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The Client-Driven Practice: Make Your Clients Your Advisors

What is your unique value proposition?  What is the strategic direction of your practice? What can you do that will really drive referrals?  The best answers may come from consultants often underutilized by financial advisors – your clients. 

That was the message of Stephen Wershing, CFP, creator of The Client-Driven Practice, in a session Friday at FPA Business Solutions 2011, appropriately titled “Role Reversal, Making Your Clients Your Advisors.”

Wershing, who entered the investment and financial planning industry in 1987, coaches financial advisors to be more successful. His emphasis is on attracting more referrals by developing more client-driven practices. His process of collecting systematic and objective client feedback and using it to reorient an advisor’s practice effectively engages an advisor’s best clients to drive the strategic plan of the business.  Among other things, he consults with financial advisors on strategic differentiation, client advisory boards and implementing technology.
The presentation discussed the value of client advisory boards and the secrets to making them successful. “The heart of The Client-Driven Practice process is engaging clients in directing your strategic plan,” Wershing said. “The cornerstone of involving clients strategically is the client advisory board.”

“A client advisory board is a representative group of your best clients. The kind of client you want more of,” he explained. “Bringing them together and soliciting their guidance on where they want your practice to go, and acting on that advice, is the most powerful way to deepen relationships, do more business, and receive more and better referrals.”


Wershing launched into a review of the newest research by Julie Littlechild, president of Advisor Impact. In The Economics of Loyalty: Anatomy of the Referral. Littlechild provided insights into the sources and circumstances of referrals (see Cracking the Referral Code for more detail). Wershing also provided insights from other sources including John Jantsch, author of the book "The Referral Engine."

“If you assemble a client advisory board, you can benefit from promoting that fact,” Wershing said. “Many advisors have told me that their clients and prospects are impressed when they hear about the advisory board. Acting on feedback will push your clients closer to being engaged.”
Engaged clients are the ones who talk about you in a favorable way and suggest that others – people just like them – seek your counsel.


Wershing laid out a case for why the way advisors have traditionally been encouraged to ask for referrals is downright counterproductive. Other marketing experts (including me) agree. Bill Good, founder of Bill Good Marketing says this:

“Stop asking for referrals. Asking for referrals does not work. Worse, doing it can damage the client relationship. It puts clients on the spot. You know that in your heart. And to the extent you have refrained from asking for referrals, well done. You were right. Referrals happen when a satisfied client learns about a situation requiring your help. To make that referral, the client needs, obviously, to be a happy client. You need to have provided good investment advice, great service, and stayed in touch. The client has to regard you as an expert financial advisor, a caring, trustworthy, well-mannered individual, as well as a good citizen. These are the ingredients in a successful recipe for producing referrals. And you have to promote, not solicit, referrals.”
Ingredients of a successful advisory board

Establishing a cycle of client feedback is a more natural and effective approach. Forming a client advisory board is one way to do just that.

Here’s how to do it right:

1. Formulate the right objectives. One of the keys of a successful client advisory board is formulating appropriate goals and developing a meeting strategy to attain them. Boards can be engaged at different levels of involvement, from the most superficial feedback (what do you think of my brochure mock-up?) to the deepest advice (help me determine the strategic direction of my business). You might decide to form more than one client advisory board, based on different objectives and perceived client skillsets.
2. Identify the anchor tenants. Success depends on the right people being in the room. Who do you need to give you the right input on evaluating and improving your business? What combination of people will create the right group dynamic? “Evaluate whether to invite some non-clients like an accountant or attorney that may regularly refer business,” he said. And, one of his secret weapons: “Make sure you have included a curmudgeon.  That last crusty character plays a key role in the dynamic. Have someone there who is not afraid to ask the hard questions, to get issues on the table.”
3. Use a trained facilitator. While some advisors do it themselves and have successful boards, Wershing pointed out some of the advantages of hiring an outside facilitator. “Just as advisors have a particular skill set, professionals who conduct meetings do as well, Wershing said. “An experienced facilitator can recognize when to redirect the conversation. An independent third-party can also get away with asking questions the advisor cannot.” An example is soliciting guidance on getting more referrals. When the advisor asks about how they might generate more referrals, it can come across as self-serving. But an independent party who asks the group about creating an effective system of generating more referrals can be received very differently. “Have a third party at the front of the room so you, the advisor, can remain at the table as part of the client group .” He referred to this as “being part of the ‘tribe’.”
4. Approach the meeting with an open mind.  While you will look to your advisory board for guidance, you will not have to implement everything they recommend, so there is no reason to be defensive or dismissive of any idea that may come up. But, as Wershing pointed out, discounting any idea prematurely can undermine the entire process very quickly.  The ideal dynamic to build in early in an advisory board meeting? “Encourage the curmudgeon to say something critical of the practice,” he said. “Make sure you do not initially respond, but let your facilitator explore the issue.  Wait for the facilitator to then turn to you to provide a response, and recognize the value of the underlying elements of the concern as worthy of consideration.” This, Wershing said, gives permission to everyone else to bring up comments they might otherwise be reluctant to contribute, and that is the point when the meeting starts paying rich rewards in uncovering the unspoken concerns and frustrations of clients.
5. Publicize the feedback. As a long-time PR professional, I concur with Wershing in that it is wise to have a communication plan in place to  share the feedback you receive. You can include a description of the issues discussed at the board in your company newsletters, e-mails, or posts to your website. Indicate what you plan to do in response to the board's recommendations. Even more important, publicize the changes you make once they are in place. “Changes to your office procedures, how you interact with clients, your marketing, or client events organized based on the request of the advisory board are all powerful ways to communicate that you are listening and willing to make changes to improve your clients’ experience,” Wershing said.

“Building a practice based on a cycle of continuous improvement drawn from client feedback is the most powerful way of tailoring the client experience and driving referrals,” Wershing said.  “The client advisory board can be the most powerful tool in your kit for providing your business that orientation.”

 “Clients could be exploring new advisory relationships,” he said. “Forming an advisory board gives you  an excellent opportunity to clarify your value to them. It is a chance to communicate to key clients what you do, how you’re different, and get their input,” he said. “In this era of Madoff and Stanford, this an important time for independent advisors to engage clients and discuss questions on their minds, like, ‘Who is behind your firm?’ and, ‘Who’s keeping an eye on my money?’ In addition, as the advisor greys, clients may be wondering who’s going to watch after them in due time. You can engage them in conversation and ask their advice through a client advisory board.”

The presentation included videotaped interviews of a collection of advisors who have successfully utilized advisory boards.  One of them, Marc Freedman, President of Freedman Financial and former FPA national board member, was in the room to share some of his experiences and insights.  You can view a couple of the video clips here.

Wershing has a white paper available for free download on how to organize a successful client advisory board.  You can find it here.


Marie Swift is president and CEO of Impact Communications Inc.  Swift also spoke at the FPA Business Solutions Conference, joining a panel of experts who spoke on social media and building your online presence). Readers can purchase session recordings and corresponding Power Point presentations ($25 each or $225 for the entire conference) from the FPA at www.shopFPA.org

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