Pacific Life Chief Compliance & Ethics Officer Sharon Pacheco and Deputy Chief Compliance Officer Patricia Thompson discuss how a mission-driven culture and business model at one of the world’s leading life insurance and retirement solutions companies creates a virtuous circle for an ethics and compliance program that is always looking for ways to improve. Interview by Bill Coffin.
How would you say your work on ethics and compliance reflects Pacific Life’s broader culture, mission, vision, and values?
Sharon Pacheco: Pacific Life’s mission is to provide financial security through products and services that stand the test of time. Our vision is to be the company of choice for providing financial security and well-being. Those are very broad and aspirational things, but they speak to how the life insurance industry provides a great value to society.
And it’s not just an overnight, flash-in-the-pan type of industry. Our customers place their well-earned money with us for paying a life insurance benefit at time of death, and to provide for financial security through things like annuity products. They’re giving us their money so we can make payments to them in their retirement years. Trust and reputation are very important to Pacific Life, so we need to make sure we have a solid compliance and ethics program that promotes integrity and trust throughout the organization.
Building a best-in-class ethics and compliance program requires a significant time and energy. How has Pacific Life maintained steady progress on advancing your program?
Sharon Pacheco: We started this program maybe 18 or 19 years ago, when the Pacific Life board of directors approved the Chief Compliance Officer position. From there, we have had the necessary support and resources from our executive leadership to build, maintain, and enhance the program. Without that kind of support, I don’t think any company would be able to build a world-class ethics and compliance program.
So it starts there, but it also has to be a dynamic program. It can’t be a static risk and compliance program. It has to be able to evolve and change quickly, so you have to keep your eye on the ball of what’s happening inside and outside of the company and make necessary changes and enhancements.
Life insurance is a very long-term business. It’s a marathon, not a sprint. As you mentioned, sometimes the ethics and compliance world requires you to move quickly, and insurance companies in general have a hard time with that. They’re not necessarily built for rapid reaction or agile movement. How has your program addressed that particular pain point?
Sharon Pacheco: Great question. The thing I’ve been very lucky with at with Pacific Life is that there’s credibility and trust in the compliance function that we will be reasonably balanced in our approach. That gives me the ability to continually evolve the program where I feel it’s needed and most appropriate.
With trust and the support of your leaders, you can do things quickly, versus having to go through the chain of command or through an inefficient approval process. So I think that’s been very a fortunate thing here at Pacific Life.
Patricia Thompson: Our success comes a lot from the top down but also has a grass roots element to it. Our culture, and the compliance program are both customer-centric and focused on what is the right thing to do, not just what is required. When challenges, tensions or gaps come up, that focus on what is right empowers individual employees to make their own ethics and compliance decisions within that context of trust that Sharon was talking about.
Building and maintaining credibility is so important to our program, but also to our company and our industry as well. It’s what really guides those decisions every step of the way, and at every level within our organization.
Not every company enjoys that level of trust with its ethics and compliance department. What did it take to build that trust over time? And now that you have it, what would you say to companies that might look at your experience and want to try to replicate your success?
Sharon Pacheco: Trust doesn’t happen overnight. And it really comes down to the people. And your intentions need to be very clear that you’re not doing all of this for your own benefit—you’re doing it for the company’s benefit and for who we serve. We’re looking out for the best interests of Pacific Life and its customers. Transparency is key.
The life and retirement business can be a deeply personal one. There’s an old saying, for example, that a life insurance policy isn’t really in force until it’s been signed by a spouse’s tears. So how has Pacific Life’s interactions with its customers helped to inform your overall culture and approach to things like corporate citizenship and integrity?
Sharon Pacheco: Pacific Life has seven core values: people, accountability, customer focus, integrity, financial success, innovation, and community. We live and breathe those core values every day.
Community has always been a big part of the Pacific Life culture–volunteer efforts, donations, and so forth. That is becoming even bigger in this new
environment with a greater is focus on the importance of corporate social responsibility. That wasn’t a drastic change for us because those things have always been part of Pacific Life’s values. But I think it’s a prominent thing that is getting even bigger.
Employees want to work for a good, ethical company, and that is where we’re finding the payoff in this. It’s a very heated job market, and people want to work for a good company that they are proud to be a part of. Having this great ethics culture within Pacific Life is sometimes a factor for employees and customers on making that decision, because they have choices out there. And we want to promote that we are a great company. We have a great reputation. We have been in business for more than 150 years, and you don’t have that longevity if you’re not a strong, ethical company.
What have the last few years been like for your ethics and compliance function, especially in terms of strategic initiatives?
Sharon Pacheco: I don’t think there has been a huge change in our strategic initiatives, but it’s been influenced by looking at how can we promote and sustain the culture we have built over time, now that we are in a hybrid work environment. We were fortunate that we went into COVID with such a strong culture both from an engagement as well as an integrity standpoint. But you can’t just be asleep at the wheel. Today, we have to reach out to employees in a different manner.
Patricia Thompson: Sharon is right, and some of it is trial and error, to be honest. Take training and awareness for example, there are things we tried in an in-person, office environment that that we have found greater traction and interest within the work-from-home environment. I think the trick to any engagement is to be deliberate and consistent and to try to meet staff and colleagues wherever they need us to be.
We have put lots of materials on our intranet site, such as manager toolkits and employee visuals that help them think about decision making as a thought processes that includes compliance and ethics. We spent a lot of time on that, but we have also taken a deliberate stand at being personally available and trying to drive conversations around compliance and ethics related topics.
The most impactful messages that employees listen to come from their direct leader. They don’t come from splashy art or an Internet article. It doesn’t even come from the CEO. The most impactful conversations or messages come directly from your closest relationship in the workplace, which is often your direct leader. So we are trying to engage leaders in a way that makes them comfortable with having conversations about things that might be uncomfortable, and being open and honest about saying, “I may not have all of the answers.”
What are some of the things your program has achieved that you really take pride in?
Patricia Thompson: The companywide engagement and enthusiasm for the WMEC honor. When we first started engaging with Ethisphere and looking at the World’s Most Ethical Companies® application, it was really a compliance and ethics driven initiative. Now, in 2021 & 2022 we have people knocking on our doors and suggesting things that we can do to mature our programs. Or suggesting things we can use in the World’s Most Ethical Companies® application process. The thing I’m most proud of is that our employees across the organization are engaged when we ask, and also excited to offer their suggestions and help. I think that’s really notable.
Sharon Pacheco: It’s great seeing employees embrace this award and putting it in their email signature line, or their Zoom background. Five or six years ago, when we started this journey, it was a corporate compliance initiative, and there wasn’t as much enthusiasm for it. But it grew over time into a collaborative effort, and I’ve been extremely pleased to see that engagement.
Is there anything else you’d like to share?
Sharon Pacheco: It’s just such a pleasure to work for such a great company. Nothing really keeps me up at night because I know what we have built here. We have a great program. We have great leaders that support us in what we need to do. I have been with Pacific Life for close to 20 years in the chief compliance officer role. It hasn’t always been easy, but it sure hasn’t been difficult either, because of the support from the company.
Patricia Thompson: We’re incredibly proud and honored to be one of the World’s Most Ethical Companies®. It’s an affirmation and confirmation of the hard work that we do at Pacific Life and the investments we’ve made. But to me, the real value of the recognition is the journey that we go through on an annual basis, where we take previous benchmark information, compare ourselves to it, and ask ourselves, what do we want to do differently? What do we want to do next? How do we think we can be better and improve the experience of our employees, our third parties, and ultimately, our customers? How do we engage and make decisions that are good business decisions? I think that journey is really the biggest value that we’ve gotten out of this entire process.
Sharon Pacheco: The journey never ends, right? We realize that our compliance and ethics program must continuously evolve. Our board is extremely pleased by this honor and we continue to iterate our program to keep it fresh and relevant.