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Regulation and Compliance > Federal Regulation > FINRA

Advisors Weigh In On Client Advisory Boards

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A financial advisors’ group on recently had a lively discussion of client advisory boards, started by an advisor who asked for the opinions of colleagues who had established a board. Here are some of the comments in the discussion thread, which I’ve grouped by topic and edited for anonymity:

Has having an advisory board benefited you?

“They have been invaluable – providing insights, feedback, referrals, and being true stakeholders in our firm.”

“They have provided input on marketing, service models, communications, etc.”

“An advisory board is an inexpensive way to really grow your firm and give you credibility when you are small.”

Who is (or should be) on it?

“For about four years, I have had an advisory board made up of 12 of my top clients, mixed between retired, working, male, female, couples and single clients.”

“I was thinking five to seven of the clients in my target segment whom I have the best relationships with. They may not be my highest net worth clients, but those whom I feel are comfortable enough to give me effective feedback.”

“My best clients are represented on the board. I also include a CPA and have had an attorney and marketing person serve as well.”

“The surprising thing is how many high-profile people you can attract to join your board.”

“When starting this process I will keep in mind that I want influential members of the community on my board.”

What do you need to know at the outset?

“Make sure you have clear objectives and the members understand what is expected from them.”

“One of the most important things to do up front is outline expectations. If you want the advisory board members to help with marketing, let them know up front so there are no surprises.”

“You may want to consider having board term limits from the start, so that later when you’re ready to change board members you don’t offend clients.”

How often should they meet?

“I ask them to serve for two meetings and we meet every nine to 12 months.”

“Our firm’s advisory board meets twice a year.”

“We hold two dinner meetings a year.”

Do you compensate them?

“You have to be careful in this area because of FINRA.”

“We find that our board members are eager to serve and to help our firm, and they do not require (or even inquire about) compensation.”

“Our firm makes an annual donation to their charity of choice in their honor. They seem to appreciate that.”

“We also give feedback to the board, letting them share in the excitement of the implementation of their ideas.”

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