If you have ever listened to an episode of The COO Roundtable podcast, you’ve probably heard Matt joke that, “As a kid, no one says to themselves, ‘When I grow up, I want to the COO of an RIA firm!’” This is then followed by chuckles from our guests and their personal stories about how they (more often than not) “stumbled” upon the COO role. They were already performing many of the functions of a COO or were somewhat adjacent to the role and eventually ascended to the COO title within their firm. It’s very rare that someone sets out in life to become a COO of an RIA, which is completely understandable— it’s not an easy job. As Jay Veale wrote in his article, “A Gen Z Perspective on the RIA Space,” the wealth management industry has a general marketing problem when it comes to younger generations.
So, in hopes that one day a little kid utters the words, “When I grow up, I want to be the COO of an RIA!” here are a few points as to why that would be a great idea:
What does an RIA COO Do?
As Matt has previously written, “It is the COO’s job to execute the owner’s vision through people and technology, and to execute that vision profitably.” But what does that mean, really? In Get Aligned!: A COO’s Guide to Unlocking Enterprise Value Through People, Processes and Systems by Alexander Tuff he writes “A good operating executive should fill in the leadership gaps, fix big issues, and execute the core strategy in concert with senior leadership. Most importantly, an operating executive needs to be an effective communicator and collaborator with whom people want to work.” A COO isn’t just the leader who helps coordinate back-office infrastructure for maximum efficiency, they also focus on the people of the organization, making sure they have all the tools necessary to execute their jobs on a daily basis. In essence, COOs are problem solvers and obstacle removers for their teams. COOs also address issues such as, “Are the right people in the right roles?” and “If we implement a new technology, how can we gain firmwide adoption as soon as possible?” If the RIA is a ship, the COO is the navigator charting the best course toward its ultimate goal.
Why is this job needed?
We believe that the best use of an advisor’s time is spent servicing existing clients at the highest level possible, earning referrals, and looking for new clients. But if they’re too bogged down answering questions such as “How do we fix our quarterly reports for clients?” or “Which outsourced trading tool will best serve our clients?” or “Why is our receptionist so upset all the time?” that can quickly distract them from the tasks the organization needs them to be most focused on. Tuff writes “[These situations] run you down and can make you believe that you are the only one in the organization that can do the job, forcing you to micromanage the organization.” As RIAs grow and complexity demands scalability, professional management is needed to drive the business forward.
Do COOs Effect Change?
Again, the answer is a resounding “YES!” and I will add that COOs have the power to effect change not just in their individual firms, but across the entire RIA industry. Diversity in the workplace is something near and dear to my heart. Being a Latina in this industry is difficult because I don’t see a lot of people who look like me. That is even more true when I consider positions of leadership. But there is space for us. Through my time at PFI Advisors, we have spoken with countless RIAs who all agree that because the COO usually spearheads the hiring process at their firms, they are the key driver of a firm’s culture. RIAs want the best talent and want to create a great environment not just for their clients but their employees as well. RIA leaders have taken notice of the social justice marches in the past years and offered days of service for their employees, impact investing firms always strive to send money to impactful causes, and thought leaders in the space have always talked about these issues!
For those of us who want to leave the world better than we found, I would argue the COO role at an RIA is a great place to start. I genuinely believe if the role of RIA COO were talked about more, it would become an option in the minds of more people everywhere.