A client advisory board (CAB) is a powerful tool that allows you to engage clients to help you grow your practice. “It provides legitimate feedback and strategic guidance from your clients’ perspective,” says George Hartman, CEO and co-founder of Elite Advisors Canada in Toronto. That feedback can help you put the right measures in place to meet client expectations.

A CAB is essential for “building a client-centric organization that allows you to serve your clients better,” says Francis D’Andrade, vice president, private client, with Hahn Investment Stewards Inc. in Toronto.

A CAB is a small group of clients who are knowledgeable about your business, assembled to provide feedback and advice to you — from the client’s point of view. This board meets periodically to provide you with guidance about your practice: for example, what they like and dislike about the services you provide, and any services they would like to see added.

Board members must be selected carefully, to reflect the types of clients you serve. And, D’Andrade says, board members should be rotated periodically to ensure a diversity of fresh perspectives.

Here are five benefits of setting up a CAB:

1. Finding out what you’re doing right, and what you’re doing wrong
“Clients are willing to give feedback,” D’Andrade says. And that feedback enables you to learn whether you are delivering on your promises, or if you need to make improvements.

“Of course, you want to hear the nice things you are doing,” he says. “But more important, you want to hear their complaints.”

2. Insights into strategic direction
A CAB can help you navigate operational challenges, according to Hartman. For example, in determining how you will implement the second phase of the client relationship model (a.k.a. CRM 2), you can explain to your advisory board that these are the rules under which you have to operate, and ask for suggestions on how you might proceed. This strategy can help ensure that you choose an implementation process that is acceptable to your clients.

3. Improved client loyalty
“To the extent that you ask clients for their input,” Hartman says, “you are deepening their loyalty, especially when they see their recommendations being implemented.”

This strategy shows that you value your clients’ opinions, he adds, which enhances the confidence they have in you.

Loyalty also comes from engaging your board in dialogue and communicating with its members in a way they understand, D’Andrade adds: “Clients are more loyal when you listen to what they say they want, and provide it to them.”

4. Networking opportunities
A CAB builds advocacy among members, who can become centers of influence, Hartman says. While CAB members might not provide you with direct referrals, they can recommend you to potential clients.

CAB members know the products and services you offer and the type of clients you serve. “They understand the needs of clients like themselves,” D’Andrade says.

5. Competitive insights
Clients are often willing to share their experiences with other financial institutions. For example, Hartman says, if a CAB member has been offered a “special package” by a financial services firm, he or she would tell you about it, and how he or she reacted to the offer. This type of intelligence gives you an opportunity to compare your services to those of your competitors and take action to gain a competitive advantage.