Somewhere around the age of 45 to 55, many people will have a change in career. This used to be called a mid life crisis, now it is called a mid life transition. At this mid life point, there are typically two triggers for career transition for executives and professionals: the company may trigger it through restructuring/retrenchment or the individual may trigger it.
For executives and professionals, pursuing a career as a professional non executive director at this stage can be a professionally and personally rewarding career choice. However, those planning such a transition need to review their financial strategy and put in place the appropriate financial structures to protect their family finances. It is prudent to seek professional financial advice about how to make this change and manage the risks to career, income, family and lifestyle.
Most peoples’ wealth comes in the last 10 years of their working life – they have finished paying school fees, the mortgage is manageable and they have peaked in their salary earnings. Whatever you do at this point will have a significant impact on your wealth creation. If you don’t put the appropriate structures in place, you can lose up to half of the productive time to build wealth.
Typically people have two areas to address in preparing themselves financially for a career as a professional non executive director (NED). The first one is financial, which includes asset protection and asset structuring for cashflow. The second is building their skills and relationships so they can build a portfolio of interesting and rewarding board positions.
Ideally the financial restructuring should happen years in advance of transitioning from a full time profession to a professional board career. There is no point in transferring your house to your spouse’s name the day before a board crisis occurs.
Start While In Your Current Role
Reviewing your financial strategy and making any changes while you are still in your current full time role and building your portfolio of directorships is the best approach.
5 Things You Need To Do
- Seek professional financial advice and select an advisor who understands the needs of a company director. You need to have an open discussion and let your advisor know that this is your career objective.
- With your financial advisor, work through the timing and options for your redundancy package or golden handshake – consider what is negotiable remembering that building your board career is a long cycle (you may decide to “hang on” in your current role while you actively build your NED portfolio) and how to structure your payout to provide cashflow while you are building your portfolio of directorships.
- Protect and maintain your professional relationships, invest time in your professional networks, raise your profile and learn to network.
- Care for and make your family a priority – they are a part of this as well – with the appropriate insurances and estate plans.
- Invest in your professional development. The Company Directors Course run by the Australian Institute of Company provides a sound understanding of your personal liabilities as a company director.
In summary, professionals, executives and senior managers need to appreciate that a career as a non executive director requires a different approach to structuring and managing their wealth. For most people it will take 12 – 18 months to secure your first NED position and several years to build an interesting and financially rewarding portfolio of directorships. Planning early will ensure you have an income stream while building your directorship portfolio and the appropriate wealth protection in place when your directorship career takes off.
Please refer to our case studies to further understand how Rob MacLean has assisted his clients in preparing for a career as a company director.