Retiring bankers find portfolio careers

Old financiers never retire; they become part-time consultants and non-executive directors. This is an increasingly popular career path for bankers who, in an earlier age, would have retired early to a life of leisure. Many are energetically pursuing portfolio careers in which they juggle several commitments.

The list ranges from Colin Buchan, former global head of equities at UBS Warburg, and Alastair Ross Goobey, former chief executive of the fund manager Hermes, to Nicola Ralston, former chief investment officer of Schroder Investment Management, and Michael Deakin, former chief investment officer of Insight Investments.

Deakin explained the appeal of stepping down but not out: "The plan is to be less busy - not to work as long or to travel as much as when I was employed full-time but to be mentally occupied with interesting things to do."

Following his retirement two months ago from Insight, the fund management arm of HBOS, Deakin plans to set up a consultancy offering advice on investment issues and corporate governance.

Buchan said: "It is not a question of retiring and doing nothing, but of finding things that are stimulating, interesting and enjoyable."

The concept of the portfolio career was promoted by Charles Handy, a management guru, in the early 1990s. Handy said careers made up of lots of small jobs instead of one big one offer numerous advantages. Among them are variety, control over what one does, and being able to use the full extent of one's knowledge and experience.

Portfolio careers may comprise anything from window cleaning to flower arranging. However, for retired financiers consultancy work and non-executive directorships stand out as options.

Buchan, who left UBS in 2001, has taken non-executive positions with Standard Life Investments, Royal Bank of Scotland and Merrill Lynch World Mining Trust. He has a property portfolio and runs a working farm in Scotland.

It is a busy life, Buchan said, and one that has a certain stigma: "A portfolio career smacks of people finding a cosy list of non-executive jobs and not doing very much."

For some the opposite is the case. Many retiring executives risk doing too much rather than too little. David Stewart, co-founder of the Independent Direction Directors Advisory Service, which advises executives building portfolio careers, said: "People are easily flattered. They are approached by someone offering them a consultancy role or asking if they would like to be treasurer of the local church and, before they know it, they are overrun by all sorts of things."

A former director of the merchant banks County NatWest and Hill Samuel, Stewart is aware of the pitfalls awaiting senior figures leaving the financial services industry. As well as making the mistake of accepting whatever comes their way, he said many financiers think it will be easy to find positions as non-executive directors. They are wrong.

Ian Davies, a headhunter who specialises in placing non-executive directors, said some employers are wary of hiring former bankers: "They have been in a rarefied atmosphere and need to convince companies that they can relate to the day-to-day running of businesses."

Davida Marston, regional head for UK and Irish banking at Citigroup, is approaching the task of building a portfolio of non-executive roles carefully. She plans to retire next month and has taken a non-executive post on the board of a housing trust in central England.

Marston said: "I applied for the position to gain board experience and because I am interested in social housing in that area. I also felt it necessary to demonstrate that I have a skill set that is useful outside the financial services industry."

Would-be non-executives need to be realistic about the time it will take them to develop a portfolio of work, said Marston. In some cases, this can be several years. They also need to be realistic about the workload: "It is easy to think you will be paid 30,000 (€43,000) for two days' work a month but there can be a lot of additional research and preparation."

Stewart advises aspiring non-executives to undertake due diligence on prospective employers to avoid walking into problems that can be punitive as well as time-consuming. The Equitable Life case, in which nine former non-executive directors are facing a negligence claim of 3.3bn, illustrates the dangers.

Buchan said some non-executive directorships have a risk-reward ratio that is unappealing. "Financial liability can be mitigated to some extent by insurance but there is also huge reputational liability. I've spent 25 years building my reputation. I don't want to see it destroyed by holding a non-executive position."

Part-time work as a consultant may seem the safer option, particularly as it is often possible to work for a former employer. Buchan continues to work for UBS as chairman of UBS Securities Canada, while Douglas Ferrans, chief executive of Insight, has said HBOS will continue to take advantage of Deakin's investment knowledge and technical skills.

The portfolio opportunities for financiers are wide-ranging. Ross Goobey's activities include being a non-executive director of Argent Group, a subsidiary of BT's pension scheme, and sitting on the investment committees of the Royal Opera House and National Gallery in the UK.

Ralston is a non-executive of two hedge funds and a business adviser to CSTIM, a management consultancy.

Being cast adrift without the back-up of a large organisation and secretarial support can be exciting. Deakin is working from home and making the most of his new freedom by designing his own website. "It's completely unlike anything I've done before and quite a challenge," he said.