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An interview with Malcolm Hamilton

by Joe De Dominicis, SOA staff fellow, Canadian membership

“Don’t think of retiring … until the world will be sorry that you retire.”
— Samuel Johnson

Aside from sports heroes like Wayne Gretzky and Michael Jordan, it is difficult to think of too many who have met the above criteria.  When actuary Malcolm Hamilton retires later this year, he will have come as close as any… at least in the world of Canadian pensions and retirement.

I had the chance to sit down with Malcolm and discuss a range of topics including how he became one of Canada’s leading experts on pensions and retirement.   Do you aspire to be Canada’s next “Super Actuary”? Find what Malcolm’s 30 plus years of experience have taught him and what advice he has for today’s actuaries.

How did you first start to develop a broad knowledge of the pension and retirement landscape in Canada?
Early in my career I would do mymother in-law’s tax returns and help her with retirement planning.  That’s how I developed a first hand familiarity with the issues faced by older Canadians. An example is replacement rates.   I was told you needed 70%   [of your pre retirement income in retirement].   She didn’t have anything close to 70% but lived quite well. I tried to figure out why I had a large income but no money, and she had a small income and lots of money. There are lots of mysteries out there; if you are curious you can figure them out.

Malcolm Hamilton, FSA, FCIA

What motivates you, and how did that help you become one of Canada’s leading pension experts?
I think I was different from most consultants in the sense that I had less of a commercial motivation. Looking back on my career – by my nature I am an academic.  There was never a point in my career when I was comfortable with just doing the things for which people would pay me a lot of money.   I was driven by a desire to understand how and why things work, how to do things better and how to develop a broader perspective – one that extends beyond actuarial science to accounting, financial reporting, economics, retirement savings, etc.  I needed a balance, more so than some people.

I suppose that I could have made more money if I had behaved differently.  I would have been richer, but miserable.  I am fortunate that there was sufficient alignment between my academic and commercial interests so that I could focus on the things that fascinated me while still making good money from consulting.

What is it about pensions that interested you and continues to interest you?
Pensions are a very complicated and poorly understood subject. It isn’t easy to understand pensions and there are ample opportunities to challenge conventional wisdom and to do things better than the way they are currently being done.

I especially liked the fact that you can’t study pensions for a year or two and know everything there is to know.  To be a good pension consultant you need to develop a diverse set of skills in areas like economics, taxation, accounting, mathematics, investments and probability. Then, just when you think you understand the way things work,  along comes a financial crisis, or interest rates go down, or the world changes in some other way and you need to rethink many of the things that you had taken for granted.

You have made a name for yourself as someone who challenges conventional wisdom.  What are some key issues in Canada that actuaries should be challenging?
There is a great deal of confusion about the relationship between retirement ages and life expectancies.  The conventional view appears to be that the longer people live, the longer they should be able to work…as if this is a biological fact rather than an unsupported leap of faith. It is fine to push the retirement age up if older people are able to work; it is not fine if people are just living longer but not able to work longer. Had Bismarck, in 1889, tied the German retirement age to life expectancy as is frequently advocated today, the retirement age in Germany would now be 100. German pensions would be admirably affordable but there would be armies of old, unproductive people trying to find their way through life. We need better thinking about this issue to decide what a sensible retirement age looks like.

Other examples are,

  • How much income do people need in retirement?
  • How much do people need to save and when should they do so?
  • What should people do when they have a limited amount of money to save and the competing possibilities are RRSPs, TFSAs, RESPs and debt reduction?

These are all important questions for the Canadian population.

If actuaries aren’t helping the public answer these questions, who is?
These questions seem to be dealt with largely by groups with vested interests in the outcome.  If you are a financial institution and people ask whether they should pay down their debt or contribute to an RRSP, you have a conflict. You are better off if they contribute to the RRSP because you make money on both the debt and the retirement savings. Unfortunately, for most people, that’s the wrong answer.

The actuarial profession has people who are capable of dealing with these issues and, as a rule, are reasonably objective.   There are many important questions that actuaries can think about and take positions on.  Unfortunately, you are seldom compensated for answering these questions – but it is important to do so anyway.

What advice would you give an actuary who aspires to the same level of success that you have had?
I’ve been successful largely in areas where no one else was trying to succeed.  It’s relatively easy to be successful when you are not competing with anyone.    The first thing you need to do, and it is a hard thing, is decide what success means to you.

A big competitive advantage is your ability to communicate in an interesting and compelling way.  How did you develop those skills?
If you want to be a good communicator, a good writer or a good speaker the first thing you need to understand is that there is nothing in your actuarial training that prepares you to excel at any of these things. If effective communication is important to you, you need to do what you’ve done in every other aspect of your actuarial training – work at it.

When I was a young actuary I would read transcripts of presentations I had made as a panelist at actuarial meetings.  They were scrambled, inarticulate, badly expressed and very discouraging. I went through a period of 4-5 years when I actually wrote out and read verbatim the speeches I would deliver.  It would take an incredible amount of time. For every minute of presentation I would spend 3 hours doing the research and getting the text to where I thought it was well written. As time passed the amount of time spent on preparation decreased. Eventually I was able to go back to speaking from notes. But the hours and hours I spent during those early years helped me hone my vocabulary and gave me an appreciation for the difference between oral and written communication.

What is the most important tip for young actuaries trying to develop their presentation skills?
First you need to have something to say.  That is the most essential element of a compelling presentation. Young actuaries often don’t have a message. That’s not their fault.  They don’t have anything to say because they spend all of their time focusing on the technical underpinnings. When you ask them the big picture questions they don’t have views because their jobs don’t require them to develop an appreciation of the big issues.  Your audience will be understandably disappointed if you describe all of the consequences and implications but don’t reach any conclusions. Work on having a message – it’s there if you look for it.  You may need to start reading the Economist, the Financial Times, the opinion section of the Wall Street Journal.  Do that for a year and you will find the things you believe in, the things that are important to you, and then you will have your message.

As you approach retirement later this year what aspect of your career will you miss most?
I don’t think I’ll miss anything and here’s why. At this point in my career I’m not doing actuarial valuations, I’m not trying to develop new business, I’m not managing teams or doing any of the things I was expected to do earlier in my career. Frankly, I’ve done enough of that. It was hard work, long hours, and a fair bit of stress. I don’t regret the things I had to do, nor do I expect to miss them.

I regularly read that people don’t want to retire any more.  But I think we’ve grown confused about what retirement is. It is not as though you were busy and productive the day before retirement and then, all of a sudden, you are no longer doing anything useful.  For me, retirement is the transition from doing the things that people will pay you to do, i.e. work, to doing the things that you want to do and for which you are not paid. That’s retirement!

Malcolm Hamilton is a pension consultant and partner with Mercer Canada. Malcolm is a former colleague and mentor of mine.

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6 responses to "An interview with Malcolm Hamilton"

  • Mike Austin says:

    This article is very inspiring for a young aspiring pension actuary, such as myself. Thank you Joe and Malcolm!

  • Raymond Tsang says:

    I knew Malcolm is great. But I want to know how to upgrade myself so that I find some work that can generate income to sustain my living expense. Therefore, I want to get those kinds of information. I am not looking for complimentary message. I apologize for this nasty response.

  • Tom Walker says:

    Malcolm’s communication skills have always impressed me. He is definitely our media super star and I hope an inspiration to all actuaries on the importance of communication.

  • Rob Brown says:

    Great actuary. Great career. A true credit to the profession. Well done.

    Enjoy Muskoka.

  • Minaz Lalani says:

    Malcolm – Congratulations ! Enjoy your defintion of retirement.

    Great article on the actuaries’ actuary. Malcolm has been THE spokesperson for the actuarial profession during his esteem career and we should all be indebted to him for his effort and time . Malcolm -Thank You.

  • kinyanjui charles says:

    the interview has just broadened my mind, that its of more importance to concentrate at what will bring out your talent to the core, than just for the pay check!

    Thank you Malcolm.May you enjoy your RETIREMENT…

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