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Breakout Implementation, inc.

What is a Fractional COO?

First, What is a COO and Do RIAs Really Need One?

The COO Role and Functions

This position is sometimes alternatively titled President, Managing Director, or Chief of Staff. Whatever their title, the Chief Operating Officer (COO) plays a critical role in ensuring that the organization’s operations run smoothly and are aligned with the strategic vision of the company. The three main functions of a COO include

  • Managing the daily operations of an organization, (its personnel, processes, and resources).

  • Assisting in the design and execution of the strategic initiatives of the business.

  • Leadership and guidance to departments and team members.

Do RIAs or Advisory Practices need a COO?

The Short Version

Yes! Someone must be responsible for ensuring the daily operations are taking place, and that those operations are aligned with the strategic goals of the RIA or Advisory Practice. This is often just one of the functions of the CEO/owner at the initial phases of the business but that should change as the RIA or Advisory Practice becomes larger and the daily operations become more complex.

The Longer Version

Initially, the founding owner is likely in the role of CEO, CCO, COO, CIO, CFO, Senior Advisor, and Client Service Rep all at the same time. As the firm grows in clients, revenue, and staff, some of the roles and functions are fulfilled by other team members. For instance, we often see some of the first functions being split off from the CEO/owner are to fulfill the client service needs, (i.e. paperwork processing, meeting scheduling, answering the phone, etc.), and this comes with the hiring of an assistant or client service rep. Eventually, the owner/lead advisor may have great success onboarding new clients, and they require an additional advisor, then another client service rep, and so on. Perhaps they also begin to administer more complex portfolio management or planning functions and need an investment or planning professional or even an entire investment or planning team to handle those tasks.

This is the typical early scaling model of many successful RIAs and Advisory Practices – an increase in success, increases complexity, and requires an increase in personnel to handle all the new business. But at a certain point the legacy of that growth and success creates so much complication that it actually begins to stall the growth, curtail profitability and efficiency, and ultimately leads to valuable team members and clients abandoning ship. This is because key team members become unable to complete important tasks related to their core role and functions because they are dealing with operational tasks and issues and no one is tasked with coordinating all the processes and procedures. Everyone feels overworked, tasks get dropped, client issues are unaddressed, and finally you begin to lose those relationships.  The most common tactic to mitigate this is for the CEO/owner to just add more service team members. This is only a temporary fix, will greatly impact profitability, and ultimately will exacerbate the issue.

This is where a COO can play an important role in helping the CEO to design and implement a strategic vision, manage personnel, and provide cross functional leadership to departments and team members. The right COO will bring profitability and efficiency, minimize risk, allowing the visionary/owner, and his or her advisors to prioritize business development and their support staff to provide exceptional client service. This will lead to a growth in revenue, as sales/marketing functions are not bogged down with operational tasks. An increase in profitability due to a streamlined workforce and effective technology package, ultimately creates a much happier team, and this comes from having the right people in the right seats. Who wouldn’t want that?

Now, What is a Fractional Chief Operating Officer (FCOO)?

A Fractional Chief Operating Officer, or FCOO, is an outsourced or part-time COO, who provides part-time or temporary COO services. Instead of being full-time employees of a single company, an FCOO typically works with a few select clients simultaneously, providing strategic guidance, operational expertise, and leadership on a part-time basis.

Fractional COOs are often utilized by companies that may not have the resources, or desire, to hire a full-time executive at the COO level. They can offer valuable support in areas such as operations management, strategic planning, process improvement, and team leadership, helping companies achieve their growth objectives without the expense of hiring a full-time executive.

Arrangements with a Fractional COO can vary depending on the needs of the company, ranging from a few hours per week to a few days per month. This flexibility allows companies to access high-level executive talent on a more affordable basis while still benefiting from the expertise and experience of a seasoned professional.

What are the Benefits of Hiring an Fractional COO for an RIA or Advisory Practice?

A Fractional Chief Operating Officer, or FCOO, can bring several benefits to RIAs and Advisory Practices:

  • Cost-Effectiveness: Hiring a full-time Chief Operating Officer can be expensive, especially for smaller RIAs and Advisory Practices. Utilizing an FCOO allows RIAs and Advisory Practices to access the expertise of a seasoned executive on a part-time basis, reducing costs while still benefiting from strategic operational guidance.

  • Strategic Expertise and Planning: FCOOs often have extensive experience in operations management and strategic planning across various RIA or Advisory Practice models. They can bring valuable insights and best practices to help RIAs and Advisory Practices optimize their operational processes and align them with strategic objectives. FCOOs collaborate with other executives to develop and execute strategic initiatives that drive growth and success for the RIA or Advisory Practice.

  • Flexibility: FCOOs offer flexibility in terms of the amount of time they spend working with the RIA or Advisory Practice. This flexibility allows RIAs and Advisory Practices to scale their operational support according to their specific needs and budget constraints.

  • Process Improvement: FCOOs can assess current operational processes within the RIA or Advisory Practice and identify opportunities for improvement. By streamlining workflows, implementing efficiencies, and leveraging technology, they can help RIAs or Advisory Practices enhance productivity and profitability.

  • Leadership and Guidance: FCOOs provide leadership and guidance to departments and team members within the RIA or Advisory Practice. They can help build and develop high-performing teams, foster a positive organizational culture, and ensure effective communication and collaboration across the organization.

  • M&A Diligence and Integration: FCOOs can assist an RIA or Advisory Practice with mergers and acquisitions by overseeing due diligence, integration planning, and operational assessment, while also providing change management support and facilitating communication between the acquiring and target companies. They play a crucial role in guiding the RIA or Advisory Practice through the M&A process, ensuring a smooth transition, maximizing the value of the transaction, or making the RIA or Advisory Practice a more attractive prospect to potential buyers and/or sellers.

Overall, leveraging the expertise of a Fractional COO can help RIAs and Advisory Practices effectively manage their operations, drive growth, and achieve their business objectives in a cost-effective and flexible manner.

Do You Need an FCOO?

As a CEO or Owner of an RIA or Advisory Practice, consider some basic questions to determine if you may need the services of a Fractional COO:

  1. Are you experiencing a stall in growth because you and/or your key business development team members are wearing too many hats?

  2. Do you have strategic plans you are unable to implement because you just don’t have the time to dedicate to their planning and proper implementation? Is your team ready or capable of implementing them? Are they onboard with your plan? Do they even know what the plan is? Do you?

  3. Are you finding it difficult to scale your business because you do not have the time, data, systems, or technology that allows you to scale?

  4. Are you at a point where you would like to hire a COO, but it just doesn’t make financial sense at this time, even though you would still like to grow and operate more efficiently?

These may be just some of the signs that you are ready for a Fractional CCO. Click the link below to learn about our Areas of Expertise and how they can assist you in maximizing your RIA or Advisory Practice operations.

 

Contact Us to learn more about how we can help you take back control and get the most out of your RIA or Advisory Practice.