Build an effective advisory board for your practice

When Brian McCarver and Jonathan Freeman decided to start an advisory board more than 10 years ago, the goal was to help meet centers of influence (COIs) who could help them build a retirement business. They enlisted a mixed dozen professionals to help, including accountants, attorneys, payroll specialists, recordkeepers, benefits specialists, clients and prospective clients.

What they wanted from the board was independent opinions, but they also wanted advocacy from outside interests that could help them grow. The board’s first advice: Change your name. The two were using their surnames and the board suggested they try something more distinctive. This led the Pennsylvania-based firm to rebrand as Stonebridge Financial, a change that has helped them build a name in their community. And it is just one example of the ways the board has helped them over the years.  

McCarver and Freeman say their board has helped them grow at an annual rate of 10-15%, to the nearly $2 billion firm they have become, serving equal parts wealth management and retirement clients. The board has helped generate referrals to grow not only on the retirement side but also the wealth management business, and it’s generally helped the firm evolve. Over the years, the board has driven the Stonebridge Financial team to leave their wirehouse, bring on new talent and become a registered investment advisor. And although the two admit they haven’t always followed the board’s advice, it has always been spot on.

Stonebridge’s story is similar to those heard from other advisors with established boards, according to Matt Robinson and Melissa Sloane, divisional managers at Capital Group. While not all advisors are using boards, those that do say there is no better channel to test new ideas and improve the progress of your team. A board can also help with networking and getting new eyes focused on your business.

“If done well, an advisory board is one of the best ways to transform clients into advocates,” Robinson says. “Ask people for their help and watch how quickly they become invested in your success.”

Still, advisory boards require some work to get right. If you are looking to start an advisory board here are some best practices to consider.  

Ask people to join your board

Aim for eight to 12 board members at a given time, serving terms of anywhere from one to two years. Sometimes the biggest hurdle to getting those members is knowing how to ask, Sloane says.

“How you invite the members of your board is important,” she says. “Think about using phrases like ‘I really respect your opinion or ‘I would love your advice.’  Making clients feel valuable will help with buy-in.”

Robinson agrees. “When asking clients or COIs to be part of your board, let them know you need talented people to help you move forward. Most will be flattered and excited for the opportunity to take part.”

This is true for Stonebridge, who asks each member for a two-year commitment and regularly transitions new members onto the board. In 10-plus years, no one has turned down the offer. 

Constructing your board

Who to include on your board will be driven by your objectives for the group. For example, you may want a board that consists only of clients or instead want to focus on professionals who are COIs around your ideal client. Your board may include professionals in areas where you have less experience, such as human resources, education or technology. Or you may have a combination of these, with clients and COIs meeting side by side.

When deciding which clients to invite, start with those you would most like to replicate — your “ideal clients” who are also not afraid to give feedback. Robinson recommends a specific combination that he has observed to yield impressive outcomes:

• Honeymooners – These are clients who have been with your business for less than a year. They have just made a great decision to retain you and want to feel empowered to tell everyone. They haven’t experienced any service impacts or true market volatility, and they see you in the most positive light possible.
• Lifers – These are your most loyal clients or cheerleaders for your practice. In case constructive feedback starts to get a little too constructive, these folks can step in to share how much they trust you.
• The otherwise advised – These are clients or prospects who have advisors other than you. These people can help provide perspective they have garnered from those other firms, and may even ask themselves, “I wonder why so and so doesn’t ask me for feedback like this?”

If you are considering COIs, Sloane recommends looking beyond the obvious accountants and attorneys to include third-party administrators, realtors, psychologists, small business consultants, non-profit executives, and so on. 

Holding an advisory board meeting

Setting and presentation are key, says Robinson. “Think like a Fortune 500 company,” he adds. Set your meeting in a private room with name placards, a printed agenda and copies of any presentations laid out at each seat. One or two staff members should be present at each meeting, but even those individuals can rotate over time. It also helps to have a staff member or third party take notes during the meeting, capturing everything that’s shared.

Most meetings will start with introductions, which is important to networking and likely to be the motivation for board members to attend. Rather than simply stating your name and business, a more engaging introduction might be asking clients how they joined the firm. The Stonebridge board recommends starting by asking everyone to share their biggest challenge. More than simple ice breakers, these techniques can help members get a sense of what drives one another.

In terms of presentation, lead with your successes, says Robinson. “People want to work with other successful people. Take members behind the scenes of your business,” he says. This could include growth and success metrics, new team members and strategies. You may also want to quickly review what your business is all about: your mission statement and progress toward it.

Next, dive into your vision for the business and what you plan to do next. For example, share your succession plan and long-term growth strategy as well as short-term goals and how you plan to achieve them. Then, ask for feedback, which shows board members that you care about the business and providing a certain level of service.

The meeting should end with a worthwhile activity, such as a five-course dinner with wine pairings. Stonebridge has learned over time that a second meeting may be needed in the same year — one that provides an opportunity for a recap and something fun (like a golf day). They have found that following up with board members over time is the best way to get meaningful feedback.

Asking for feedback

While feedback can be intimidating to some advisors, keep in mind that’s exactly what an advisory board is for. You may not act on everything the board recommends, but having a willingness to listen can benefit your practice while improving loyalty among clients and COIs.

Freeman says that initially, most of the time spent in board meetings was helping members learn more about Stonebridge. Over time, the meetings have focused more on feedback. But some boards are more interactive than others.

“We started to shape the conversation of our meetings to be ‘we need your input,’” Freeman says. “If we want their opinions we have to shape the content of the meeting around specific advice we are looking for.”

Topics you might introduce for feedback could include:

• A first look at branding, website, marketing materials
• Helping decide client event topics, speakers, venues, etc.
• How to build an ideal client profile or marketing niche
• Validating an elevator pitch or value proposition
• Introducing or adjusting fees.
• Input on what you should stop doing, start doing or continue

Using advisory boards to generate referrals

While new client acquisition is not the main reason to have an advisory board, referrals do tend to organically arise from board activity. Stonebridge asks board members to be advocates for the firm, meaning to engage with them on social media and in other contexts where appropriate. Because people on their board are very influential, it helps them connect with others in the community and build their brand. They also ask existing board members at the end of their two-year period for replacement recommendations, which helps expand their networks as well.

Robinson suggests having your board entertain the concept of introductions rather than referrals. “I’ve seen advisors teach their clients how to make introductions by taking out their phones and sending an email that connects who they are talking with to a third party,” he says. It seems like a small detail, but it’s one that can result in big benefits.

For more about advisory boards, download our handy Advisory board starter kit, then reach out to your Capital Group representative for questions.