The best kept secret of a successful business is their advisory board.
An advisory board is made up of individuals that provide direct feedback on your business and your business model. These individuals can be a group of your current clients (similar to a focus group), or in Nifty's case, a group of experienced professionals. It is important to not confuse a board of advisors with a board of directors.
InvestmentNews interviewed RIAs that have grown tremendously due to the honest and critical feedback they would not have received otherwise unless they formed their Advisory Board. For an established firm who feels they have reached their peak in capacity, a board of advisors might help build feedback on an otherwise stalled business.
Did you know that Nifty has five members sitting on our board of advisors? Even though we started our board prior to starting Nifty, it is easier for an RIA who has an established book without having to tap into external resources. An advisory board can also be an excellent way to evaluate your current client experience.
Here are a few things to consider before forming your advisory board:
1. How would you describe their personalities? Do they communicate well or are they more reserved? Your board should consist of members who will get along well and are willing to communicate openly.
2. What is the time commitment? How often will your board meet? Will they meet in-person or virtually? An assigned role can intimidate others if expectations are not clearly defined. You should also state how long their term will be (1 year, 2 years..) so you can consistently rotate your members and add new perspective on an ongoing basis.
3. What type of feedback are you looking to get? What goals do you hope to achieve with the advisory board? Once you define your goals, you can decide how many members should be on your board, what types of questions to ask and how to guide the conversations between your members.
4. How diverse is your prospective board? Different points of views are valuable to the growth of your business and should represent different demographics across your entire book of clients.
Could your firm benefit from an advisory board? If you have an existing advisory board, what tips do you have for those who are interested in forming one?