the independent consultant

ISSUE NO. 7 | JANUARY 2005

Inside...

THE INDEPENDENTCONSULTANT

The Actuary as Entrepreneur?

This question may seem contra-dictory—actuaries are notgenerally thought of as entre-preneurial—yet, as past issues

of The Independent Consultant show,there are many entrepreneurial actuariesout there. Three actuary entrepreneursspoke on a panel at the Society ofActuaries’ Annual Meeting in New York.

The panel consisted of Dan Cox,managing director of Chicago ConsultingActuaries, and formerly head of practicesat both Wm. M. Mercer and AonConsulting, David Florian, founder ofPivot, currently director of Reinsuranceat Wachovia Bank in Charlotte, NC, (seearticle in The Independent Consultant No.6) and Mike Miele, founder of CDMS(which he sold to Landacorp, Inc. in 2000,featured in The Independent Consultant,Issue 1, 2002).

Cox’s presentation was about ways toraise money to finance a start-up practice.Additionally, he gave a detailed presenta-tion on the need to prepare and execute abusiness plan. His presentation is avail-able online in the new Smaller ConsultingFirm Resource Center on our Web site atwww.soa.org.

Florian and Miele both told of theirexperiences as entrepreneurs founding,running and then selling successful startups. The formal presentations generatedlively discussion. Readers who wereunable to attend the meeting can obtainthe tape of the session from the audiovendor, www.aven.com. In addition, anedited transcript will be prepared will bepublished in a future edition of TheRecord.

NEWSLETTER OF THE SMALLER CONSULTING FIRM SECTION

(continued on page 3)

2 Chairperson's Corner: The Road Ahead

by Ian G. Duncan

3 Update from Kenya

4 The Virtual Firm: Teaming upwith a Peer

by David S. Rintoul

6 Become a “Thought Leader” andSeparate Yourself from the Pack

by Ken Lizotte

8 Planning for the SOA 2005 Spring Meetings and Beyond

by Charles E. Ritzke

10 Don’t Solve the Problem...

by David C. Miller

12 New (and returning) Council Members

SCF chairman, Ian Duncan, and three actuaries who made it as entrepreneurs.

As I write this, it is fall, andthat means that the leader-ship of the Society ofActuaries, from the lofty

heights of the presidential office (isthere such a thing as an Oval Office inSchaumburg?) down to the lowliestcouncil member has turned over. Inaddition to my editorial duties withThe Independent Consultant, I now addthe role of chairperson of the SmallerConsulting Firm section. GeorgeMcCauslan, one of the section foundersand founding chairperson, has steppeddown after a successful two-year stint,in which membership grew from theoriginal 200 needed to establish thesection to the current level of nearly 600.

I have been participating the pastyear in the Society of Actuaries organi-zational redesign. Like any organiz-ational redesign, this one has its frus-trations. One could ask the typicalquestion, “If it ain’t broke, why fix it?”Certainly from the perspective of asmall, new section, the SOA appears tohum along.

It is a great idea for an organizationto go through a reevaluation, as theSOA is now doing. Every so oftenduring the redesign process, however,one catches a glimpse of how thingscould be in the new order. Number onebenefit: aligning the mission of thesection with its organizational struc-ture. The reorganization has given usthe chance to reevaluate, as a section,those functions we believe are impor-tant to members. But more than this,the re-organization allows the sections(and the SOA) to re-structure to deliveron the mission. In particular, there arenow more clearly defined roles forcouncil members, and the roles matchthe functions that we want to conductfor members (think of these as “portfo-lios”). In the coming year, we will focusmore on the objectives of member valueand continuing education, in additionto doing the things that we are alreadydoing (the newsletter, sessions at

Spring/Annual meetings). The otherby-product that is immediately obviousfrom the reorganization is more cooper-ation between sections (see the articleabout a proposed seminar on “StartingYour Own Firm” in this issue.)

One other consequence of theproposed reorganization: it’s going totake more effort and volunteer time.Sections are being asked to take onmore responsibility for setting thedirection and coordinating the effortsof SOA staff. This will require moreand different work from section volun-teers. So now is a great time to getinvolved and help us on the roadahead. A good way to “try out” volun-teering is by becoming a Friend of theCouncil. We can use your help. Contactme at my e-mail address, or anymember of the council to learn how tobecome involved!! �

Chairperson’s Corner: The Road Aheadby Ian G. Duncan

THE INDEPENDENT CONSULTANT

Issue No. 7 | January 2005

This newsletter is free to section members. Backissues of section newsletters have been placed inthe Society library, and are on the SOA Web site,www.soa.org. Photocopies of back issues may berequested for a nominal fee.

The purpose of the section shall be to encourageand facilitate the professional development of actu-aries at smaller consulting firms through assistancewith the educational, research, networking andother special needs that arise in their practice.

Expressions of opinion stated herein are, unlessexpressly stated to the contrary, not the opinion orposition of the Society of Actuaries, its sections, itscommittees or the employers of the authors. TheSociety assumes no responsibility for statementsmade or opinions expressed in the articles, criticismsand discussions contained in this publication.

Newsletter Editor, Ian G. DuncanLotter Actuarial Partners, Inc.15 East 26th Street | Suite 1801 New York, NY | 10010Phone: (212) 532-6433Fax: (212) 532-6248E-mail: [email protected]

Assistant Editor, Janet Duncan, FCAS, MAAAXL CapitalE-mail: [email protected]

2004-2005 OFFICERSChairperson, Ian G. DuncanVice-Chairperson, Daniel P. CassidySecretary/Treasurer, Marcus A. Robertson

COUNCIL MEMBERSDavid C. Hart (Web Liaison)Pamela L. MarlinGeorge W. McCauslan (Continuing Ed)Charles E. Ritzke (Spring Meeting Coordinator)Mitchell I. SerotaDavid Pratt Ward

SOA STAFFLois Chinnock, Section ManagerE-mail: ([email protected])

Susie Ayala, Freelance Graphic DesignerPhone: (847) 706-3548Fax: (847) 706-3599E-mail: ([email protected])

Society of Actuaries475 N. Martingale Road | Suite 600Schaumburg, IL 60173Phone: (847) 706-3500Fax: (847) 706-3599Web: www.soa.org

Copyright © 2005 Society of Actuaries.

All rights reserved.

Printed in the United States of America.

Ian G. Duncan, FSA,

MAAA, is a partner

at Lotter Actuarial

Partners, Inc. in New

York, N.Y., and is editor

of The Independent

Consultant. He can

be reached at iduncan@

lotteract.com.

Update from Kenya

EDITOR’S NOTE: Regular readers ofthis newsletter will rememberShiraz Jetha, FSA, MAAA, who hasrecently started a consulting prac-

tice in Kenya. We profiled Jetha in theJanuary 2004 issue of The IndependentConsultant. We recently received an updatefrom Jetha, from which we quote below:

“Well, it’s been one year since I started ourdivision and am pleased with the progress byway of clients. We are booked for five to sixpension plan valuations, two rate developmentprojects, three “business type” projects—suchas scenario analysis, strategic plans, etc., andan industry-wide mortality study (assured,group, etc). I feel that getting involved with theAssociation of Kenya Insurers (who are spon-soring the Qx project) was a neat way to getknown to the insurer community. Beyond that Idid write articles for industry publications—health and pensions.

Revenues are at present only a fraction ofthe costs. So the “pipeline” is quite healthy. Ifanyone wants to start an HMO in Cairo,remember me. That place presents very inter-esting opportunities.

We are also trying to formalize the profes-sion into TASK (The Actuarial Society ofKenya).

The hospital project we are working on isfascinating. We were asked to develop scenar-ios on what shape the national healthlegislation could take and then to explore thefinancial impact to the hospital in somechosen scenarios—fascinating work. In theother nontraditional work, we helped developa growth strategy for an industry client (thiswas to get a “foot in the door,” and hopefullywe will see more work from them, especiallyyear-end statutory work)”. �

January 2005 | THE INDEPENDENT CONSULTANT | 3

Continuing the Focus onEntrepreneurship

The interest in entrepreneurship is so greatthat we are sponsoring two seminars on thetopic (one at each of next year’s spring meetingsin New Orleans). Here is the current (tentative)outline of the program for this seminar:

Have you ever thought about starting yourown business someday? Attend this seminar toget an overview of what it takes and how to getstarted. Obtain insights from actuarial entre-preneurs who have started their ownbusinesses. Topics cover both the general stepsand considerations involved in starting yourbusiness as well as a panel discussion on thespecific experiences, both positive and negative,from entrepreneurs in various actuarialspecialties. Speakers may include actuariesspecializing in (depending on the specificspring meeting) health insurance, pensions,life insurance and investments, as well asother disciplines and nontraditional areas.Discussion may include but not be limited tothe following:

l Determination of services to offer customersand marketing approaches.

l Billing (invoicing) and financial (expense)management of the business.

l How do you know whether or not your busi-ness plan is working?

l What insurance coverage should one buy(e.g., professional liability, general liability,employee benefits, other?)

l What are your resources (e.g., legal issues,technology, outside industry data sources,Internet, disaster recovery backups).

l Managing the intangibles, such as the day-to-day challenges (highs and lows) of thebusiness.

This seminar is intended for both currententrepreneurs as well as for actuaries with noprevious experience in running a business.Attendees will take away a better understand-ing of the general issues and steps involved instarting a business, they will get insights intothe specific business considerations from vari-ous specialties, and they will be betterprepared for the inevitable challenges they willface in starting a business.

In the meantime, look for materials andresources relevant to starting and running anactuarial business in the new SCF ResourceCenter at www.soa.org. �

Actuary as Entrepreneur? | from page 1

Shiraz Jetha

4 | THE INDEPENDENT CONSULTANT | January 2005

Legal Corner

The Virtual Firm: Teaming Up with a Peerby David S. Rintoul

Working on a pro ject with another independent actuary?Congratulations. You may havejust formed a general partner-

ship.Joining with a peer to work on a project is

a great way to handle a project that wouldotherwise be too big or for which you mightnot have all the expertise required. It can alsorelieve some of the professional isolation asolo or small-firm consultant can feel. Tomake sure that you get what you expect out ofthe deal, you need to keep some legal issues inmind, though. Many issues are similar tothose addressed in the articles whichappeared in the prior two issues on clientagreements and agreements with contractorswho will work for you. Like those agreements,you will need to address issues such as:ownership of any intellectual prop-erty created for the project,non-solicitation of clients andpossibly a non-compete. Take alook at the prior articles for morebackground on these issues.

Some legal issues are uniquewhen working on a project with apeer. You may see the relationshipwith your peer as a one-time, non-exclusive project. Each of youremains free to seek other workwithout having to share any of thework or revenue from these otherprojects. Your expectations may bewrong, though, if your peer or acourt finds that you didn’t justform a one-off deal, but instead have established a newbusinessentity. This can happen as a resultof the law of partnerships.

If two individuals join togetherto do business with someone else,the law generally considers theindividuals to have formed ageneral partnership under commonlaw. You don’t have to file any form,make any elections, put initialsafter the name of the entity or evenhave a name at all. A partnershipcan arise simply from the fact that

two or more individuals and companies areworking together. Whether a partnership isformed, the scope of its business, and how longit will last, depend on the intent of the parties.If this intent is not in writing, however, one ofthe partners may claim a different understand-ing of what was intended when you startedworking together, particularly if participationon a lucrative and prestigious contract is atstake.

The consequences of a court finding thatyou are operating as a partnership can be far-reaching. Partners in a partnership owe theirfellow partners strict duties of loyalty. In afamous statement of the duties partners oweto each other, Justice Benjamin Cardozostated:

“Joint adventurers, like co-partners, oweto one another, while the enterprise

Partners in apartnership owe their fellowpartners strictduties of loyalty.

continues, the duty of the finest loyalty.Many forms of conduct permissible in aworkaday world for those acting atarm's length, are forbidden to thosebound by fiduciary ties. . . . Not honestyalone, but the punctilio of an honor themost sensitive, is then the standard ofbehavior.”

The words are grand, but the consequencesof partnership status are concrete. If a part-nership exists, you have a duty to give yourpartner a chance to participate in future busi-ness opportunities that are within the scope ofthe business of the partnership. If you don’thave something in writing while setting forththe scope of the joint business, you open your-self up to a claim from a former partner thathe should have the chance to participate inthe project, or that you breached your duty tohim by not first offering the business opportu-nity to the partnership.

Avoiding an unintentional partnership canbe easy. A simple letter signed by each participant claiming each has the right topursue other business, during and after the

specific joint project, without first offering theproject to any or all of the other participants,can be enough. Once any part of a deal gets inwriting, though, there is a tendency to puteverything in writing. The more writing thereis, the more important it is to have legal coun-sel involved to make sure that everyone’sexpectations are fulfilled.

Sharing business creates the web of reciprocal interests that is the foundation ofsuccessfully marketing a solo or small-firmpractice. We all know, however, that it was nofun when our mothers forced us to shareHalloween candy with our baby brother. Beingforced to share a big contract is no fun, either.If you make sure that everyone understandsthe scope of a project at the beginning, youcan decide to spread the wealth, or just keepall the goodies for yourself. �

This article only addresses general principlesof law. You should consult qualified legalcounsel admitted in your jurisdiction to deter-mine how any of these principles apply in anyindividual circumstance and under a particularstate’s law.


David S. Rintoul practices with

the firm of Brown, Paindiris &

Scott in Glastonbury, Conn.

He can be reached at

[email protected].

Smaller Consulting Firm Section to Sponsor “Webinars” in 2005

The Smaller Consulting Firm Section, in keeping with our mission to provide cost-effective continuing education forour members, will be sponsoring two Web seminars in 2005:

Restricted Lump Sums

The collision of reduced plan assets and the number of baby boomers retiring and electing lump sums has causedmore plans—both large and small—to be impacted by the top 25 restrictions. Panelists address the rules, commu-nicating them to clients and affected participants as well as strategies for dealing with them. Speakers will beLorraine Dorsa, EA, MAAA, FCA of Dorsa Consulting, and James S. Hutchinson of Alston & Bird.

Our other continuing education opportunity is a three-session Web series on “Business Building.” The three sessionsare: “Make over your marketing message,” “Turn your speaking opportunities into gold” and “Overcoming fear ofmaking sales calls.” Instructor is Dave Miller, FSA, MAAA, an experienced sales and business coach. The Web seriesbuilds on the successful sessions given by Miller and his partner, John West Hadley, FSA, MAAA, at this year’s SOAmeetings.

Watch your e-mail and the SCF Web site for more information.

The Virtual Firm: Teaming Up with a Peer

Lately, the age-old business develop-ment dilemma of how to stand outfrom the crowd has been hauntingprofessional service firms more than

ever before. Many services nowadays look alltoo much alike, with marketing strategiesseemingly unable to distinguish them fromtheir competition—glossy brochures, snazzyWeb sites, press releases and advertising.When everyone employs the same methods,everyone ends up vying for the same narrowwindow of client and prospect attention.

To escape this marketing black hole, manyfinancial consultants have adopted an uncom-mon strategy that elevates both principal andfirm above the fray. This approach positionsthe firm’s expert professionals as “thoughtleaders.”

Names of superstar thought leaders are notonly well known but the stuff of legend: BillGates, Tom Peters, Richard Branson, MarthaStewart, to name a few. Rather than abandon-ing the marketing to a marketing department,they inject themselves into the heart of theprocess, churning out books, articles, confer-ence speeches and media interviews to keeptheir visibility machines boiling. Amid theresulting excitement and industry debate, theysimultaneously personalize their company,expand their products’ exposure and deepenboth market share and loyalty from theircustomers.

Richard Branson, for example, has takenhis Virgin conglomerate literally to newheights by attempting such stunts as pilotingan air balloon around the world. MarthaStewart, despite her legal troubles, has madeherself and her firm rich beyond words bymelting away the branding lines that tradi-tionally divide a company’s products from aCEO’s personality. These are only two exam-ples of results the process can produce.

This capacity to reach beyond traditionalmarketing approaches is available to us all, aprocess that only needs to be committed to andthen implemented within often-ignored chan-nels. There are two main vehicles to employ,

(a) publishing articles and/or books, and (b)delivering talks and presentations. Suchcenter-spotlight marketing attracts attentionand recognition from a target market in waysthat more commonplace marketing toolscannot attain.

Dan Cassidy, president of Argus ConsultingLtd in Concord Mass. and a longtime SOAmember, has published articles in leading HRand benefits planning journals in the UnitedStates, Canada and the United Kingdom.Attendant publicity around these publishingcredits has led to Cassidy being interviewed bysuch high-profile media outlets as TheStreet.Com, Institutional Investor and WallStreet Journal Radio. As a result, Cassidy isknown beyond the borders of his ownclient/prospect community for his benefitsplanning expertise and never fails to callattention to these media credits when strategically advantageous occasions arise,such as during a marketing campaign or evenin the midst of an actual sales call.

Given thought leadership’s competitiveadvantages, taking the plunge would seem tobe a no-brainer. Yet, many consultants hesitateout of fear that the process will not work forthem, or out of ignorance of where to begin.However, embarking on just two simple stageswill get the process moving in the right direc-tion, building confidence as the effort succeeds.

Stage one is to publish your ideas as articles in business publications, a seeminglydaunting task until this challenge is brokendown into baby steps. First, compose a list ofarticle ideas that align with your businessobjectives. Ask yourself, “Which services do Imost wish to promote? What expertise/servicedo I most want to be known for? Are thereservices even my oldest customers may notrealize my company has to offer?” Youranswers will translate into publishing ideas.

After answering such questions, search foran editor who sees a fit for your ideas withinthe publication. Pitch to magazines read bydecision makers, who typically hire your firmor by referral sources that can spread word of


Become a “Thought Leader” and SeparateYourself from the Packby Ken Lizotte

Given thoughtleadership’scompetitiveadvantages,taking the plungewould seem tobe a no-brainer.

mouth about your firm. Create this list usinglibrary directories or by searching the Web. Forexample, offer actuarial services primarily tohigh technology start-up companies. Pitch anidea titled “Five Biggest Financial Mistakes ofHi-Tech Start-Up” to Hi Tech CFO Magazine(fictitious name).

What’s important to realize at this point isthat business editors regularly depend onprofessionals just like you to feed thempublishing ideas. After all, they can only knowwhat to publish in their pages as a result ofinput from those of us on the “front lines.” Sodon’t underestimate the ability to publish yourday-to-day knowledge, expertise, value orinsights. Ideas that might seem mundane maybe viewed as among the best-kept, leading-edge secrets in the business world when youshare them with an editor.

After you get published, stage two involvesspeaking at business events. Some engage-ments may come about because a conferenceplanner read your article and invited you tocome and speak about it, but most gigs will bearranged when you actively leverage yourpublished works. Send e-mail announcementsto your private business e-list, send a newsrelease announcing your published articles,post the article on your company’s Web site,pass out your article to customers, colleagues,prospects, employees, even vendors. Don’t sitaround and wait for people to see it. Instead,leap into action, ensuring that your work getsread. Build a buzz!

At your actual talks, always distribute yourarticle for free, promoting your availability asa speaker, too. And when you get offered anykind of speaking gig, don’t turn it down! LarryWinget, a highly sought-after motivationalspeaker, has stated, “The very best way to getspeaking engagements is to simply go out andspeak!” Exposure breeds exposure, exponen-tially growing your speaking schedule.Speaking can then lead to more article assign-ments, for you never know when an editor maybe sitting in your audience, and loving whatyou have to say.

By taking these actions, your credibility(and that of your firm) will leap-frog over thatof your competitors. Third party “endorse-ments” from publications and conferenceplanners will solidly establish you as an

author/speaker and a leading thinker in yourfield, elevating your firm’s services as well.Once this happens, bona fide thought leader-ship will have officially arrived. From there on,enjoy the ride! �


Become a “Thought Leader” and Separate Yourself from the Pack

Ken Lizotte is chief imaginative

officer (CIO) of Emerson

Consulting Group Inc., Concord,

Mass. He can be reached at

[email protected].

The SOA Spring Meeting ProgramCommittee met in early Septemberto kick off planning for the 2005spring meetings in New Orleans. I

attended this planning meeting as the SmallerConsulting Firm’s section representative. TheLife/Investments/Financial Reporting meetingwill be held May 23-24 and the Health/Pension/Long Term Care meeting will be heldJune 15-17.

Changes to the Spring MeetingFormat

This year’s planning meeting covered morethan just the gathering of ideas for the varioussessions to be offered. The SOA staff compiledattendance statistics and your ratings/comments from your session evaluation formsat prior meetings. Attendance at the springmeetings has been trending downward the lastfew years and a large part of the planningmeeting was committed to discussing why thishappened and what could be done about it.

There were several potential causesdiscussed and probably all have had their effecton attendance. The cost of meeting attendancewas an obvious one, particularly for many ofour section members who must pay their ownway. Belt-tightening by employers was another.A third was that we have more choices tocompete for with our educational or networkingdollar than ever before, with the increase invarious seminars and webcasts.

Some of these things we can, and I hopewill attempt, to address over time. However,session quality was one cause where thecommittee thought we could have an immedi-ate impact. Many attendees commentsexpressed concern about the lack of depth insubject matter. Other attendees complainedthat session content often did not resemblesession descriptions. So the committee agreedto several changes that are intended toaddress these concerns:

l Instead of conducting 90-minute paneldiscussion sessions, the committeeencouraged sections to also sponsorhalf-day or full-day seminars with aneye toward covering topics in moredepth. We want to encourage sessionsthat go beyond the typical three-person, uncoordinated panel discussion.


Planning for the SOA 2005 Spring Meetingsand Beyondby Charles E. Ritzke

l Smaller sections in particular (likeours) are encouraged to co-sponsorsessions or seminars with other specialinterest sections, where it makes senseto do so, on related topics, both toprovide a broader experience and tomake the best use of section resources.

l The roles of session coordinators andmoderators have been more explicitlydefined to try to add some accountabil-ity to session preparation. This isintended to improve the quality andfocus of session content, to respond tocomments from attendees that presen-tations often do not match theiradvertised session outlines. Feedbackwill be provided to session coordinatorsin an effort to improve quality on anongoing basis.

Of course, accountability and increasedmeeting quality can be difficult to implementin that speakers are mostly volunteers. Butthe hope is that these changes will be a stepin the right direction.

Sessions to be co-sponsored by the Smaller Consulting Firms Section

At the deadline for publication of this newslet-ter, we will have not yet finalized whatsessions we will co-sponsor. But tentatively, itlooks like we will co-sponsor sessions on thefollowing topics:

How to Start Your Own Business. We willlikely co-sponsor a session (or possibly a half-day seminar) in cooperation with the Actuaryof the Future Section, Management andPersonal Development Section and HealthSection at each spring meeting. One part ofthis seminar will cover the general needs instarting a business and becoming an entrepre-neur. The second part of the seminar willlikely cover “case studies” by entrepreneurialactuaries from various disciplines.

The “Personal Actuary.” We will be co-sponsor-ing this session with the Actuary of theFuture Section. The SOA has a task force setup to define and promote the concept of the“Personal Actuary.” A “Personal Actuary” isgenerally defined as an actuary who doeswork for individuals. This could involve serv-ices like personal risk management, insuranceproduct advice, life settlement calculations,individual retirement modeling, expertwitness testimony, or even investment or taxadvice from an actuarial perspective. You canget more information from an article in theOctober 2004 issue of the Actuary of theFuture Section newsletter. Just search thelibrary for “Personal Actuary” at www.soa.org.

How You Can Help

This newsletter is likely to be distributedabout the time that we are recruiting speak-ers. We certainly have experts in our sectionon starting a business and I suspect we havemany members who perform one or more ofthe functions of a personal actuary, eventhough they may not have labeled themselvesin that way.

If you have something interesting to say onthese topics, are planning to attend one of the spring meetings and might have an interest in participating, you can contact meat [email protected], or any othermember of the council.

Ongoing, we would also like your feedbackon what you like or don’t like about the springmeetings. How can they be improved ingeneral? What, if anything, should the SCFspecifically be doing to meet your needs andimprove these meetings?

In the meantime, maybe we’ll see you inNew Orleans next spring. �


Smaller sectionsin particular (likeours) are encouraged to co-sponsorsessions or seminars...both toprovide a broaderexperience and tomake the mostuse of sectionresources.

Planning for the SOA 2005 Spring Meetings and Beyond

Charles E. Ritke, FSA, MAAA, is

president of Problem Solving

Enterprises, Inc. in West Dundee,

Ill. He may be reached at

[email protected].

too soon. That’s the qualifier. As consult-ants we love to help our prospects solvetheir problems. In fact we’re so passion-ate about our solution that at the first

indication the prospect might need it, we jumpout of our skin to reveal it immediately. Afterall, that’s what they want to hear about,right?

Consider the following:

Prospects buy our products or services for tworeasons, either:

l To solve a problem, orl To achieve a desired result.

The most effective way to sell is to firstfully explore what is important for the clientto avoid or achieve in the areas where ourproduct or expertise can help them. This isespecially true for consultants and those whosell services. So if our goal is to seek mutualunderstanding, we must resist the temptationto discuss the solution before we have an in-depth understanding of the prospect’sunderlying problems or their desired results.

This isn’t easy to do for eager businessdevelopers, yet it’s vital for realizing success-ful selling results.

When speaking with prospects, here areeight reasons to resist focusing on the solutionprematurely:

1. Forgoing the opportunity to help theprospect fully appreciate their need.

As strange as it sounds, the prospect is oftennot in touch with the full extent of their needfor your solution. There is always some levelof pain associated with an unmet need. It’shuman nature to avoid that pain in some way.One of the most common ways is for theprospect to ignore or minimize the problem,i.e., “it’s not really that bad.”

The prospect won’t see the need for your“medicine” until they are aware of their “seri-ous illness.” In other words, an undisturbedprospect will not buy. Successful businessdevelopers help their prospects get in touch

with the consequences of doing nothing beforethey present their solutions.

2. Reducing the probability of providingthe best solution.

How can you solve the problem before youthoroughly understand what it is? It’s easy tojump to conclusions and assume to under-stand what the client wants and then “make”our solution fit. Usually the prospect will tellyou the solution they want rather than theproblem or result. It’s like a patient telling thedoctor, “I need chemotherapy.” Would a quali-fied doctor respond by saying, “Great—Ispecialize in chemo. How’s next Tuesday?”Certainly not. But that’s what many businessdevelopers do. As soon as the prospect saysthey want a service that the business devel-oper provides, the business developer thinks,“Great! Time for the close.”

You can imagine the problems that canresult from this approach – clients spending alot of money on solutions that don’t deliver thedesired results. That’s bad for business!

Just like a doctor, you want to explore theprospect’s “symptoms” before you present thesolution. This way you can be sure you willdeliver the best solution—one that the clientwill be happy with.

3. Taking away rationale when meetingwith other decision-makers.

In the complex sale, your initial meeting maynot be with the ultimate decision maker.Many organizations utilize a team approachwhen buying services. If you present the solu-tion out of the box at the first meeting, youmay forfeit the opportunity to meet with theother decision makers. As a result, you may beleft to depend on someone else presentingyour solution to the rest of the team. It’s asure bet they won’t do as good a job as you. Inaddition, you won’t have the opportunity toexplore the needs and motivations of theseother decision makers. It’s much better to laythe groundwork to be able to speak with allthe decision makers on the team.


Don’t Solve the Problem…by David C. Miller

David C. Miller, FSA, MAAA, is a

professional business coach.

He may be reached at dave@

translifecoach.com.

…

4. Minimizing the amount of exposure tothe prospect.

Especially with complex/high-ticket sales,mutually exploring problems and results willtake more than one meeting. In contrast,presenting your solution in a “dog and pony”format can be done in one meeting with littlereason for further discussions. This providesvery limited exposure to the prospect.

Instead, demonstrate how you solve problems by the way you sell, i.e., “mutualexploration.” In this process you are helpingthe prospect understand their situation,developing rapport and fostering a relation-ship over several meetings.

5. Making it difficult to understand theprospect’s true intentions.

Mutual exploration gives you the time andopportunity to assess the prospect’s trueintentions. Are they really interested in yourservices? Or is this discussion a “price check,”“fishing expedition” or free feasibility study?By presenting your solution prematurely,you’ll never really know what the prospect’smotives are and it may end up costing you

plenty in terms of time and resources spentfutilely trying to get their business.

6. Giving enormous advantage to acompetitor that may already have a rela-tionship with the prospect.

Have you ever had the prospect love your ideaand then take it to their favorite consultant toimplement it? Presenting the solution prema-turely makes you extremely vulnerable tothis. In these types of sales, relationship wins.Before presenting the solution, you mustunderstand the prospect’s needs, their deci-sion-making process and what competition, ifany, exists.

7. Forcing you to resort only to claims ofexperience and expertise to differentiateyourself.

While touting your experience and expertiseis a valid way to set yourself apart, it’s oftennot enough. Let’s face it—pretty much every-body makes those same claims. Presentingsolutions prematurely doesn’t give you time todevelop a relationship with the prospect anddemonstrate how you solve problems.

8. Weakening your ability to prove valuefor the cost or fees.

Your price or fees will only eliminate you fromthe process if you haven’t first provided acontext for them. If I asked you to give me$25,000 for what’s in this brown paper bag I’mholding, you would say, “No way!” That’s whatit’s like for the prospect if you present yoursolution before they understand what thesolution will do for them. Services are intangi-ble and can seem mysterious, and thus,expensive. The prospect needs a context tomeasure the value they’ll receive for your fees.For example, if you can show the prospect howpaying $25,000 for your services will savethem $1,000,000 in the next 12 months, you’llget much fewer price objections.

Remember to resist the temptation toreveal your solution prematurely for bettersales success and more satisfied clients. �


...demonstratehow you solve

problems by theway you sell...

Ritzke started his actuarial career in1977, including stints in the homeoffice of two major life insurancecompanies, as well as, independent

consulting work since 1995. His consultingwork has been in the areas of marketing soft-ware development, Web development, Internetmarketing, direct marketing, financial model-ing, valuation, administrative systems,customer service support, marketing/agencysupport, policyholder taxation and productdevelopment. Ritzke also had a part in thefounding of two successful dot-com companies.

Prior to consulting, Ritzke held several lifeinsurance company senior management posi-tions. In these senior management roles, hecontributed to major initiatives in the areas ofstrategic planning, incentive compensation,re-engineering, employee training, re-insurance negotiations, agency/sales manage-ment, life and annuity product development,financial reporting, product/sales complianceand the development of a direct marketingdistribution system.

At Zurich Life between 1985 and 1995,Ritzke held a number of positions, including:product development actuary, vice presidentand chief actuary, vice president and chiefmarketing officer, senior vice president of newbusiness, company officer and member of theboard of directors

Ritzke was a founding partner in two dot-com companies:l MyPoints (www.mypoints.com) is the

leading consumer loyalty rewards anddirect marketing Internet company.MyPoints had a successful IPO in 1998and is now owned by UAL Corporation.Contributing to the writing of the origi-nal business plan, Ritzke developed thefinancial projection model that led tothe company’s initial $13 million roundof funding, designed the initial productpricing structure, and participated ininitial marketing efforts.

l CultureWorx was an employee rewardsand motivation company that was ulti-mately purchased and folded into theCarlson Marketing Group. Ritzkedesigned the initial financial projectionmodels that led to several rounds ofventure capital funding.

Professional Activities

Published Papers: “A Radical New Approachto Mortality Table Development,”Contingencies, May/June 2002; “DistributionChannel Conflicts,” Inter-Company MarketingGroup Newsletter (ICMG), June 2001; “Ridingthe Life Product Rollercoaster,” The Actuary,November 1993; “Product Development in aSmall-Company Environment,” ProductDevelopment Section Newsletter, March 1992;“Thoughts on Modern NonforfeitureRegulations,” Product Development SectionNewsletter, August 1990; “Life InsuranceSales Illustrations—What are the problems?”The Actuary, September 1988.

Society of Actuaries Activities: IllustrationActuary Practice Notes Task Force, 1996 topresent; Editorial Board, The Record, 1999 topresent; Web Editorial Board, 1999 to 2001;Technology Committee, 1999-2001; assistanteditor, Product Development Newsletter, 1990-1992; panelist, Illustration Actuary Seminar,2004; panelist, Annual Meeting, New Orleans2002; Moderator, Annual Meeting, SanFrancisco, 1999; participant and attendee atnumerous other SOA meetings and seminars.

Other Professional Activities: Meetingparticipant and speaker at various meetingsof the Life Insurance Council (LIC-LIMRA),National Association of Life Companies(NALC), National Fraternal Congress ofAmerica (NFCA) and Illinois Association ofLife Companies. �


New (and returning) Council Members

In the recent Council elections, two retiring members of the previous council, Ian Duncan andMarcus Robertson, were re-elected to the council. Joining them is a newcomer to SOA committees,Charles Ritzke, who immediately added value to the council by representing us on the planningcommittee at this year’s spring meetings. Some information about Ritzke is reprinted below. An arti-cle on the new SOA Spring Meeting process, and Smaller Consulting Firm sessions planned for thisyear, appears on page 8 of this newsletter.

the independent consultant

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