Part1: What is an Advisory Board?
While a Board of Directors (BoD) focuses on making decisions and leading matters of governance and compliance, an Advisory Board (AB) is set up to help solve business problems, and preventing them arising in the first place. An AB provides access to independent and objective opinions; can act as a sounding board for ideas; and provides ongoing technical and strategic support to senior management and the BoD. These benefits are driving significant growth in the use of ABs globally across all scales and types of enterprise, including start-ups, family offices, large corporations, and government bodies.
A company is not bound by the decisions of an AB which gives the AB greater freedom to consider a wider range of options in anticipating market trends and competitor actions, and in suggesting alternative options for management. There are also no set rules for how an AB should be constructed or operated, so a company can benefit from tailoring its AB to meet its unique needs, to ensure that the principles of independence are effectively enshrined, it has clarity of scope with measured outcomes, and is comprised of a fit-for-purpose team.
There are now many financial services companies that are using advisory boards in different forms such as international advisory boards, strategic advisory boards, fund advisory boards, and customer advisory councils. Their increasing use is being driven by the proven success that they have brought to their business activities. Those companies that are still not using advisory boards should be asking themselves the questions how might their product and service offerings change, and how different might their 2023 results be, if they had implemented a strong advisory board?
by Jonathan Watkin & Greg Solomon