You know your practice has reached a crucial turning point when you have to choose between serving your clients and growing your business — because you no longer have enough time and resources to do both.
Many of the advisors we work with at my consulting firm come to us out of frustration that they have built the wrong organizational structure to support their firm. This often becomes a conversation about whether this is the right time to hire a professional manager to help run their business operations, freeing the advisor to spend more time with clients and to develop new client relationships.
Here are the chief signs that the time has come to hire a professional manager:
1. You try to do everything yourself.
If the time you spend at work is getting longer and you are still running out of hours in the day, this is a sign you are doing too much yourself and it’s time to bring in someone to help run the business.
I suggest making a list of the things you do and don’t like doing; it should include the things you’re not good at doing or that are not a good use of your time. Then use the list to hire someone who has the skills to run the day-to-day operations of the firm.
This will free you to focus on the big picture — the strategic aspects of running the firm. A lot of entrepreneurs complain they are unable to work on the business because they are too busy working in it.
They suffer from the belief that they can do it all themselves. Recruit and hire people you can trust and who are willing and able to step into management roles.
2. Your firm’s growth is slowing.
Are you finding that, if you take market growth out of the equation, revenue from new clients has ground to a halt or is lower than in previous years? Is the reason because you’re wearing too many hats?
Many advisors are diverted by operations such as financial management, compliance and human resources, and find they no longer have time to focus on rainmaking activities that helped propel growth in the past.
If you are working with clients and developing new business on a part-time basis, it may be time to give up some of the day-to-day aspects of running the business. Advisory firms with professional management grow at a faster rate than those without it, industry data show.
3. You can no longer manage your employees effectively.
Are you no longer able to keep track of all of your employees? Then it’s time to bring someone on board who has experience and a proven track record of managing people.
It’s vital to check on each employee periodically and give them individual attention. Yet most owners I have met tell me pointedly that they “didn’t get into the business to manage people.” They complain that managing their employees day-to-day overwhelms them.
So I tell them it is time to invest in hiring someone who can give their employees the direct coaching and guidance they need.
4. Your mistakes impact clients.
When you and your employees are stretched for time, your quality of work will begin to suffer. Because you can’t fully focus, costly mistakes will be made.
I had a founder come to me exasperated and dismayed that an employee’s trading error had cost him one of his best clients.
The best time to hire an operations manager is before you undertake something major — whether it’s a strategic initiative, such as investing in new CRM technology or switching to a new custodian, or starting your next phase of growth by adding a new advisor or merging with another firm.
5. Someone else can do it better.
It comes down to knowing what you do best and what someone else could do better.
As the leader of a company, you most likely need to focus on the strategic aspects of your business by spending time with top clients and generating new business. Offload the rest by bringing on someone who will not only maintain but actually enhance your day-to-day operations.
Most firms find that, once they hit the $500,000 to $1 million revenue mark, they have need of a full-time operations manager to run their day-to-day activities.
At larger firms, with $1 million to $2 million in revenue, this role should evolve to that of a chief operations officer, who is responsible for all of the firm’s major functions: finances, risk management, compliance, human resources, client-service administration, sales, marketing and technology. The COO directs, administers and coordinates the firm’s activities in accordance with its policies and goals, and is typically a partner at the firm or on the partnership track.
There are three ways to fill this role: The first is for one of the firm’s current owners to take it on and drop his client-facing role.
We see firms opt for this approach frequently, with mixed results. It is very difficult for an owner to give up managing clients and growing the business, and that person is not always the best-qualified to run the business. When a qualified manager is 100% dedicated to the role, the results are always better.
The second option is to promote someone qualified from within the firm. More often, it is easier to promote a manager from within than to bring in someone from the outside. Promoting from within also helps ensure that your firm’s culture remains strong and provides a career path for those on the operational side of the business.
The third way is to hire a professional from outside the firm. This route seems to work best for larger firms, which have more-specialized roles and longer-tenured employees.
A larger, more experienced team makes it possible for an outside recruit to transition over time into the role, as the team is less dependent on the new hire for specific knowledge and industry background. But the key to successfully hiring someone from the outside is finding a candidate who is in sync with your firm’s culture and values.
However, none of these approaches will be successful if the firm’s owners aren’t willing to relinquish some authority and cede a measure of control to the new manager. He or she needs to be empowered in the role, and given the freedom to work creatively, unfettered by too many rules.
Set your new manager up for success by showing the rest of your staff that you are delegating real responsibility. Then take advantage of having someone in that role by refocusing your efforts on servicing clients and growing the business.
Kelli Cruz is a Financial Planning columnist and the founder of Cruz Consulting Group in San Francisco. Follow her on Twitter at
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