Is a client advisory board right for you?

If you wonder whether your clients think you’re doing a good job, providing the right products and delivering good service, then ask them, face to face.

A growing number of financial advisors are doing just that by creating client advisory boards. These groups typically consist of fewer than 20 top-shelf clients and, sometimes, referral sources such as accountants. They meet periodically to discuss how advisors can improve their practices. Advisory boards are easy to set up, vastly simpler and cheaper than holding formal focus groups, and can guide advisors with meaningful advice, the experts say.

“A client advisory council, if done properly, is ongoing, like a board of directors or a steering committee,” says Duncan MacPherson, co-founder of Pareto Systems Inc., a British Columbia-based specialist in business development, practice management and marketing solutions. “Clients are a sounding board to ensure the advisor and his team are on track and not drifting.”

A successful client advisory panel can help an advisor achieve several goals, says Peter Montoya, who heads Peter Montoya Inc., a Tustin, Calif., financial services marketing firm.

“One is to get meaningful, purposeful ideas to strengthen one’s practice. No. 2 is to strengthen relationships. No. 3 is to generate more referrals from existing clients,” Montoya says.

Feedback about your business is absolutely important, especially if you’re dealing with older clients who sometimes require different “selling” skills than younger people, says Michael Walker, a marketing and management consultant based in Rochester, N.Y., and author of the book “Marketing to Seniors.” “The more information an advisor has for salespeople, the better-trained they’ll be to do their job.”

Panel setup
Keeping membership on the low side helps allow every participant a chance to express opinions. Montoya recommends starting a panel with six to 18 clients. MacPherson suggests 10 to 15 people. Evelyn Ehrlich, president of Ehrlich Creative Communications in New York City and author of “The Financial Services Marketing Handbook,” advises choosing five to 10.

The ideal participant is a top client – not necessarily the wealthiest client, but one with whom you have a strong and long-standing relationship. MacPherson recommends calling prospective members with an informal invitation that stresses your commitment to clients and asks for the client’s input to improve the practice. Then, you can follow up with a written invitation that outlines the goals of the client advisory panel and what to expect at the meeting.

Walker cautions that even if your group includes people of different ages, gender and socioeconomic backgrounds, it be statistically representative of your market as a whole. One way to accomplish this is to create several advisory councils, ask them the same questions and compare their responses, Walker suggests.

Holding meetings
Client advisory councils can meet at whatever intervals you and your clients agree would be worthwhile. Many advisors choose to hold quarterly meetings while others prefer semi-annual or annual gatherings.

Meetings generally are held in a comfortable setting, conducive to conversation. This can be your office, a restaurant meeting room or even your home. Montoya maintains that meeting in your home is the best choice, provided your residence is on par with your clients’ homes. A fancier home than theirs will make clients think you’re too successful; a more modest home will make them think you aren’t successful enough, Montoya says. Often, advisors serve refreshments or link meetings to breakfast, lunch or dinner, depending on the availability of the clients.

Nothing will turn off client-participants faster than a rambling, poorly run meeting. Write and send out agendas in advance, then try to hold the meeting to an hour. “Brevity has to be key,” MacPherson notes. But the beauty of a well-run client advisory group is that the meetings often go past their scheduled time, as participants enthusiastically embrace the discussion, he adds.