10 signs a firm needs a COO

DEC 11, 2013
By  MFXFeeder
1. The firm generates $1.5 million a year in revenue. About 50% of firms at that level have dedicated management in place. By $3.5 million in annual revenue, that number jumps to 90%. 2. There are seven or more members at the firm. Once the business gets large enough, one person can't run it all. 3. The firm wants to build its client base faster. Firms with dedicated management increase their clientele 12% faster than companies without management. 4. The firm wants to increase income per owner. Companies that invest in management roles have 36% higher income per owner than companies without, an average of $387,274 per owner, compared with $284,918 per owner for firms with at least $500,000 in revenue. 5. The firm wants to give its advisers an edge, with increased flexibility, productivity and em-ployee engagement. Hiring management roles can free up more of advisers' time to develop a specialty and work to forward the firm's strategic goals. 6. The firm is experiencing growing pains. Often as firms grow, miscommunication and other inefficiencies can come out of the woodwork. Thirty-six percent of firms surveyed by TD Ameritrade Inc. listed increasing dependency on key individuals, and 29% said that the inability of technology to keep pace as the biggest hindrances to growth. Hiring management can help your firm get past these roadblocks. 7. The chief executive needs a thought partner. Chief operating officers can help delve into business metrics and be co-creators of the firm's business strategy. 8. More than 45% of the firm's revenue goes toward overhead. At that level, a manager might be needed to come in and take charge of the company's spending habits. 9. The total amount of hours that the team is dedicating to management activities is greater than the equivalent of one full-time worker. Hiring someone to handle those duties can create increased efficiency. 10. The bottom line is large enough to afford to spend $156,238 in additional annual salary. That number is the industry's median compensation for a COO. — Megan Durisin

Latest News

RIA M&A stays brisk in first quarter with record pace of dealmaking
RIA M&A stays brisk in first quarter with record pace of dealmaking

Driven by robust transaction activity amid market turbulence and increased focus on billion-dollar plus targets, Echelon Partners expects another all-time high in 2025.

New York Dems push for return of tax on stock sales
New York Dems push for return of tax on stock sales

The looming threat of federal funding cuts to state and local governments has lawmakers weighing a levy that was phased out in 1981.

Human Interest and Income Lab streamline workflows for retirement-focused advisors
Human Interest and Income Lab streamline workflows for retirement-focused advisors

The fintech firms' new tools and integrations address pain points in overseeing investment lineups, account monitoring, and more.

Buy or sell Canada? Wealth managers watch carefully as Canadians head to the polls
Buy or sell Canada? Wealth managers watch carefully as Canadians head to the polls

Canadian stocks are on a roll in 2025 as the country prepares to name a new Prime Minister.

Carson, Lido strengthen RIA networks with bicoastal deals
Carson, Lido strengthen RIA networks with bicoastal deals

Carson is expanding one of its relationships in Florida while Lido Advisors adds an $870 million practice in Silicon Valley.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.