| 16 July 2009
So, What Exactly Does a COO Do and Why do I Need One?
COO or Chief Operating Officer…more than likely you’ve heard someone mention this before in the context of your financial advisory business, right? Well, if so, I want to address it again with you and if not, let me help you understand what this person does and why you desperately need one ASAP! First, let’s talk first about what a good COO can bring to your firm. If you have more than one employee, you will appreciate this next description. You close your office door, you gather all the paperwork you need to work on your next project or you sit down to review your emails for the day. What happens next? Just as you settle in for some quiet time, a knock on the door and then the door opens. It’s one of your employees with a problem, complaint, situation, joke, whatever. The point is they’ve once again interrupted your private time. Now, being the nice person that you are and not wanting to upset this employee, you stop what you’re doing and listen to them. The resolution may take one minute or one hour but whatever the amount of time, you’ve stopped what you were doing and now have to switch gears and deal with them. I bet this has happened to each and every one of you and it only multiplies with each additional employee.
Next situation. You feel like each and every time a situation arises, you are “recreating the wheel” with each solution. Or, you have multiple employees doing the same task but each one is doing it differently. Does this sound remotely familiar? A compliance nightmare right?
How about this? You have two employees who are simply not getting along or one employee who you think may be spending too much time on personal business. So, now again, you have to take precious time away from your firm to handle these situations and more than likely, it’s time you didn’t even have in the first place! You didn’t become a financial advisor so that you could manage employees! Okay, one more. How many of you are terrified to leave your office because you fear: your clients won’t be taken care of properly, you’re afraid one of your employees will make a mistake and you won’t be there to catch it, handle it, etc.,
So, what are the only two things, you as the owner and advisor of your firm should be doing? Taking the best care possible of your current clients and making rain! That’s it…that’s all it boils down to. Anything you do that is outside of these two activities is a waste of time and defeats the whole reason you became a financial advisor in the first place.
Okay, you say, but I have a “secretary” or “administrative assistant” to handle these other things. And I say…so what? Now, having said that, it’s possible that your secretary or AA is competent enough to become your COO but probably not because when you hired this person, you were not thinking about the skill set that a competent COO would have…self-starter, broad thinker, good manager, ability to prioritize, strategic thinker. You hired someone to assist you and that’s great but now we need to take it up a level. This person is not just an assistant but also a business manager. How can a COO solve the problems I mentioned? A good COO is your team leader. They are the only person in the firm who is empowered to speak with you directly when your office door is closed i.e., they are the only person who reports to you directly. All of your other staff report to your COO. They are charged with Practice Policies, technology, systems, etc. They ARE your back office. They are empowered to participate in strategic decision making, they are given full authority to run the back office in the manner the two of you have arranged, they prioritize all of your back office operations AND, this is key, they have the right to refuse a client or advisor request that does not fit within the firm’s operational policies and strategy. In other words, they are your checks and balances for your strategic plan as well as your chief operational person.
And, let me give you some statistics (you knew they were coming, right?). According to Mission Possible: Finding the Optimal Operations Model, a report published jointly by Pershing and Moss Adams, firms with a COO see their revenue leap by 189% over those that don’t. Let me say this again…189%! And, firms with a COO had revenue doubled the rest of the community as did their operating revenue.
That should be compelling enough right there. But you say, I cannot afford to pay someone of this caliber a decent enough salary to attract them. I say, you cannot afford not to. This person is crucial to you meeting your goals and building the firm you want. This is the not the place to cut corners. The right staff is the most important thing you do for yourself and your firm. A good, qualified COO will pay for him or herself in a very short time by providing you more time to build your firm. They are your top manager, your right hand and they take everything off of you that is not directly related to the two tasks you should doing. Additionally, the right person can have an impact on your personal life as well because a qualified COO frees up your time to do the things you love which include spending time with your family and friends.
Mike Self of Self Wealth Management in Scottsdale, Arizona had this to say about his decision to hire a COO. “Hiring a COO is a commitment to the long term goals of a business. The investment in a professional hire enables an advisor to focus on the important aspects of the business; clients, quality of service and building AUM. In addition to the investment of a COO, you must understand your vision of your business and the ultimate success level you want to achieve. The COO will help you set objectives, and meet those objectives. I have found that objectives/goals that may have normally taken months and years to achieve, have been met within weeks and months with a qualified COO on staff. Finding an individual who fits in with my work ethic and vision has provided me with peace of mind and the freedom to do what I do best – serve my clients.”
So, bite the bullet and hire a top notch COO for your firm. There is no other investment you will make that will give you the payoff this person will.
Please call me or email me if I can help you hire the right COO for your firm or if you want to discuss how I might be able to assist you in your quest!
