Where do planners turn for advice?

There is a significant role for practice management consultants in the industry and the work of groups like Encore, Business Health and CEG has added real value to practices.

However, planners are faced with ongoing issues that need to be addressed in the short-term and revisited over time, and the work of consultants only goes some way to addressing this situation.

Often financial planners may see an ongoing relationship with industry peers as a means of addressing practice based issues and may additionally draw on consultants for advice.

But to address business issues that are intrinsic to planners’ practices on a systematic long-term basis, the establishment of a board of advice could yield significant added value.

The advisory board

Advisory boards have been a fixture of larger dealer groups for quite some time and have had mixed success in part due to their composition — that is, most of the boards are composed only of company appointments, with no external representation and they have limited or no interaction with most of the planner network.

While these boards may have delivered the companies’ requisite outcomes in terms of policy implementation, they have lacked the additional dimension that can only be realised through external representation.

Non-executive appointments are not paid to toe the corporate line and do not have to bow to the politics of head office. In fact, it is the role of the externals to bring on board new ideas in addition to facilitating the implementation of the companies’ strategies and policies.

Establishing advisory boards

There is a strong case for planners in large dealer networks to have access to advisory boards that may report into the main board, and whose composition would represent both company representatives and external appointments. These boards could be established on a regional basis to afford access for a number of planners in a particular area.

Dealer groups would, at the outset, see this initiative as possibly just another level of administrative burden and not in line with management’s desired strategic aims. However, the resources called on to establish advisory boards would not be excessive, and over the medium-term would deliver positive results in terms of the planners being able to take away relevant business ideas for their practices.

There would be additional benefits in that management’s communication with regional planners could be more efficiently delivered and discussed by planners in a formal forum with peers and with participants who have a range of experiences that would be relevant to the discussion.

The establishment of such advisory boards would somewhat reflect the position of company boards that have non—executive directors. As we have witnessed with the growth of corporate governance issues in the corporate arena, the position of the non-executive director, although subject to significant regulative constraints, has grown in prominence in the last two years.

Inwardly focused boards are now not deemed to be necessarily working in the best interest of key stakeholders and it could be said that dealer group advisory boards could be viewed in a similar light.

The advisory board and the smaller practice

Planners, particularly those who have established their own businesses as sole practices, often rely purely on their own practice management resources or draw on the resources of a consultant.

Financial planners have also drawn on business development managers who may assist in certain areas of practice support, but this is often limited to advice on platforms or marketing issues such as client communication.

Additionally, financial planners draw on the resources of their own network of peers on an informal basis, but this alone is not an effective mechanism to help planners resolve issues they face on a day-to-day basis or more importantly bring to them comprehensive business solutions.

The first question that financial planners should ask is what will my practice gain from the involvement of an advisory board?

If you are seeking sound ongoing objective advice from industry peers or a broader view than the one that you may hold, then it is worthwhile examining the best way to go about establishing the board and suitable candidates. Level of experience, skills and ability to commit over time are critical issues.

There are a considerable number of senior industry participants who have the ability to bring a wide range of commercial experience to your board. They can also bring with them considerable networks of contacts who may prove invaluable in terms of their experience in a range of areas from funds management through to advice.

As one financial planner told me recently, “I have a relatively small board, however, I know that if I need to negotiate anything from liability insurance through to selling my business, there are only one or two phone calls I have to make to make things happen and I know that I am talking to the right people — they have my interests as the key issue”.

These external appointments are critical in that they should bring an objective view, and they come with the one agenda to further your aims and ambitions. Your interest should be in receiving an outside view that at times may run contrary to your own. The contrarian view as we know can often lead to discussion that results in a new perspective being brought to an issue that has been unresolved to date.

Ensuring requisite board outcomes

The advisory board should operate along the lines of a company board in that there should always be a set agenda circulated prior to the meeting. The focus is on gaining a full review of the issues for discussion. If you have board members who have prior experience in this capacity, then meetings will tend to progress with focus and all agenda items should be covered comprehensively.

The key to a successful board meeting is openness to divergent views, the ability of the chairman to draw participants together in the discussion, and that actionable outcomes with appropriate timelines are adopted.

Sourcing the right candidates

You may have people in mind that you believe would add value as members of your board and are comfortable in approaching them directly.

Alternatively, you have no-one in mind and so turn to your peers for an opinion, but to get the most suitable candidate, it is important to seek advice from a professional executive search company.

The cost savings in engaging an executive search firm to conduct a targeted search would prove significant, as the right candidates should help you deliver increased business effectiveness and revenue growth over time.

Peter Dawson is executive director,Financial Recruitment Group .