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10 things you need to know about today’s mutual fund boards

June 7, 2011

BoardroomToday’s mutual fund boards are more sophisticated than ever. They’re asking more questions about a broader range of topics — and looking for more detailed answers.

How mutual fund managers can work with today’s directors was the topic of one session at NICSA’s East Coast Regional Meeting, which was held on Friday, June 3rd in New York.

Our panelists highlighted 11 current trends in fund boardrooms:

  1. Risk. Boards are now as risk-averse as they have ever been. They’re more likely to ask, “Should we do this?” not just, “Can we do this?”
  2. Responsibility. Directors have more responsibility than ever before, thanks to new regulatory requirements, and they’re feeling the weight of that responsibility. They’re saying “no” to proposals more often.
  3. Headline news. Directors want to know how issues that have hit the headlines will affect their funds. Managers should be prepared for questions about them.
  4. Transparency. Boards expect complete transparency from management and service providers.
  5. Solutions-oriented. Boards are looking for management to suggest solutions, not just report problems, and they want to understand “why” and not just “what”.
  6. Proactive. Boards want managers to be proactive and forward-looking. A pattern of reactive behavior will steadily erode trust. Directors themselves are asking more about the future and less about the past.
  7. Bottom line-focused. Directors don’t want to play “Where’s Waldo?” with reams of material. They’re looking for good executive summaries.
  8. Deliberate. Directors want time to consider important decisions. They may not be ready to take a vote after one discussion.
  9. Sustainability. Boards want to know about the sustainability of a manager’s business. They’re asking about succession planning, resource availability and client concentration.
  10. Service providers. Directors are spending more time with service providers — not only in the board room, but on site as well.

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