The Advisor Partnership Program (TAPP)

Transcription

1 The Advisor Partnership Program (TAPP) Running Your Business CREATING A CLIENT ADVISORY BOARD INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE

2 A STEP-BY-STEP PROCESS Creating a client advisory board and guidelines for integrating client feedback into your practice. One of the biggest challenges for any financial advisor is to gather high-quality feedback about managing their practice and handling clients. The power of perspective A powerful and cost-effective solution is to establish a client advisory board a select group of clients who agree to meet with you several times a year to share relevant ideas and insights. After all, clients have firsthand experience of you and your business and a vested interest in helping provide the best possible service to them. A board can be especially useful in providing practical ideas and observations on what you are doing right, what you are doing wrong, what you are not doing, and, most importantly, how to stay competitive. Client advisory boards can help guide the strategic direction of your practice and ensure that you do not lose sight of important long-term goals in the rush of day-to-day business. In addition, they serve to deepen relationships with some of your most important clients. 2

3 Areas that a board can address include the following: Quality of client service and communications General perceptions of issues facing investors Evaluating personnel needs and impressions of staff Proposed changes to your investment process or business model Ideas for new programs, technology, services and marketing materials, such as a newsletter, brochure or website 3

4 1 CREATING A MISSION STATEMENT As you begin the process of creating a client advisory board, you will want to do some brainstorming about the areas where your practice needs help. If you have a team or support staff, it is useful to involve them in this process. They can contribute a different perspective on many areas of your business. Examine potential goals for your board. For example, most advisors are looking for feedback on a variety of operational and strategic issues. Are you interested in exploring new technology or services? Do you want advice about your overall marketing plan or strategy? Are you looking to expand your practice? Do you want to evaluate staffing needs and impressions of staff? The outcome of this brainstorming process will be critical to how you structure your board. Taking the time to define your approach will result in more focused meetings and potentially more valuable feedback and advice. The results of this process will become the basis for the general mission statement for your client advisory board. Sample mission statement The client advisory board of XYZ Firm comprises a diverse group of professionals whose business and perspectives are important to our firm. The role of the board is to provide meaningful feedback on our business, including operational and strategic issues; insights into issues facing investors; and ultimately to help shape the future direction of our practice. The goal is to help us provide our clients with the best possible experience. 4

5 DETERMINING BOARD TERMS AND COMMITMENT 2 You will need to think about the length of the term that you are asking board members to serve. There are two different ways to approach this: indefinite terms and rotating terms. Indefinite terms An indefinite term is one that has no formal end date. The composition of the board changes only when a board member resigns or you decide a change is necessary. Some advisors have had great success with indefinite terms, with long-term relationships fostering trust and collaboration. If you choose to go in this direction, keep in mind that you have the right to review each board member s contribution, attendance, and quality of feedback to ensure that you are maximizing the potential benefits of the board. Rotating terms Other advisors have chosen to have rotating terms and boards. For example, some advisors ask board members to serve for one year only. The board members commit to three to four meetings, and the last meeting of the year is a dinner attended by the outgoing board and the incoming board. Other advisors desire a little more continuity and ask board members to commit to two-year terms. One of the additional benefits of this approach is that, over time, you get a larger cross section of your clients involved and have the opportunity to strengthen a larger number of client relationships. With any board arrangement, keep in mind that each member should be given the opportunity to withdraw at any time for either personal or business reasons. 5

6 3 SELECTING BOARD MEMBERS Consider developing a list of 20 potential board members that fit your target profile. When compiling your list, think about each individual s ability to provide useful insight, perceptions, and, more importantly, constructive criticism. Also, consider personalities. Think about which people would work well together and which personalities you enjoy spending time with. You want to avoid having more than one member of the same family on your board at the same time; it reduces the diversity of opinion. From that initial list of 20 candidates, you should be able to find eight to 12 clients with the time and inclination to serve on the board. There are two main ways to approach the composition of your board: Diverse cross section Some advisors like to have a representative cross section of their entire client roster. For example, depending on the mission statement of your board, you may want clients with professional backgrounds in marketing, human resources, technology and finance. You may also want to include small-business owners who face similar challenges and opportunities in your community. This diverse cross section would provide you with interesting feedback on a variety of operational and strategic issues. Target market Other advisors have taken the approach of selecting board members who fit the profile of their target market. Creating this type of board has several advantages. First, there tends to be a set of common interests that may serve to foster better interaction and in fact can foster relationships that live outside your board meetings. If your board is composed of physicians, or small-business owners, or corporate executives, you will be able to focus your board meetings effectively on the issues surrounding the particular target market. Second, the composition of the board can aid them in expanding their own professional network. Third, focusing your board in this way may help you to expand your target market. 6

7 EXTENDING THE INVITATION Once you have determined the initial list of 20 candidates, you will want to extend the invitation. 4 This can be done in person or in writing. You may want to prioritize candidates into an A list and a B list, approaching the A list first in case you get an overwhelmingly positive response. Keep in mind that the way that you extend this invitation is indicative of the seriousness with which you view this endeavor and is, in fact, a reflection on your practice. Given this, we suggest a formal written invitation followed by a personal phone call. The invitation should explain why you are setting up an advisory board and why you believe they would be a valuable board member. We recommend that you draft formal guidelines (including the board s mission statement, the number of expected meetings per year, and the tenure of appointment) and include them with the formal invitation. 7

8 Client advisory board do s and don ts Staying true to your mission As steward of your board, it is critical that you ensure that it remains focused on its mission. The mistake that many advisors make is to treat their client advisory board simply as an informal focus group or a source of referrals. As one industry source put it,... When you ask someone to be on your advisory board, they hear that you want their expertise and advice. If you are not prepared to listen to them closely and evaluate their suggestions, you run the risk of disenfranchising some pretty important people. 1 For that reason, there are some guidelines you should adhere to so that your board serves its main purpose: Don t establish your board solely as a means of generating referrals. It s likely that if your board members experience is rewarding, they will send referrals to you naturally. Don t use board meetings as a venue to pitch products (unless you wish to get their input on products you are considering to add to your menu). Do use your board to discuss ideas on improving your practice, including marketing strategies and service refinements. As valued clients, they can provide useful perspectives about why they work with you. Do let members of your board know that their opinions will be kept confidential. This will encourage board members to provide more candid feedback. Do make it clear to everyone that you have an open mind and that no idea is off limits. Approach any critical comments from board members as helpful hints that can improve your business. Do obtain permission to share the board members contact information as a means of promoting cooperation and group spirit. Do consider promoting your client advisory board. Some advisors have profiled their board on their website, others have pictures hanging in their office, and some have even profiled board members in their brochure or newsletters. 2 1 Turning the Tables: Client Advisory Boards Offer Valuable Advice to Planners, by Nancy Opiela, Journal of Financial Planning, November Please work with your firm s compliance and marketing groups for guidelines and assistance. Please note that there are specific rules around the use of testimonials and feedback that you should be aware of before publishing or displaying any information regarding your client advisory board. 8

9 CONDUCTING EFFECTIVE BOARD MEETINGS In planning for your board meetings, give careful consideration to scheduling, the venue details, and the agenda. 5 How you plan for these meetings speaks volumes about the importance of the client advisory board to you and to your practice. It is imperative that you take the time to prepare for these meetings so that they are meaningful and productive. Your preparation also shows respect for the commitment your board members have made. Potential agenda topics Value proposition critique Ideal client profile discussion Changes to compensation model Introduction of new services, products or platforms Discussion of technology enhancements Future growth plans Feedback on staff Feedback on client communications and service levels Advice on your marketing plans Scheduling Build the meetings into your annual business plan. Consider potential conflicts in your clients calendars (i.e., holidays, school vacations, parent/teacher conferences) when choosing dates. Consider setting the date of the first meeting and then having the board choose the rest of the dates for the year. Invite board members six weeks in advance (even when dates have been determined in advance by the board). Consider a multi-pronged approach: written or invitation, phone call follow-up, reminder. Venue Build timelines and accountability for venue selection and menu/event details into your planning process. Consider venue options: { Private room of a fine restaurant or private club { Creative client appreciation venues (i.e., cooking class, art gallery or a similar interactive setting). If you can make a portion of the meeting an interactive and fun experience, it will create shared memories and strengthen the relationships. Just make sure that you conduct your business meeting first! Your Legg Mason Sales Director can help you think of event ideas. (Always make sure that you follow your firm s cash/non-cash compensation reimbursement policy when choosing the venue.) Determine the time of day for your meeting. Some advisors prefer breakfast or dinner so that it doesn t interrupt their clients business day. Others have had great success with lunches. Ask your board for input on the best time of day for them. Consider the client experience in every touch point you should always convey an impression of quality and professionalism. 9

10 Agenda setting Create an agenda for each meeting and send it out in advance to board members. This ensures there is a clear sense of purpose and that the conversation stays on track. While your formal agenda is meant to keep the meeting on track, be open to changing gears if your board expresses a concern that they want to discuss when the meeting starts. You can always repeat your formal agenda for the next meeting, if necessary. Your agenda should begin with a discussion of how the feedback from the last meeting has been incorporated into your practice. Be aware of the time needed to discuss agenda items. It is better to have a shorter agenda with more meaningful discussion than to try to cover too many items at a high level. Sample facilitation questions What can I be doing better as a financial advisor to serve you and your family/business? What are your thoughts or fears concerning the market that I should be addressing? Are there products or wealth management strategies being introduced to you by other advisors or friends and family that I have not discussed with you? Prepare either formal remarks for each agenda item or a series of questions to facilitate interactive discussion. Think about how you can give back to your board members at each meeting. For example: Is there a topic that would be of special interest to them for which you could bring in a guest speaker? It is important that this does not appear to be self-serving or a product push. Have a process for members to nominate topics for discussion and to vote on which ones to discuss. If you only discuss topics that you suggest, you will miss out on important feedback. 10

11 INCORPORATING 6 FEEDBACK There s an important process to incorporating feedback. First, solicit opinions from members during meetings, then decide how to address these concerns. During the board meeting If you disagree with what a board member says, be sure to ask that person to elaborate, and invite comments from other members before voicing your own opinion. Make sure you or someone on your team takes detailed notes, or tape the meeting for future reference. After the board meeting As soon as possible after the meeting (while your memory is still fresh), sit down and think through the feedback you received at the meeting and how you are going to incorporate it into your practice. If you are on a team, include team members in this process. Develop a plan to address the feedback that can be shared at your next board meeting. Keep in mind that you do not have to do everything your board is suggesting. You may be limited by time and resources. It is also extremely important that you do not make commitments that you cannot keep. Determine the spirit of the feedback and how you can best address it. Share the plan at your next board meeting. 11

12 INDEPENDENT EXPERTISE. SINGULAR FOCUS. Brandywine Global ClearBridge Investments Legg Mason is a leading global investment company committed to helping clients reach their financial goals through long term, actively managed investment strategies. Martin Currie Permal QS Investors Royce & Associates Western Asset A broad mix of equities, fixed income, alternatives and cash strategies invested worldwide A diverse family of specialized investment managers, each with its own independent approach to research and analysis Over a century of experience in identifying opportunities and delivering astute investment solutions to clients LMTAPP.com youtube.com/leggmason The Advisor Partnership Program (TAPP) Our Experience. Your Potential. The Advisor Partnership Program (TAPP) is Legg Mason s landmark value-added offering, featuring a wide range of multidimensional workshops and seminars that empower financial advisors to build successful practices and educate their clients. TAPP delivers value in three areas of importance to advisors: branding and marketing, business management, and client needs. Branding and Marketing Your Business offers comprehensive resources for developing a value proposition and leveraging social media and the wired world for communication, brand building and client acquisition. Running Your Business showcases tactical tools and real-life insights into practice management. Addressing Client Needs provides in-depth materials to help advisors engage and inform their clients on a variety of topics. Legg Mason, Inc., its affiliates and its employees are not in the business of providing estate planning, tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the promotion or marketing of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer s particular circumstances from an independent tax advisor. The Advisor Partnership Program (TAPP) and Our Experience. Your Potential. are registered trademarks of Legg Mason Investor Services, LLC Legg Mason Investor Services, LLC. Member FINRA, SIPC. Legg Mason Investor Services, LLC is a subsidiary of Legg Mason, Inc TAPX /15 FN