How Old Is Too Old To Serve?

1-21-15-Jack.pngWhat is the most sensitive topic in the board rooms of most banks today? It probably isn’t regulation, director compensation or whether or not to sell the bank.

I think it’s age, and the issue can be examined in two dimensions. At what point does advancing age rob an individual of the intellectual and physical capacity to serve effectively? And does the older director who still has the capacity to serve also understand enough of the world around them and how it is changing to provide forward thinking leadership?

Let’s examine these two aspects separately.

It’s certainly no news that a great many (if not most) bank directors are in their 60s and 70s—with some even older than that. They are often retired, which gives them the time to serve that a younger person might not have. And with age often comes a level of experience (life as well as business), wisdom and judgment that can be of tremendous benefit to a board.

Of course, we all have a “freshness date” and it varies for everyone. (In the interests of full disclosure, I am now on the north side of 60, so aging is no longer just an abstract concept for me.) A director who is, say, 78 years old might have a much higher capacity than someone 10 years younger depending on their separate circumstances. This might be why so many directors are opposed to mandatory retirement ages, because they fail to discriminate between individual cases, and could end up removing as many older directors who are still effective as those who are not.

A better mechanism for dealing with directors who are no longer performing up to the required standards of their boards for any reason (including age) is the use of individual evaluations, where each member of the board confidentially rates each other’s effectiveness against a common set of criteria. There are two problems with this approach: One, I have found that most directors find the process abhorrent, and two, it takes a strong chairman or lead director to ask a colleague to resign because, in the judgment of their peers, they are no longer effective.

The other aspect of the age issue is whether the older director understands how broader changes in the world around them are impacting the business of banking. I’ll point to three trends which tend to interconnect: the explosive popularity of all things mobile and how that is changing retail financial services, the parallel growth in social media platforms and usage, and the rise of millennials as a significant factor in the economy. It is not enough for an older director to bring experience and mature judgment to the task. They also need to understand the technological and social changes that are occurring around them. That can be accomplished in part through continuing education, but it also requires a level of intellectual curiosity and engagement.

I think one of the most important attributes of an effective director is to know when it’s time to leave the board. Nothing lasts forever and board service won’t either.

There might be several good reasons why it’s time for a director to resign from the board, and advancing age is only one of them. The catalyst could be a philosophical or policy difference with a majority of the other board members. Perhaps a director’s life circumstances have changed and he or she can no longer devote the necessary amount of time to the board. Or it could be because of a health related problem. 

Whatever the reason, have enough respect for the important role that boards play to step out gracefully when you reach the point where you can no longer meet the demands of being an effective director.


Jack Milligan


Jack Milligan is editor-at-large of Bank Director magazine, a position to which he brings over 40 years of experience in financial journalism organizations. Mr. Milligan directs Bank Director’s editorial coverage and leads its director training efforts. He has a master’s degree in Journalism from The Ohio State University.