Well, we have to start (again) somewhere…
Being a NED is not easy. It is never going to be easy. Being a new shiny “independent” NED even less so, but as JB Beckett describes in his new monthly column for Fund Boards Council, this could be the start of something important for him, and for the fund industry.
Dear Fund Board Council (FBC) members, senior (fund board) directors, and my fellow independent non-executive fund board directors. Greetings!
This year I began the slow and fairly arduous journey towards non-executive (NED) life. It feels like starting your career again (but with baggage) and we all have to start somewhere; noting the initial part of that journey might look quite different to the end. FBC, of which I am very pleased to be a Corporate iNED member asked that I share some honest experiences and anecdotes on NED life. As someone who has spent a lot of time in the public eye I was easily coerced. I am not a NED who is only heard but never seen.
For my first, and this is going to be a monthly, blog it makes sense to introduce myself. Most commonly known as ‘JB’, a fund analyst and fund distribution gatekeeper for two decades for my sins, latterly retiring from Scottish Widows (part of Lloyds Bank) at the end of 2018. I am also a writer, publishing my fairly controversial book ‘New Fund Order’ in 2015, which detailed many of the dysfunctions in the asset management industry. An industry activist, I’ve presented and written on fund governance issues for well over a decade.
As indigenous Scottish, I was initially bemused by the term ‘NED’ and the first time I stepped into the luxurious establishment of the same name, just off Poultry, in London. To a Scot, the geni Homo-NEDus actually refers to a thug or what in Essex you might refer to a ‘Chav’.
Watch: ‘NEDS’ 2011: Described as “Encompassed by violent street gangs, neglectful parents, bullying teachers and a lack of positive role models, a studious but emotionally abandoned kid turns thug.” Directed by Peter Mullen.
Suitably confident I wasn’t being asked to don a shell-suit or engage in forms of boardroom thuggery, I researched what the job might actually entail. That was far more difficult than expected and has become very iterative across dozens of conversations and engagements. I had to take what I already knew about the funds industry and combine it with the challenges and pitfalls ahead for a NED. What I found was a very broad and varying remit plus a potentially large liability. I also began analysing the new Financial Conduct Authority (FCA) requirements in detail, co-writing a series of working papers with Sunil Chadda, who wears many hats, including that of an ambassador at the Transparency Task Force, culminating in our ‘Maginot Line’ – Assessment of Value paper which we presented at a UK Fund Boards (the forerunner to FBC) Senior Managers Roundtable in the spring this year.
Let’s start with the obvious. Being a NED is not easy. It is never going to be easy. Being a new shiny “independent” NED even less so. Just getting started (and your first CF2 approval from FCA) takes a painfully long time. Finding patience is hard when you see the regulator’s doomsday clock counting down. Apart from getting to grips with the new Assessment of Value (AoV) criteria, as a NED you will quickly find yourself enlisted into other committees and conversations, inputting on strategy and a broad range of matters of the day. These are all relevant. To assess value you have to first understand the value of the firm and the challenges it faces. All firms have issues. As an independent you have to drive a customer agenda; as a director you also need to help support the business. Reaching the right balance is a bit of a mouse-trap every time you step into the board room.
In my two current iNED roles, the discussions are quite different. One firm is a large mutual; the other a small boutique. One is more advisory; the other more hands-on. Where that helps me is that they give me two very different perspectives and insights into our industry. What then are the topics of the day from my latest boards? No surprises: the agenda turns to issues of transparency, ongoing active-passive debate, sales flows, responsible investing, liquidity risk and Brexit. Behind all, the looming Assessment of Value (ergo Value for Money) is not too far away. My journey is 6 months in. There are barely a few months left to the first AoV public disclosure. More of that later but we did have to start somewhere.
Till next month,
JB Beckett, FBC Corporate iNED Member
iNED, Author ‘New Fund Order’
JB Beckett will be writing a monthly column, Diary of an iNED, recording his experiences on the boards of two very different organisations as he navigates the highs and lows of a plural career at a time when the fund industry is beset with challenges and opportunities in equal measure. JB can be contacted at firstname.lastname@example.org.
If you would like more information on Fund Boards Council, and how you can get involved, please get in touch at email@example.com