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​Signs with the words "new life" representing the different directions a life transition could take.

February 06, 2019

Why You Need a Personal Advisory Board for your Life Transition

While business owners and nonprofit leaders are familiar with advisory boards, individuals don't usually think about establishing personal advisory boards. But if you are taking a serious approach to your transition from a full-time career to business ownership, or you are pivoting from one career to another, it's smart to identify and use a personal advisory board.

When we need life advice, most of us call our parents or siblings, or rely on best friends. A more strategic approach is to gather people around you who have the experience and expertise to serve as a sounding board for your major life and work decisions.

“Anyone can have an informal group of friends who give each other advice," said Dave Kerpen, author of “Art of People" and founder of Likeable Local, a social media software company. “What's powerful about a more formal personal advisory board is that the people involved are more committed. There's a multiplicity impact when you have five to seven people. They can be more helpful together than separately."

Such a powerful group can also give you confidence when you need to make a major decision. “A personal advisory board can help you feel confident to take the risks you need to take to live an authentic life," said Michael S. Seaver, an executive coach and founder of Seaver Consulting. “Only 33 percent of Americans like their job, according to the Gallup State of the American Workplace survey. A personal advisory board can help you transition to something you'd rather do."

Salaried individuals can also benefit from a personal advisory board, said Patricia Hausknost, a wealth planner at City National Bank.

“You can benefit from hearing people's different perspectives and learn from their experience when you want to make a life transition of your own, such as planning for your retirement," said Hausknost.

Typically, people tap a personal advisory board for ongoing advice about their career or business, but a board can also be used for just one major decision.

How to Create a Personal Advisory Board

While there are several possible approaches to establishing a personal advisory board, you'll need to decide first what you hope to achieve through one.

Set Your Goals

“If you haven't started a business but hope to do so, then you'll be looking for advice about how much money to set aside and what issues might come into play as you make that transition," said Kerpen. “If you're in business, there's a huge overlap between your business and your personal life. Your advisors can help with that."

Think about where you want to be in five years, said Seaver, then do a personal inventory to set the foundation and ask yourself who you are and what you're doing to establish your guiding structure.

Decide Who You Need On Your Board

Your personal advisory board should ideally have no more than five to seven people, said Kerpen, because scheduling meetings becomes more challenging with a larger group. If you're interested in starting or expanding a business, Kerpen recommends reaching out to someone in your industry who is more successful than you.

“Ideally, your board will include an attorney, a financial expert, a subject matter expert in your area and someone with sales and marketing expertise," said Kerpen.

Choose people who have done bits and pieces of what you're looking to do, suggests Seaver, then leverage their networks and their strengths to accomplish your goals.

A financial advisor who can talk about your investments, a tax advisor or CPA and an estate planning lawyer are all recommended members for a personal advisory board, said Hausknost.

“A financial planner should also be part of your personal advisory board to talk to you about everything, not just your investments," she said.

Experts have varied opinions on whether family members should be part of your advisory board.

“Whether your family members are working in your business or not, if you're a business owner that means you're eating, drinking and sleeping the business. So your family is naturally impacted," said Hausknost. “Family members should be part of your board, especially if your family's wealth is tied to your business."

But Seaver believes that family members should be excluded from your personal advisory board, along with work colleagues if you have a full-time job. “That just muddies the water," he said.

Kerpen suggests including a mix of people you know and people you meet through networking. Ask the people you know to suggest others with various areas of knowledge and experience.

“You want the most qualified people you can find and you want a diversity of perspectives," said Kerpen. “You definitely don't want someone you live with to be on your board. They can give you advice anytime."

Compensation Methods

Asking someone you don't know or even someone you know well to join your personal advisory board can be daunting, so it's essential to think about how you can give them value in return for their time and effort. Typically advisory board members don't charge an hourly professional rate for their time. Instead, they're compensated with a small fee or other forms of gratitude.

“I've set up personal advisory boards three times when starting different businesses and each time I've offered people cash or equity in the business," said Kerpen.

He also treats his personal board members to good meals at his meetings or at restaurants afterwards as a way to thank them. In addition, he structures his meetings so everyone benefits from activities like leadership training or team building.

“You appeal to someone's nobler motives when you ask for their help," Seaver said.

Most important, listen to what they care about and support those interests.

“Some people just want to be thanked, but you can also offer to pay for their travel to your meeting, buy them dinner or offer to make a donation to a charity they support," said Seaver. “Sometimes people ask you to do something specific, such as meet with someone they know or take a class or a trip. Agreeing to that can make them feel more valued than they would if you just gave them a gift."

Your personal advisory board will evolve over time and you'll want to manage expectations of how much help you'd like from your board as well as your capacity to provide assistance in return.

Establish a Structure

While Kerpen prefers group meetings, Seaver finds one-on-one meetings more valuable. Either way, it's important to establish a clear agenda and ask for people to commit to at least one year of board membership.

“I try to get everyone together at least quarterly at an in-person meeting or by video chat if someone can't make it," said Kerpen. “It's important not to waste anyone's time, so I send an agenda in advance and limit the meeting to two or three hours at most, including a meal. Typically, we meet from 4 to 6:30 p.m. and then dinner is optional so if someone needs to leave they can."

Seaver prefers one-on-one, face-to-face meetings with his board members that last one to three hours.

“I rotate so that I meet different board members each month and try to get to everyone once per quarter," said Seaver. “Group meetings never have as much depth and transparency. Things can be said individually that might not be said in a group."

Seaver schedules an occasional group dinner with his advisory board or other executives. He also asks for a commitment of three years from board members and reassesses his board every 18 to 24 months to see if it meets his current goals.

“When you seek advice, make sure whoever you're talking to understands the full story," said Hausknost. “The biggest challenge for most people is being afraid to open up and share what they're really thinking about. It's important to be open to get honest feedback."

A personal advisory board can help you figure out how to follow your dreams and yet understand reality and your own limitations, she said.

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This article is for general information and education only. It is provided as a courtesy to the clients and friends of City National Bank (City National). City National does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of City National. Please cite source when quoting.