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What prompts a fund board to review its workings?

What considerations should boards be factoring in when determining the scope of fund board reviews?

How to ensure an effective process and what happens after the review?

All questions on the agenda at FBC’s latest Fund Board Effectiveness Digital Meeting in March.

Fund board effectiveness and the mechanisms firms are putting in place to review the performance of their fund boards were the focus of Fund Board Council’s latest Digital Meeting for corporate members on 24th March. As part of FBC’s Fund Board Effectiveness programme, the session explored what triggers a firm to review its fund governance entity, the scope and process of these reviews and how firms are taking forward the outcomes.

Joining us at the meeting to explore this theme in more detail were experienced independent director Eimear Cowhey, who sits on investment boards in the UK, Ireland and Luxembourg and the Managing Director, Asset Management at Coutts, Ben Hunt. Both Eimear and Ben have instigated board reviews and have been heavily involved in both the process and the outcomes of the reviews.

A snapshot poll of FBC corporate members attending the event suggested that directors are increasingly stepping back and taking time to understand how well the fund board is working. 

All of those polled said they had been through some form of a review in the last three years – either a standalone assessment of the fund board or one conducted as part of a wider firm governance review.

What prompts a fund board review

A key topic for discussion was what triggers a board to review its own effectiveness. The panel agreed that, outside of regulatory requirements to conduct a board review or a need to do so as part of the wider firm’s own governance requirements, there are often quite a broad range of reasons that prompt a board assessment.

According to the results of the FBC poll, key triggers include a change in board directors or a desire to do a review after the board has undertaken a significant initiative, for example the Assessment of Value project in the UK. In some cases, the board felt they would benefit from an assessment of particular aspects of their board activities, while for others it was more about ensuring they had the optimum skill sets on the board, as well as the ability to benchmark their board against good practice elsewhere in the industry.

Many fund boards appear to be conducting quite wide-ranging reviews, exploring for example the fund board’s role in the firm’s wider overall governance structure, looking at the skills and experience that make up the composition of the board, examining how effective and efficient the board processes are (board packs, minutes etc) and also the culture and behaviours that underpin the workings of the board. FBC will be returning to these topics in future Fund Board Effectiveness sessions.

FBC Fund Board Assessment Review

For more information about FBC’s work in the area of Fund Board Assessment Reviews, click here.

Download for full information on our Fund Board Assessment