Jan-Stig Rasmussen says the job of an independent director in the fund industry is becoming ever more professional, and the increased responsibility, from AML and the SFDR to overseeing digital strategy, means board mandates should not be accepted lightly.
How do you feel about the changes brought by digitalisation?
I am very enthusiastic about them for two main reasons. First, I have an entrepreneurial mindset – I like new things. Secondly, I have already witnessed at first hand how digitalisation can transform the financial industry. When I arrived in Luxembourg in 1987, we did not have computers. There was telex, then the fax, but most of the job was done by phone. All clients were on microfiches. The introduction of computers in 1988 enabled us to use a contact database and send personalised newsletters. We started organising seminars around the world. We published the first home page for funds, turning them into a commodity! It was a revolution. We are witnessing a similar giant leap right now. Fund distribution is about to change a lot: the MiFID rules makes it hard for small companies to distribute their funds internationally. I believe approaching investors directly and digitally will be the next big trend. In the past, you needed printed documentation and to travel a lot to build a distribution network. Today it is much easier to make yourself look good on the internet. You can create an attractive web site, advertise with Google and use powerful tools such as LinkedIn. Automated translation makes it even more powerful, and less expensive.
You are only truly independent if you can afford to turn mandates down.
What other changes are taking place?
For independent directors like me, regulatory changes put a heavy burden of responsibility on boards. The CSSF’s 18/698 and subsequent circulars have put the boards of management companies into the firing line. The regulator has started handing out fines, naming and shaming firms and individuals, which puts a different perspective on being a director. The days when it was a matter of where you put the rubber stamp is over. Money laundering is a heavy responsibility, and so is the SFDR. There are so many requirements that the boards need to ensure that we comply with. Because of this, independent directors like myself need to be very careful when they accept a mandate. For example, I would not accept a board position for a self-managed fund, where a small board faces the same requirements as a management company. Being small is not bad in itself, but you have to be serious! There are often too many things missing in such structures. The independent directors most at risk are those that really need mandates, which can affect their judgement. You are only truly independent if you can afford to turn mandates down.
How do you see the role of independent directors evolving?
Independent directors nowadays cannot lean back. They can be quiet, but they need to understand what’s going on because their responsibility is engaged. When I started a few years ago, I was organising five lunches per week for a year. This, combined with solid training from ILA, law firms, the Big Four firms and Insead, has enabled me to keep up with all the regulation while developing my network. It’s vital to follow the trends and how the world in changing so that you can adapt with them. Our industry is entering an ultra-professional phase. The days when independent directorships were a pre-retirement scheme are long gone.