February 2017

Interview with Carlos Fuentes

Steve CamilliCarlos FuentesBy Stephen Camilli

This is the second in the “Innovators and Entrepreneurs” series of interviews sponsored by the Entrepreneurial & Innovation Section of the Society of Actuaries. Each participant is an actuary that has chosen an unusual professional path, whether in an area where few actuaries have been before or in a traditional area but with a new business model or a unique role. What these actuaries have in common is their entrepreneurial and innovative spirit.

In this interview, Carlos Fuentes, president of Axiom Actuarial Consulting, FSA, and a member of the E&I Section shares with us highlights of his career both inside a large company and on his own. He also talks about working overseas, offers advice to entrepreneurs, reflects on how to find trusted vendors, and reflects about his decision to obtain an MBA.

You have worked in both a company setting and on your own. Could you share some of the challenges and joys of striking out on your own?

I’d like to make an observation—my experience is very personal and may or may not correspond to other’s experiences. I will start with the negatives. One of the problems with being an entrepreneur is that, until you are successful, you may have problems with cash flow, sleepless nights and difficult conversations at home. Also, since you may not make as much as you used to, you will need to adjust your lifestyle accordingly. Another difficulty is the lack of infrastructure that we take for granted inside an established company. You may have to do general administration work and perform other activities that you don’t enjoy or feel uncomfortable with. There are many positives, of course. You can shape your company and its culture in any way you like. The rewards, both in money and satisfaction, can be significant. Finally, a third component is the reduction in bureaucracy—you’ll have more time to concentrate on what matters to your business. Those are the positives and negatives. I’d like to make another observation—hard work and competency are important for your success as an entrepreneur or as an employee but many people don’t recognize the role of chance, timing and other factors you don’t control. That is the reality of being an entrepreneur—you control only part of your destiny.

What advice do you have for actuaries starting their own business?

You must have some savings—becoming successful requires an investment of time and money. You also must understand the market and your value proposition. You must be comfortable or at least be able to tolerate uncertainty. You must acknowledge the fact that you might fail and you will have to deal with the inconvenience of failure, which can be devastating. You will also have to convince people to work with you—not an easy task when you compete with large, well established firms. These activities lie far outside the traditional actuarial job description. You have to be very aggressive when pursuing or creating opportunities. Those who aren’t aggressive run a high risk of failure.

What does being aggressive look like?

By being aggressive I mean taking chances. You can’t just assess opportunities based on probabilities. Those who are more outgoing, more of a risk taker, are better positioned to be entrepreneurs as long as they understand that crushing failure is a real possibility. Those who are risk-averse aren’t good candidates to become entrepreneurs, although by chance some of them may succeed. Being an aggressive entrepreneur means throwing the dice, putting your heart into the task and going after it.

You grew up in Mexico and transitioned to life in the U.S. What was this process like?

It wasn’t easy and took longer than I expected, perhaps because my original plan was to return to my family and friends to resume my life in Mexico. However, for reasons partly outside of my control, my life took a different turn.

You work with outside consultants at Axiom. How have you developed a network of relationships with professionals who you can rely on.

The key is to become involved in activities that attract people with similar interests. This type of experience, such as my involvement with the Entrepreneurial & Innovation section, has shown me the importance of skills that aren’t part of the traditional actuarial repertoire. One area is communication—it is crucial to be able to communicate clearly and convince people. Other intangibles are of paramount importance such as trust—knowing who to trust and being trusted by others. For example, in considering a joint venture, trust trumps reputation and size.

You have experience in both U.S. and international markets. What advice would you have for actuaries seeking to expand their practice outside U.S. borders.

There are niche markets, but in general, competition is fierce and international markets are relatively small or, if attractive, don’t lack domestic talent. In some places an ASA or FSA designation give you no advantage or can even be a bit of a liability. For example, Mexico only recognizes Mexican credentials (bachelor’s degrees in actuarial science). Thus, being FSA doesn’t help and can make you appear expensive because people associate FSAs with American salaries. In my life, I’ve met several international consultants, but only very few that have succeeded.

There are currently diversity initiatives seeking to expand the presence of Hispanic actuaries in the profession. Do you have any idea on how to increase the number of actuaries of Hispanic descent?

There should be an open discussion to understand why there aren’t enough Hispanic and African-American actuaries. I think that many people know the real reasons but prefer to avoid a serious conversation because the truth is uncomfortable. Then, there is the need to focus on high school and college students. Despite rhetoric to the contrary, initiatives for entry-level college students have not been successful. The only lasting solution will require a long-term plan that spans decades. I have met a small number of Hispanic and African-American actuaries, the vast majority of whom are immigrants. This distressing observation should not be lost. The education system and society are not working as they should. The problem, as well as the solution, involves everybody.

What led you to obtain an MBA? What changed in your career before and after an MBA?

I wasn’t happy with the narrow role I had and the idea of becoming an entrepreneur was in my head. The MBA made a difference in my career in two ways. First, I developed a broader view of the industry and business in general—a valuable skill. Second, I had the opportunity to interact with successful professionals who were candid about their mistakes, failures, the role of chance in their careers as well as their accomplishments. I didn’t know how to become an entrepreneur, but I did know that I was as smart as many of my colleagues who had been very successful. This observation along with their encouragement and the entrepreneurial environment of the school I attended gave me confidence, which I now see as a fundamental element of entrepreneurship.

Earlier you mentioned trust. How did you determine which professionals you could and couldn’t trust?

Knowing who to trust is more an art than a science. You want to deal with honest people, but honesty is not easy to uncover. You have to be alert all the time, especially when there are problems, to see how people react—everybody is decent and moral in good times, but few remain unmoved in the face of difficulty. To determine trust, I try to imagine working with someone in the long term. Would we be happy working together? Would we stick with each other in bad times? Of course we would in good times, but this knowledge is irrelevant. Sometimes I know the answers to these questions, many times I don’t. I think that getting to know people—not what they say, but their mettle and their true moral compass—is a skill that can be improved with practice, but never perfected.

Carlos, thank you for sharing your knowledge, and personal and professional history with us.

Stephen Camilli, FSA, is president of ACTEX Learning. He can be contacted at  Stephen@Actexmadriver.com.