Board of education: Other client advisory board models

Editor’s note: Also read “Board of education: CPA firms, businesses can profit from clients’ advice,” in the Jan. 2012 issue of the JofA.

The client advisory board model recommended by the PCPS is far from the only format used by CPA firms and other businesses. Buffalo, N.Y.-based Dopkins & Co. and the McGladrey Alliance, a group of nearly 90 independently owned accounting firms, have their own approaches to client advisory boards. Here’s a look at their models.

The Dopkins model
Over two decades of running client advisory boards, Dopkins has developed its own formula for board chemistry. The firm begins by securing 15 to 18 top executives to participate. The firm sends letters to potential board members about a month and a half before the first meeting, then follows up with phone calls about two to three weeks out. About 90% of the people asked to be on the board accept the invitation, said Thomas Emmerling, CPA, the firm’s managing partner and a JofA editorial adviser.
 
Dopkins used to have 12 members on its board but ran into problems with members being unable to attend meetings, leaving the group with too few people to generate the stimulating, productive conversations the firm was seeking. So, after six or seven years, Dopkins added more members to the mix, allowing for critical mass to be achieved even if not all members could make every meeting.

“What we learned over the years is that you need 10 to 15 people to develop a good conversation,” Emmerling said.

Another key element in the Dopkins formula is the board member mix. Dopkins aims for one-third of the board members to be clients, one-third to be referral sources, and one-third to be potential clients.
 
“We develop relationships with, deeper relationships with, our clients and nice relationships with referral sources and prospects,” Emmerling said. “And they learn more about us. And invariably each year, we develop new business directly because of people being on our advisory board.”

A five-step approach
From the beginning, Dopkins has held five meetings over the course of a year. The firm’s 2011 schedule called for meetings in February, March, May, September and November. No meetings are held in the summer. The firm has learned the members tend to want to leave early on warm summer days.

The first Dopkins meeting is an orientation to the firm; the second focuses on the firm and the CPA profession; and the final three focus on practice areas within the firm. Dopkins holds its meetings at its office in a large conference room.
 
The first meeting begins with each board member doing a short introduction, which takes two to three minutes each. The rest of the meeting consists of a tour and orientation.
 
The board members break up into three to five small groups, depending on how many members are there. These groups then go to a series of 10- to 15-minute presentations given by nonpartner professionals about specific activities of the firm. A group might hear about the tax practice, then about the consulting practice or the medical business. Each group of advisory board members attends six to seven presentations over an hour and a half and has the opportunity to ask questions during each presentation. An after-meeting cocktail party follows.
 
Emmerling points to two major benefits of his approach. First, the firm is able to show off its nonpartner professionals, demonstrating the firm’s depth. Second, nonclients are exposed to the firm’s services, and even current clients learn about services they didn’t know about before.

Less talk, more listening
For its final four meetings, Dopkins gathers the board and the six or seven members of the firm’s management team in the firm’s largest conference room. The meeting facilitator—either Emmerling or another partner—gives a five- to eight-minute introduction to the evening’s topic.
 
“Then we’re asking what we hope to be penetrating questions of their perspective,” Emmerling said. “Our entire motivation is to get the advisory board members to talk and us to do a whole lot less talking and a lot more listening.”

Emmerling leads the second meeting, which delves into the accounting profession and CPA firm strategies. Subsequent meetings highlight a particular department or function at the firm—such as tax, audit or consulting—and are led by the partner in charge of that particular area. The goal is to have the board members do 90% of the talking at those final four meetings
.
“We try to muzzle ourselves and listen,” Emmerling said, “because we found that the advisory board members much more enjoy participation and sharing their thoughts and ideas, rather than just listening to us tell them about our ideas and thoughts.”

The McGladrey Alliance model
Most of the 20 or so client advisory boards McGladrey & Pullen’s Deb Lockwood, CPA, has facilitated for McGladrey Alliance members have been one-time “events” with the boards meeting just once. Logistics are key to this approach. Lockwood has to travel to alliance members’ meeting locations, making it impractical and overly expensive for her to run multisession boards.
 
She does sometimes facilitate two boards in the same day, such as a nonprofit board in the morning and a for-profit board in the afternoon.

Logistics forced McGladrey Alliance member Jackson Thornton to try something different at client advisory boards for the firm’s utilities clients. Because those clients are scattered across the Southeast, Alabama-based Jackson Thornton had them travel to various sites for client advisory board meetings.
 
Jackson Thornton utility partner Heidi Lee, CPA, attended two of those sessions. The first one, led by Lockwood, featured 15 clients. The second was a two-day event held at a hotel and golf course near Montgomery, Ala. The firm invited 25 clients who were treated to a golf outing and dinner the first night, as well as breakfast and lunch the next day. The firm also covered hotel costs, while the clients paid their travel expenses, with most driving to the site. The firm’s managing partner facilitated the actual meeting, which was held for three hours between breakfast and lunch on the second day.
 
“It put us in a setting with our clients that was away from our office, away from their office, away from any service we were trying to provide,” said Lee. “And it probably gave us a more relaxed rapport with them for them to give us feedback outside of the time when you’re anxiously trying to meet deadlines—regulatory deadlines or some kind of compliance deadline.”

Most of the McGladrey Alliance members with which Lockwood has worked had advisory boards that met only once. An exception was Pennsylvania-based Carbis Walker LLP, which staged two to three more meetings after an initial session led by Lockwood. Subsequent meetings involved the 10 or 11 manufacturing and distribution clients on the board plus five Carbis Walker representatives—three partners, a senior manager and a manager.

In an interesting twist, the clients on the Carbis Walker board took turns playing host to the meeting.
 
“There was a lot of wrestling and positioning for who got to be the host,” said Guy Natale, CPA, coordinator of manufacturing and distribution services for Carbis Walker. “They really wanted to show off their facilities and their people and their equipment and so on and so forth.”

The clients also benefitted from their introductions to each other—a refrain heard among several firms. Those new relationships led in some cases to business opportunities for the board members.
 
For Carbis Walker, the biggest benefit of its client advisory board came in the form of client recognition, showing a form of respect and admiration that deepens the relationship and helps with client retention.
 
“It was an opportunity … for us to acknowledge the greatness within our client base,” Natale said. “To say that, ‘Hey, we know what you do. We know some of the trials and tribulations … and the decisions you’ve had to make, and more often than not, you’ve made the right decision. We respect that. We respect that to the point that we think we’ve made our own pretty good decisions, but we believe that everybody needs an adviser, so can you help us with our business?’”

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