Many RIA founders establish their firms on lean platforms, personally managing every aspect of the business. But, as these businesses begin to scale, the frameworks that effectively served their once modest client base might suddenly have limitations.
To remain competitive, a growing number of future-focused RIAs are adapting – changing their business models, expanding their service offerings and improving their succession planning. According to Cerulli, this is especially prevalent among those with more than $1 billion in assets under management (AUM).
While these growing RIAs might be able to accomplish more from a tactical perspective, their leadership must also keep their teams strategically aligned. For many, establishing a C-suite is their best course of action.
Reimagining The Framework
Much like an old building that has outgrown its design, an RIA operating with a stale governance model might benefit from an infrastructural refresh. As Marshall Goldsmith, one of my coaches, says, “What got you here won’t get you there.” In alignment with that philosophy, formulating a C-suite strategy is a practical next step for RIAs serious about keeping pace with industry demands.
Given how rapidly some RIAs can scale, it makes good business sense for those on a strong growth trajectory to do foundational planning ahead of their $2 billion AUM milestone.
Mapping Out A Blueprint
Many factors go into determining the size, structure and other attributes of an effective C-suite. The firm’s vision over the next five to 10 years should be among the top considerations when identifying which positions will be most impactful. Using that as a beacon will help guide the forming C-suite’s focus, whether that be organic growth, succession planning, M&A, innovation or other priorities.
The firm’s vision over the next five to 10 years should be among the top considerations when identifying which positions will be most impactful.
The firm’s founders should also evaluate any gaps, bottlenecks or impediments to progress – and identify responsibilities that can be handed off. RIAs ready to begin the C-suite building process can either work with a consultant or organize an internal planning session with a handful of firm leaders.
Creating A Strong Foundation
After a few planning sessions, critical “must-have” roles will begin to emerge. Here are a few common industry executive positions and their areas of oversight:
The chief operating officer (COO) or president is the architect of operational harmony, efficiency and effectiveness – accountable for ensuring alignment between the firm’s daily work and its strategic goals, freeing the CEO to focus on future vision.
The chief growth or marketing officer is the lead engineer for all activities tied to organic and inorganic growth, scale, client and advisor recruitment, retention and digitization – committed to leveraging data-driven insights to execute deliberate and well-planned client and advisor experiences.
The chief compliance officer (CCO) is the superintendent of rules and regulations – adept in monitoring and enforcing regulatory obligations to serve clients consistently and mitigate risk.
The chief financial officer (CFO) is the quantity surveyor – focused on budgeting, cost containment, innovative investments, financial tracking and client reporting.
The chief people officer (CPO) is the site manager – dedicated to all things related to human talent, labor laws, benefits and supporting the future workforce.
The chief technology or digital officer is the designer and developer of technology – driven to deliver digital systems and processes that serve clients with simplicity and scale.
There are also numerous emerging executive roles responsible for overseeing strategy, product, innovation, artificial intelligence (AI) and other increasingly mainstream verticals. Establishing the basics – while layering in naturally aligned functions – will help RIAs set a strong foundation and create a succession pipeline of future executives.
Maintaining A Cohesive Structure
Filling these roles with the right leaders – whether internal, external or acquired through M&A – requires finding individuals who demonstrate innovative thinking, agility, business acumen, executive presence, strategic vision and strong followership.
Ensuring strategic alignment within the newly formed C-suite and across the enterprise necessitates a shared vision, unilateral buy-in and a well-structured plan for changing leadership. It’s not an easy feat, but when done right, introducing a new executive tier can foster enhanced collaboration to help propel the RIA toward achieving its vision.
Reinforcing A Sustainable Design
The evolution from a founder-led RIA to a professionally managed firm involves more than shifting titles. It’s a strategic initiative designed to build an RIA for the next generation, requiring discipline and focus to generate the desired results. Developing a cohesive C‑suite can help ensure that a growing RIA’s visionary aspirations match its commitment to operational excellence.
The evolution from a founder-led RIA to a professionally managed firm involves more than shifting titles.
With the right talent and clearly-defined plan, these RIAs can future-proof their firms – delivering excellence today while building for the next generation.
Terri Kallsen, Managing Partner at Rise Growth Partners, which partners with RIAs to build wealth management brands.
