Independent directors in the registered fund arena play a critical role in fund governance and protecting shareholder interests. The Independent Directors Council’s 2024 Annual Review noted that as of September 30, 2024, there were just over 1,600 independent directors overseeing approximately 11,000 registered funds.
While the pool of qualified, industry-vetted candidates for open board seats continues to grow, the number of available board seats at any given time is limited. Turnover tends to be low, with director tenures extending over many years. Further, consolidation in the industry continues to reduce the number of seats available. As a result, opportunities for new appointments are highly competitive.
Against this backdrop, director candidates and others interested in navigating the director recruitment process gathered during the recent Cohen Client Conference for our first-ever board journey roundtable discussion. Below offers highlights and insights from the event.
Research conducted and published by the Mutual Fund Directors Forum in early 2025 confirms the competitive landscape for independent director candidates. Notably, the research found that of the 79 fund complexes studied, 41% will not recruit for another director within the next three years. The research also offers impactful insights into how mutual fund and ETF boards approach the recruitment of new directors, including typical timelines, candidate sourcing methods and future plans.
Search duration is an important consideration when weighing candidate readiness. The Mutual Fund Directors Forum report notes that 65% of searches in their research were between seven and 18 months in length from start to finish. The process is long for most searches, and it may take several years to earn a board position. At the same time, candidates who are not invested in full-time, career-building employment are typically preferred.
From a commitment perspective, it’s also important for candidates to consider their financial position in contrast to potential loss of income during the search process as well as the need for investment in networking activities, such as travel to critical, high visibility conferences.
Referrals from existing directors, fund counsel, audit firms, board advisers and management comprise the top sourcing methods for candidates, highlighting the critical need for relationship building and networking in the director and director-adjacent community. Also noteworthy is the MFDF Director Candidate Database, which was used in 34% of searches in the research. Submitting complete and updated board documents to the MFDF Database and other databases is often a great early task in the board journey.
Below are a few key best practices for networking:
The concept of “fit” is important to address for anyone seeking a board spot. Given the critical importance of fund governance and the amount of time the board will spend working together, aligning interests and personalities is as important as the business or technical skills you bring to the table. But, it’s also important to remember that fit works both ways. As much as it’s important for a board to feel you may be the right individual for the job, you also must feel comfortable that it’s right for you. Consider whether a given board role feels like the appropriate opportunity to which you want to devote your time and energy.
While the process is competitive and the journey can be long, a dedicated process and determination often leads to success. Fortunately, many in the director community are also devoted to the success of new, qualified entrants and nearly all in the director community adhere to the concept of paying success forward.
Contact Erin McClafferty or a member of your service team to discuss this topic further.
Thank you to our panelists for participating in this session with us: Carolyn McPhillips, President of the Mutual Fund Directors Forum; Jeannie Lewis, Independent Trustee for the CEF Accelerator Platform (U.S. Bank); Anne Kritzmire, Independent Trustee for Advisors Series Trust and Thornburg Income Builder Opportunities Trust.
In this blog Cohen & Co is not rendering legal, accounting, investment, tax or other professional advice. Rather, the information contained in this blog is for general informational purposes only. Any decisions or actions based on the general information contained in this blog should be made or taken only after a detailed review of the specific facts, circumstances and current law with your professional advisers.