Establish your Board of Advice
The world of financial advice has never been busier and it is more important than ever before for Principals to take ‘time out’ of their business to focus on their role as a business owner. With business practices, technology and compliance requirements evolving so rapidly, it’s increasingly difficult to be the subject matter expert in every area of your business and often it is just you working in the business.
Early in my business coaching career, I was lucky enough to meet and worked with Jim Stackpool at Strategic Coaching and Training, who introduced me to the concept of the Board of Advice (BoA) or as its sometimes referred to, an Advisory Board. I have participated in many BoAs over the past 30 years and am still currently involved in four. When structured well and with the right people at the table, a BoA gives you access to the experience and insights of a range of business people to assist you with developing and growing your business.
What is a Board of Advice?
A Board of Advice (BoA) is a group of experienced professionals who provide insight and ideas to help you make better business decisions. Members typically bring a range of expertise from either within the financial services industry or areas such as finance, marketing, technology or administration.
Unlike a formal Board of Directors, a BoA:
- Has no legal or fiduciary responsibilities.
- Does not set policy or enforce decisions.
- Provides non binding advice that business owners may choose to adopt.
Generally, the BoA will meet three to four times a year for a couple of hours at each meeting.
Benefits of a Board of Advice
A well run BoA can:
- Encourage strategic thinking rather than just operational thinking.
- Provide access to expertise that you may not have.
- Act as a devil’s advocate to challenge your decision making.
- Introduce new ideas and ‘left of field’ thinking.
- Help solve business specific challenges using real world experience.
- Create new opportunities through networking.
Setting the boundaries
You must define objectives to ensure your allocated time is maximised and as productive as possible.
Some of the main themes are:
- Strategic direction
- Review and assessment of the business plan
- Ensuring governance processes are robust
- Exploring opportunities and emerging trends
- Review of financial performance.
At a practical level, a BoA can also support management through periods of growth or transition, while improving overall business awareness, especially around the financial metrics.
The most effective BoAs rely specifically on trust within those sitting at the table. The members need to commit and be prepared to be honest, confidential and have the success of the adviser’s business ahead of their own interests.
A financial services luminary once outlined to me the story of his business, that when the four directors walked into the boardroom across the brass strip on the floor at the entrance of their offices, discussions were open, honest and no topic was off limits. However when you walked back out across the brass strip, everything that was said was left inside and you went back to the normal, cohesive working environment.
Building the right Board of Advice team
This is not an exact science and the size of your BoA can differ dependent on the size of your business, number of directors/shareholders or just personal choice.
My experience has proven that you will generally have many quality potential BoA members that you may be dealing with day in day out, right at your fingertips. Many of the Business Development Managers (BDMs) of the various platform providers, fund managers and risk insurers that service our profession have a significant knowledge base and are sitting with hundreds of different businesses as they go about their day to day dealings.
They are exposed to some of the largest boutique practices, be they self licensed or as part of dealer groups; and attend a cross section of PD Days, conferences and peer group sessions where they gain invaluable ideas and experience. And I have found that the majority are quite willing to assist advisers.
Another important piece of the puzzle is to identify potential candidates outside of the financial services profession who can bring a different skillset and ‘fresh eyes’ to your BoA. They could be an existing client, a friend or a referral partner (accountant, lawyer, mortgage broker, GI broker) who has business acumen and is willing to assist your success.
Meeting structure
It’s fairly standard as per most meetings but as a Principal, you need to be prepared. It is vital that the BoA members see that you are committed to the process and are taking it seriously.
Recommended approach:
- An agenda needs to be prepared and sent out with sufficient notice.
- Any additional documents need to be available, be that prior or handed out on the day. This is especially important for reviewing financial statements.
- There needs to be a designated chairperson to keep the meeting moving forward and ensure that the agenda is covered.
- Action items need to be documented.
Between meetings it is often a good idea to communicate any outcomes or progress with the BoA members which keeps them engaged and interested.
The venue is also important, as the environment needs to be conducive to open, honest discussion. If it is within the business premises, strict rules need to be in place to avoid interruptions and soundproof in case sensitive staff issues are raised.
Again, many BDMs have board/meeting rooms available for you to access.
Do Board of Advice members get remunerated?
This is sometimes a complex area and the ones that I have personally been involved with don’t. In my role as an attendee, for the majority of meetings that I have attended, I walk away with as much knowledge and ideas as the Principal and find the investment of my time extremely worthwhile. You could potentially pay a fixed hourly rate or retainer but I have found if you approach the right people, they are prepared to give a couple of hours of their time once a quarter.
Generally, the business might arrange a thank you lunch or dinner to coincide with a meeting. Just make sure you clarify expectations so there are no surprises.
Get started
Forming a Board of Advice can be one of the most impactful moves you make for your business. It brings shared knowledge, constructive challenge and perspective you simply can’t achieve alone. Although it requires effort and focus, the return in clearer decisions and sustained success can be significant.
If a Board of Advice is on your radar, the team at Capstone can help you start the process. To find out how contact:
Tim McCallum
Practice Manager WA & SA
Capstone Financial Planning
P: 0411 209 403
E: t.mccallum@capstonefp.com.au
