Investment trusts look for non-execs

This could be a good year for senior fund managers who want to retire and take on part-time work. Industry insiders predict investment trusts in the UK will increase their recruitment of non-executive directors in 2004.

Daniel Godfrey, director general of the Association of Investment Trust Companies (AITC ), said new Financial Services Authority (FSA) regulations this year will force many existing non-execs at investment trusts to resign.

Simon Negretti at Hanson Green, a search firm, said: 'A lot of investment trusts are going to need people. The hard core of those will have a City background. Senior fund managers who are about to retire are especially appropriate.'

The new FSA rules are a response to the crisis in split capital investment trusts, many of which plummeted in value during 2002, wiping out retail investors' savings. At the time, investment trust boards were lambasted by the FSA for a lack of independence.

The new rules say the chairman of a trust cannot also be a director of another trust in the same group; also, people who sit on the board of more than one trust in a group cannot be deemed independent. They also say trusts should have a majority of independent directors on their board.

The rules are not mandatory, but if trusts do not comply they must say so publicly. This is likely to deter investors.

Negretti said non-executive positions at investment trusts have traditionally been filled through informal contacts. Today, search firms are increasingly involved. In June the AITC linked with Trust Associates, a headhunter, to help its members find independent new directors.

Mike Connors, a director of Trust Associates, said search firms were finding board members from an increasingly wide range of backgrounds. 'We are seeing an attempt to lower the age profile of non-execs, as well as an attempt to bring in more women,' he said. But he added most non-execs are still likely to be fund managers.

Negretti said women accounted for a third of Hanson Green's appointments to non- executive positions in investment trusts last year, up from almost none the year before. For example Caroline Burton, former head of Guardian Asset Management, became a non-executive director of Rathbones.

The broadening pool of candidates is one reason why, despite the expected increase in hiring, Negretti does not expect to have problems filling the vacancies. Another is higher pay.

A few years ago, non-execs at investment trusts were paid about 8,000 a year, said Negretti. Thanks to the split caps crisis and directors' broadening responsibilities, that has now jumped to 15,000.