Fund Directions - What Boards Should Know About On-Boarding

What Boards Should Know About On-Boarding

Demands on mutual fund boards over the past five years have made it more imperative than ever that new directors quickly become knowledgeable, competent board members. Despite this, many fund complexes are still in the dark about how best to conduct the new director transition process, or "on-boarding," as it is becoming known. A series of common-sense steps can accelerate the process, according to Nicholas D'Angelo, director at PricewaterhouseCoopers, who spoke with FD last month.

Much of the pressure to improve on-boarding comes from a dramatic change in the composition of fund boards. As demands have grown, turnover has increased - a November 2007 study by PNC Global Investment Servicing (formerly PFPC) found that four in 10 fund board members surveyed said they knew directors who had stepped down because of heavier workloads or concern about personal liability. Boards also have expanded to accommodate additional members such as the mandatory financial expert.

Fund boards face pressure to increase their independence as they strive to recruit qualified candidates. As a result, outside directors now comprise at least three-quarters of their board's membership at 88 percent of all fund complexes, according to the Independent Directors Council. Unlike previous generations of fund board members, who came from the ranks ...

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What Boards Should Know About On-Boarding