NEW YORK, May 4—Kay Breakstone has been around the investor relations business for almost 20 years, in a career that spans senior management positions at Burson-Marsteller, Ludgate Communications, and most recently as president of Breakstone&Ruth, which specializes in providing U.S. IR counsel to overseas companies. So there’s not much she doesn’t know about the basics of IR.

But investor relations, she says, is a complicated business. “To be successful in investor relations, you need to know a little bit about a lot of things. You need communications skills, obviously, but you also need to understand the laws governing disclosure, and you need to understand the way investment decisions are made.” It takes a long time to get comfortable with all those subjects and more, and it helps to have experts to turn to for advice.

That’s where Breakstone&Ruth’s new advisory board comes in. The board, which consists of experts from the world of finance, will work with B&R’s senior account personnel to provide an additional level of market intelligence, financial expertise and insight that Breakstone believes is vital for the implementation of sophisticated IR programs.

Breakstone isn’t the only one who thinks an advisory board is a good idea. Her partner in B&R, Carol Ruth, set one up when she started her own firm four years ago. Cleveland-based Dix & Eaton has had one for several years. And Jerry Giaquinta, who this week left Sony to set up a new consulting business, called on industry veterans such as Jay Chiat and Regis McKenna to sit on his advisory board.

Yet such boards are still a rarity in the public relations business. Out of 10 leading independent agencies we called randomly last week, none had a formal advisory board, although two said they had a network of senior business leaders they called on a regular basis for advice, and one said it was considering creating an advisory council.

They might be surprised how easy creating an advisory board can be. Breakstone has attracted some impressive names, including Carlos de Quesada, VP of investment banking at Credit Lyonnais Securities; Daniel Lerner, managing director of research at Bear Stearns; Daniel Nemo, an attorney formerly with Sullivan & Cromwell; Fred Silva, an information technology specialist with Primedia; and Jim DiClerico, an independent crisis and corporate communications specialist. None of them will receive any compensation.

Says Breakstone, “We have a new company, a small company, but one that is growing fast. It’s interesting for these people to work with a small company. Clearly we are not on the phone with them every day, but they are there when we need their advice, and so far they have been incredibly generous with their time.”

Dix & Eaton does pay its advisory board members, who include former management consultants, a retired lawyer, and a former CEO, but it doesn’t pay them anything like their market value, according to president Scott Chaikin. “We pay them just enough for them to know that it costs us something to get their input,” Chaikin says.

Breakstone’s board will meet formally three times a year, but she plans to hold monthly conference calls to report to them on the firm’s progress. For the “fairly nominal amount” D&E pays, its board meets four times a year. “They can see all the things they have suggested put into action,” says Chaikin. “They enjoy the exercise of thinking about our business—these guys who have run major business will argue very passionately about our business—and they like seeing what a difference they can make.”

That difference has been significant, he says, helping D&E understand what clients want from a counseling firm, and providing support to senior executives as they try to build relationships with CEOs and other senior level executives at client firms.
Likewise, Breakstone believes her board will help her firm differentiate itself from the competition. “We see ourselves at the other end of the spectrum from the large conglomerates that provide a menu of financial products and services,” she says.  “To offer the right kind of thinking, we felt we needed to be current on all essential areas that touch investor relations. The advisory board brings us that depth.” The board, with its blue-chip names, may also help establish the firm’s credentials with new clients, Breakstone says, although she adds, “I’m not expecting anything. I’m hoping. I think it will make us better at what we do.”