Any career move prompts a range of important questions. Why do I want this new role? Can I make it work financially? Have I thought through the implications?
Becoming a Non-Executive Director (NED) is no exception. NED roles have grown in prominence in recent years and for experienced individuals, they offer a new challenge as well as acting as a stepping stone from full-time employment to retirement.
Plenty has been written before about what makes a good NED. Less has been said about the financial pressures they face. So we recently conducted a survey with existing and prospective NEDs to understand their financial outlook, challenges and plans. Click here to see the full survey findings.
Some of the differences in the views of established, new, transitioning and future NEDs are compelling. Nowhere is this more evident than on views around the importance of financial security.
On the face of it, respondents seem unified in their view. The overwhelming majority (89%) think that being financially secure is important to have a successful NED career. This may be because most expect their income to decrease when they become a NED – with 62% expecting or having experienced a decrease in income.
Looking more closely, we find that around half of new, established and soon-to-be NEDs think financial security is a “very important” factor. However, among those interested in becoming a NED, only one in three hold the same view.
This suggests that the next generation of NEDs may not be taking financial security seriously enough, going by the gravity those who have become NEDs place on it. Candidates who tick every other suitability box for a NED role could be caught short by the financial demands taking one on entails.
Another intriguing trend emerges around retirement. Existing NEDs, and those interested in becoming one, are largely unconcerned about levels of income they will have in retirement. However, among those currently transitioning into a NED role, nearly half (41%) express some concern.
It may be that this is when they first start thinking seriously about what the career change could mean for their retirement income. As reality dawns, it is natural that concerns will increase for some.
Whether it be questions about retirement income or doubts over financial security, our research reinforces the positive role financial advice plays in helping NEDs succeed. This might involve an assessment of long-term financial plans, a cashflow planning exercise or ways to create a tax-efficient income stream throughout a NED career and beyond. Either way, seeking financial advice can provide welcome clarity and certainty and allow NEDs to focus on the role and responsibilities ahead knowing their financial wellbeing is in good hands.
If you would like to discuss your financial situation with me or one of our advisers, please do get in touch.
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