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ABA Banking Journal

Benefiting From Advisory Boards

Recruiting local leaders to provide input is a time-honored way for banks to cement their community ties. Some of these handpicked leaders end up on the board of directors. Many serve on advisory boards.

“An ‘advisory board’ is generally a small group of individuals, separate from the board of directors, who regularly meet and provide advice or feedback to the board and management,” notes Peter Wilder, a shareholder in the banking practice of the Wisconsin law firm Godfrey Kahn. However, it’s important to remember that they are not board members or fiduciaries, he emphasized in a recent National Law Review article.

What advisory boards are is a potential source of meaningful insight into local markets for directors and management alike. Advisory boards should be compensated and advisors should feel that their time is well spent, experts note.

Relevant data for community banks was not available, but all regional banks surveyed in 2023 by compensation firm Pearl Meyer reported providing some cash compensation to advisors, with 78 percent paying per-meeting fees. The median per-meeting fee was $250, with a range of $125 to $1,000 per meeting.

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