Why Focus Groups (Not Advisory Boards) Put the Focus Where It Belongs

Aug 10, 2017


For years, advisors have asked me if they should do advisory boards. The common wisdom in the industry is yes. On paper, it seems like a no brainer to get a representative sample of your best clients in a room and ask them where they want your practice to go. The idea is that it will strengthen your relationship with them and possibly get them to refer more often. For some reason, the whole advisory board thing never felt right to me. But something else does.

Why boards can be bad

There are a few reasons I have issues with boards:

  • I typically don’t see attorneys or CPAs do advisory boards. They give professional advice and tax compliance – they are professionals. Why do financial advisors feel the need to ask clients for help with strategic business decisions, when other service professionals don’t?
  • An advisory board suggests a time commitment. Are you asking a client to offer free consulting for a year or two? The preparation, time commitment and expense are time consuming, to both you and your clients.
  • In many cases, it can make an advisor look less qualified. Aren’t advisors (planners) supposed to know where their business is going? By asking clients for direction, I think it makes you look like you don’t know what you’re doing.
  • Will clients be honest? Most advisors host their advisory boards themselves. If a client is unhappy with something, will they really tell you to your face that “your baby is ugly?” A professional facilitator can (and does) help, but even then, the client may not be as honest as you would like, due to the personal relationship.
  • Generic advice is already out there. You only have to type in “How much money do I need to retire?” or “How much insurance do I need?” and see the millions of links in the search results to know that traditional planning is changing.

And maybe that’s my overall gripe with advisory boards: Generic advice from a representative list of clients will create a generic advisory firm. What you need is focus or specialization.

How about a focus group instead?

Why focus groups (not advisory boards) put the focus where it belongs Click To Tweet

Replicating your target clients

So what is the difference between an advisory board and a focus group? A lot, both in direction and implementation. The focus group starts with the clients that you want to replicate, clients that you want to specialize in, and the beginning stages of a niche. Why create an advisory board that represents a cross-section of your practice when you don’t want to replicate your entire practice? You only want to replicate the target clients.

In an advisory board, you are asking for strategic direction from people who may not be familiar with the industry or compliance, who then may be disappointed that their recommendations may not be put into place. In a focus group, you can identify products, services or ideas that would resonate with that target audience (people just like them). You can identify what marketing tactics would be attractive, what messaging would work, and where to find the biggest holes in their financial lives. In short, the advisory board is about you; the focus group is about them.

How to start a focus group

Starting a focus group is a good way to develop and grow your firm. Need help getting started?

  1. Uncover your niche. Consider your practice; are there clients who all work for a certain employer or in the same industry? Do you specialize in c-level executives or owners of small manufacturing businesses? What about female heads of households or widows? We all have a way of presenting our process (selling) or a good referral source, which means some of our clients have things in common. Look for that commonality.
  2. Group them together. Let’s say you found 5 – 10 clients who are executives for a certain company. Ask at least 5 of them to join you for a one-time focus group meeting (you can follow with drinks/dessert or dinner). Suggest that the focus group is about delivering a more customized service model for them.
  3. Take notes. The meeting is about them, not you. So ask… what do they read, where do they go? What are others in their company concerned about? What do others talk about and to whom? What clubs to they belong to, where do they go for news that interests them? What types of communications resonate with them? What you are looking for is the situations they discuss, not the solutions.
  4. Build out their persona. Use the notes to build out a persona of the typical “executive of that company” and give him/her a name.
  5. Act on it. Now that you know about that “typical executive:”
    • Does your value proposition match what they are looking for?
    • Does your service model reflect their desires?
    • What about marketing? Does your marketing match how they want to be communicated to? (This includes a website and/or social media.)
    • Is your pricing structure aligned with how they perceive value?

Remember, the focus group is about creating a better model for them, but it’s also a way to find a specialization that others can’t replicate. It can also build a referral pipeline; a client who is truly engaged is more likely to be able to explain why you are different than other advisors.

Put the focus where it belongs

The whole advisory board thing never felt right to me because the focus was always on the advisor and his/her business. The focus group feels better because the focus is back where it belongs – on the client and creating a better model to serve them (and others that fit that persona).

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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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