Advisory Boards
Practical Accountant gives some advice on advisory boards from various people involved in using or serving on such boards:
Purposes of advisory boards:
- Guiding on ethics and customs
- Advising on how to achieve goals
- Letting the community know what the firm offers
- Advising on working with community leaders—learning how to increase market share
- Making certain the firm fulfills its independence responsibility to clients and the community
- Maintaining high quality of people and the services they provide
- Overseeing peer review
- Conferring on fees, earnings, staff performance, regulatory matters, marketing
- Playing devil’s advocate on ideas and helping the firm to improve
- Advising on operational decisions
Make-up of boards:
- Attorneys
- Academicians—particularly in the areas of ethics and accounting
- Clerics—particularly with regard to ethics
- Clients—can serve as endorsers of the firm to others on the board (but be aware, some sensitive issues, such as fees, may be discussed)
- Prospective clients
- Referral sources
- Community leaders
- Consultants to the profession
- Financial services professionals (e.g., bankers)
- Managing partners of other firms (that are not competitors)
Meetings:
- Two or three times a year for one or two days
- Two hours per quarter
- As necessary—once a month or once every other month for one day
Compensation:
- Based on daily consulting rates—$2,000-$5,000 per day
- $100—for many leaders in the community, compensation is less important than their desire to help the firm
- A six-figure amount per year
Business development should not be the primary purpose of the board, but it is a nice bonus when new business is referred by board members. Some firms decide against advisory boards because they do not feel the need; others see no downside to having one.
For more, see Practical Accountant, December 2004, p. 33, or http://www.webcpa.com/article.cfm?articleid=9603&;pg=pracacc