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Practice Management > Building Your Business

Is a client advisory board right for you?

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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.

Listening is another key. “You are not going to learn anything if you’re doing all the talking,” Ehrlich notes, “and I think a lot of financial planners need to be told that.”

It’s helpful to have another person from the firm or even outside the business be an objective listener, she adds. “It’s good to have somebody there who can say (to you afterward) you didn’t pick up on this remark, but it’s important.”

What to discuss
Topics for discussion during client advisory council meetings vary according to the advisor’s goals and the type of practice he has. Some advisors ask their client panels to critique marketing materials or newsletters, while others seek input about existing services or expanding those services, Montoya says. The questions may be as simple as, “Is our office location convenient?” or “Should we add more estate planning services?” Frequently, advisory groups are asked to evaluate proposed client-appreciation events, as well.

If the advisory panel is holding its first meeting, MacPherson suggests asking each member to explain how he came to be a client. This often opens up the topic of referrals. “It reminds everyone of the value of referrals and may make them think, ‘I haven’t introduced anyone to you lately,’” he notes.

MacPherson says it can make clients uncomfortable to ask outright if they will refer friends and family to you. Instead, he suggests asking whether you have “earned the right” for clients to feel comfortable making referrals to your firm.

He also suggests asking the client advisory group whether you have done a good job at conveying your full range of financial solutions. This allows you to describe your offerings, some of which your clients may have missed.

Can you get honest answers from advisory board participants? Yes, say the experts. Ehrlich notes, “Clearly, people are going to tell you as softly and politely as they can the (hard) answers. They may be uncomfortable telling you your assistant is rude on the phone, but if in fact that’s a problem, they would want you to know that.”

Say thanks and follow up
After your client advisory council meets, it’s good to send a personalized thank-you note or card. Some advisors include a small gift of appreciation, Ehrlich says. MacPherson says the best gifts have “impact and shelf life.” For example, if one of your council members loves gardening, a book about roses will get years of use.

Advisors often include summaries of each client advisory group meeting with their thank-you letters. It shows participants their comments were heard and their suggestions are under consideration. And – obviously – showing you’re adopting the best ideas ensures your advisory group knows you’re giving more than lip service to them.

Advisors can get fresh opinions by rotating new members into their advisory groups yearly. Indeed, as advisors become comfortable with the client advisory group concept, it’s good to add members from “lower-tier” clients – those who invest few of their assets through the advisor or haven’t formed a strong bond with him. “They have a different perspective” from A-plus clients, Montoya notes.

Ehrlich suggests that once a client advisory group is going well, advisors could ask members to bring friends and colleagues. “That way, you can get opinions from people you don’t do business with. The more people you talk to, the more you know.”


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