By: Kari English
At one of the breakout sessions at the American Bankers Association’s Agricultural Conference last month Keith Phillips, senior vice president of the First Bank & Trust Co. in Abingdon, Va., and Dr. David Kohl, an economist from Virginia Tech in Blacksburg, discussed how to create and efficiently utilize an advisory board. First Bank & Trust has been using an advisory board for seven years — of which Kohl is chairman — and told attendees to the session that he finds it very useful.
Phillips profiled his bank and explained why it decided to create the advisory board. At the end of the session there were a few minutes left for a question and answer period, which I found to be as interesting as the presentation itself. For instance, someone in the audience asked Phillips and Kohl about the liability of the advisory members, to which Phillips and Kohl promptly answered that the members are covered under the bank’s directors and officers policy.
Another question pertained to advisory members’ discretion. Phillips said most of the members of his advisory board have relationships with other banks, but he doesn’t worry about information leaking to competitors. First of all, Phillips said, he doesn’t provide detailed information to the advisory board. “Don’t put members in a situation where information may be misused,” said Phillips. And second, you have to choose board members you can trust to be objective.
Kohl added that it is important that the members of the advisory board come away from meetings feeling that it was time well spent. “One-third of the meeting should be knowledge-based,” Kohl said. “They need to learn, too.”
Another thing I found interesting was the entire staff of First Bank & Trust is invited to the advisory board meetings. They mostly listen to what is being discussed, but one employee said being there helps him to generate new ideas and prospects. Another employee said he considers the advisory board members mentors.
Also of interest, Phillips said to make sure you have a moderator for the meetings — in his case, it’s Kohl — and make sure you have an exit strategy to get rid of members who aren’t engaged.
Because there were so many questions at the end of this session, I figured there must be serious interest in the idea so I decided to investigate the concept of advisory boards further. So click below to learn why you might want to create an advisory board, how to create one, how to run the meetings and more.
Kari English is senior editor of BankNews.
Copyright © December 2010 BankNews Media