Choose advisory or fiduciary board

Who this is for

Founder led lower-middle market companies with 5 to 50 million in annual revenue that want better decisions and accountability without unnecessary complexity.

The quick answer

Use an advisory board when you need targeted expertise, customer access, and flexible support without legal oversight. Move to a fiduciary board when you add outside capital, face higher risk, or want stronger discipline on strategy, capital, and succession. You can phase in fiduciary directors while keeping advisors.

The method in seven steps

Name the job to be done
List what you need this year. Strategy input, hiring a senior leader, bank relationships, sector access, or M and A.
Check the triggers for a fiduciary board
Outside capital, bank covenants, larger acquisitions, complex group structure, or succession planning. If two or more apply, begin the shift.
Choose the structure
Advisory board. three to five operators who meet quarterly with a light charter and no votes.
Fiduciary board. three to five directors with a formal charter, committees if needed, and votes on strategy, capital, and succession.
Phase in directors
Add one independent fiduciary director now and retain two advisors. Move to a full fiduciary board within twelve to eighteen months as needs grow.
Write a clear charter
Purpose, reserved matters, meeting cadence, information rights, and how directors are selected and evaluated. Keep it short.
Set information flow
Send a concise preread with one page summaries and a dashboard. Keep meetings focused on decisions.
Review value each year
Assess director fit, skills mix, and time commitment. Refresh as the company moves stages.

Example

At twenty six million with a new facility and a first acquisition, a firm kept two advisors and added one independent director with banking and integration experience. One year later they moved to a three person fiduciary board.

Pitfalls and fixes

Treating advisors like directors. Clarify scope and liability.
Over building too early. Start with advisors then phase to directors when triggers appear.
Long charters nobody reads. Keep it to the few rules that matter.

Checklist

Job to be done list
Trigger check for fiduciary needs
Chosen structure and charter
Preread and dashboard outline
Annual review on calendar