Another Perspective: Client Advisory Boards Deliver More Long-Term Value than Focus Groups

Sep 15, 2017


Sometimes when I am writing a blog post, I just know some people are going to disagree with me. Case in point: my recent post Why Focus Groups (Not Advisory Boards) Put the Focus Where It Belongs was one that I knew I would hear from people with a differing point of view. Personally, I love the back-and-forth and debate of an idea like this, as the only clear winner is going to be you, the advisor, who now can decide what will work for your practice.

I actually knew that I would hear from Steve Wershing, CFP, of The Client Driven Practice. And he did not disappoint; he sent me a note before the email notification of the post even went out to subscribers. I value Steve’s opinions, so I decided to publish, unedited, his response. Take a minute to read both the original blog and Steve’s comments below. At the end of his comments, I respond. I don’t believe this will be the end of the discussion – nor should it be. I would love to hear your responses, too!

Comments from Steve Wershing

Firms that ask for client feedback get more referrals. We know this from solid research including Julie Littlechild’s studies that have been replicated many times. Live interactive feedback is richer than surveys. So when it comes to real-time qualitative feedback, what’s better: focus groups or client advisory boards?

In his column of August 10, John Anderson expresses concerns about advisory boards and laid out several reasons why he believes focus groups to be a better idea. Having conducted well over 100 client advisory boards, I can tell you that it is the most powerful feedback mechanism available to a financial advisor. And John has graciously provided me this opportunity to lay out why I believe advisory boards have distinct advantages.

First the difference: a focus group usually meets a single time, generally on a limited topic, sometimes without the advisor present. An advisory board is an ongoing consistent group that, over time, addresses multiple topics with the advisor present for and involved in the conversation.

Because of its ongoing nature, an advisory board enables deeper examination of the client experience, how it can be improved, and how it can be most effectively communicated to the public and centers of influence. In the initial advisory board meeting, participants are unfamiliar with the process, not sure of their role, and getting everyone focused and in the groove of the conversation takes some time. Without exception my experience is that we get deeper, more meaningful results from the second, third, and fourth meetings than we do from our first. A focus group never gets past that hurdle.

The secret to getting valuable, actionable advice from your clients is in the questions. When I have interviewed advisors who have had a negative experience with a client advisory board I find that the problem most frequently came down to the nature and structure of the questions they asked. To oversimplify, if you want to bring a bunch of clients together to ask them “so, how are we doing?” I can tell you now what they will say: fine. So, what did we learn? Nothing. However, you would not want to ask clients where they want your business to go because they are unqualified to answer the question.

Effective questions aim to explore the aspects of the client experience and how it can be improved. What about our planning process created the biggest changes for you? What portions of our plans or reports do you look at first and which would you remove? If you could change one thing about our work together, what would it be?

Will clients give you honest feedback? Yes, they will. If you create the proper environment. We will often seed the first agenda with a topic we are confident at least one member will have some critical comments about. The key is in how the advisor responds – and we have scripted it out and coached the advisor in advance. The summary of the response is that’s really good feedback, we will give it serious consideration as we update our business plan. Meetings come off the rails when an advisor gets defensive. Don’t react, don’t explain. You need not promise anything except that you will explore ways of incorporating their recommendations (and you don’t know whether you can, but you will report back with your findings). When clients see that you are honestly open to feedback, they are happy to provide it.

John voices a concern that I hear from many advisors – that asking for meaningful feedback is a sign of weakness. That it will make them look less qualified, less competent, less confident. The opposite is true. Only the most secure and self-confident advisors are willing to go to their clients to ask how they can improve the experience they deliver and be open to considering whatever the clients have to say.

The object of an advisory board in its first few meetings is to understand the client experience you provide and how it can be improved from their perspective. You can make a little progress on that in a focus group meeting but you can get much better perspective as the culture of the board develops. The most successful firms I have worked with break the experience down and look at it a piece at a time. In a first meeting we can address the big questions you might bring up in a focus group: why did you select us? Of all the things we do for you, what do you find most valuable?

But the ongoing nature of an advisory board enables you to dig down further in subsequent meetings. In one meeting we might deconstruct review meetings. In another we might examine the planning process. Later we can critique the firm’s website. Do the messages on that site emphasize what they consider to be unique about your firm? If they were not yet a client but were looking for an advisor, would what they see on your homepage set you apart from other advisors? Would it make them want to know more about you?

Most of the other recommendations John provides apply to advisory boards as well as they do to focus groups. Select board members who represent your target client. Let them do most of the talking. Take notes.

The keys to success or failure are the same whether you are considering a focus group or a client advisory board. Choose the right participants. Design effective questions. Get competent facilitation. The only difference is that with a client advisory board you can go much deeper, explore more topics, develop a better group dynamic, and get more valuable guidance because the group develops over time. And that’s what makes it a more powerful vehicle.

Another perspective: Client advisory boards deliver more long-term value than focus groups Click To Tweet

My response

Thanks to Steve for offering a sound rebuttal. I think many of you would agree with Steve that an advisory board makes sense for an established firm to look at its processes and take a deep dive to evaluate the client experiences it sounds good – on paper. But I think we are starting from different places and the starting point is why I like focus groups better.

In our research paper, What Makes you Referable: The Elements of Advisor Referability, written by Steve and Julie Littlechild (with a forward by yours truly), they argue that most advisors take a tactical approach to referrals, rather than a strategic approach. The research on “highly referable firms” showed that a successful referral framework starts with:

  1. Knowing your ideal or target clients and their unique needs and wants
  2. Talking about those clients and their needs frequently

As I said in my original post, advisory boards have the feel of the advisor saying, “Let’s talk about me, my services, and my business model.”  As the advisor, you are (or your facilitator is) forcing your clients to spend time thinking about you and looking for holes in the offering with the hope of improving those services. And advisory boards are a long-term commitment; you are asking your client to meet 2 or 3 times a year (for multiple years), just talk about you. That just doesn’t feel right.

I see a better fit asking the client to think about themselves; about what they want, need, and hope for to help them make better decisions. The discussion educates you more on your ideal or target clients and what is unique about them, not you. It helps you build a persona about them that you can use. It gives you the words to use when discussing your needs and the ability to:

  1. Differentiate yourself by customizing your offering to your ideal client
  2. Emphasizing your differentiators when describing your business

In my post, I suggested that an advisory board makes the advisor look less qualified (Steve suggested weak). I think we are going to agree to disagree on this one (and yes, his expertise may trump mine). Advisors can use their annual or semiannual meetings to spend a few minutes asking clients to dissect their experiences with the onboarding processes, the review meetings or even the asset transfer process. Asking a group of well-intentioned clients repeatedly to help you chart the direction of your firm (in a business that they don’t understand) makes them less confident in that firm’s future and thus the advisor’s future. I would rather have an advisory board made up of other advisors, OSJs and key stakeholders – people who understand the business and, more importantly, who can look objectively to the future of the business. Again, when I look at trusted professional service businesses, I don’t see attorneys, CPAs or dentists asking clients to sit on an advisory board, yet I still seek them out for advice and service.

All that said, I do whole-heartedly agree with Steve that the questions count and the people you ask to join a board or focus group are very important. As he suggests, if you ask meaningful questions, you will get meaningful answers – and it takes homework and practice to find the right ways (and the right follow-up questions) to ask. I think hiring a facilitator will provide better, more real answers – and they can ask the more difficult follow-up questions that clients may not feel comfortable answering when coming from you.

Lastly, I couldn’t agree more with his statement that “Firms that ask for client feedback get more referrals” (it is, after all, #6 in the referability paper), but is an advisory board the best framework for that discussion? Could it be held in a one-on-one discussion?

I think it comes down to this: a focus group may be better for the growth-related advisor, one who wants to build target or ideal client. One who is growing his/her business and wants to use a persona to replicate a certain type of client. A focus group is a less formal, easier way to find out what makes a client tick. The advisory board my work for some as a way to strengthen their services – it’s just not the way I would go.

Now it is your turn – let’s hear from you. I would love to hear your feedback on both Steve’s rebuttal and my re-rebuttal (is that a word?). Post your comments below. Steve will be sharing my post and comments on his blog, too. I look forward to your comments, pro or con.

Stephen Wershing, CFP® is president of The Client Driven Practice, a firm that coaches financial advisors how to clarify their value, build their brand, and attract more referrals. He is also known for his work with client advisory boards.  His book, Stop Asking for Referrals: A Revolutionary New Strategy for Building a Financial Service Business that Sells Itself was published by McGraw Hill in 2012. He hosts a podcast with Julie Littlechild, Becoming Referable, available on iTunes and Stitcher.

The opinions and views expressed herein are those of Stephen Wershing. SEI bears no responsibility for their accuracy. Stephen Wershing and The Client Driven Practice are not affiliated with SEI or its subsidiaries.

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John Anderson

John Anderson

John Anderson is the creator and lead author of Practically Speaking blog and Managing Director of Practice Management Solutions for the SEI Advisor Network.

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