Here were some of my key takeaways:
- Nearly 70% of finance professionals believe their company has made significant business decisions based on bad financial data.
- The survey found that ... 55% of professionals lack confidence in their ability to spot financial errors before reporting results.
- Roughly one-fourth said they were concerned about errors they know to exist, but hadn't identified.
What does that tell me? It tells me that in-house financial professionals don't trust their own numbers. It also implies that they may not trust externally-produced numbers, but they are not doing anything about it.
Doesn't that scream that you need a second opinion? Thinking about this as an actuary, it tells me that companies that sponsor pension plans whether they are traditional or cash balance, ongoing or frozen, well-funded or not, could really benefit from an actuarial second opinion.
With required contributions annually in the millions or even hundreds of millions or billions of dollars for many longer-term plans, the cost-value trade-off of a second opinion seems clear. If a plan sponsor got meaningful value one year in ten from such a second opinion, they will have paid for all ten of them many times over.
Are you in a long-term relationship with your actuary? If so, has the relationship gotten complacent to the point that they are going through the motions. Think of your desire for a second opinion like a seven-year itch.
Has the actuarial firm that you use recently changed or significantly modified its team that serves you? Did they come back to you with findings from when they reviewed the work that has been done recently? If not, might they have found something they don't want to tell you about? Perhaps not ... maybe so?
Does the actuarial firm that is serving your plan do periodic reviews where national leaders come in and audit the work of the team? Have they done such an audit recently? Did the team tell you about the results of the audit.
And, returning to the theme of the WSJ tidbit, do you want to be one of those seven in ten companies that makes significant business decisions on bad financial data? Isn't it time to think about an actuarial second opinion?