads us.

The distribution of career Associates is disproportionate across practice areas. The largest subgroup–about 1,500 career Associates–is in the retirement practice area, where many members become ASAs and EAs but do not become FSAs. Should retirement practitioners be disadvantaged in the selection of Board members?

Another practice area that is small today–but expected to grow rapidly–is actuaries working on enterprise risk management. While some of these actuaries are or will become FSAs, a large number will earn the SOA's new CERA credential and stop there. The SOA has hundreds of CERAs already, with hundreds more on the way. Can we accept permanent disenfranchisement of these actuarial pioneers? Isn't that counterproductive and discouraging?

Varying Viewpoints

Several comments have surfaced with regard to allowing career Associates to vote in Board elections. Some say that it devalues the FSA designation. A few have even suggested that Associates, if allowed to vote, might stop pursuing the FSA designation. I reject those arguments. In nearly every case, the primary motivation to earn the FSA designation is its value in the marketplace. It seems absurd that a new Associate would say, "I can vote in SOA elections five years from now, so I'll just stop taking exams." That won't happen.

Another concern about career ASAs having the right to vote is that they might "take over the SOA." But that's not feasible for a couple of reasons. First of all, the proposed Bylaws amendment would allow career Associates to vote but not to serve on the Board. Secondly, the number of Fellows is more than double the number of career Associates. If substantial numbers of career Associates exercise the right to vote for Board members, then perhaps that would encourage more Fellows to vote. The usual turnout of 30 percent or so is anemic in any case.

In 2003, President Harry Panjer urged Fellows to allow career Associates to vote with the following words (in The Actuary, March 2003):

  • These are smart, successful people whom we need as part of the SOA. I see no compelling reason to continue prohibiting long–term Associates from participating in determining who will sit on the SOA Board. ...

Harry's words are just as true today as they were in 2003. I urge you to support the Bylaws amendment in 2008 and make the SOA more inclusive. Even if you don't support the amendment, please vote. It really does matter who serves on the Board–the choice is up to us!

More information about the 2008 election can be found in the article by Sheree Baker, the SOA's governance director, on page 11.

Bruce Schobel

SOA President