As many of our loyal listeners know, one of my favorite topics to discuss on our COO Roundtable podcast each month is the unfortunately common opinion in our industry that “operations is boring.” Or, even more damaging, that “operations is merely an expense line on our income statement—it’s the salesmen and saleswomen that drive real value around here.” In an effort to elevate the tone of this conversation and enlighten those who hold this narrow view, I’ve explored this topic several times in this publication (see: Operational Excellence Drives Sales Growth and The Path to RIA Ownership on the Operations Track).
Jason Mirabella of WealthSource Partners had a strong reaction on the podcast to my question on the potential conflict between sales and operations. He replied, “I do think operations has a branding problem in our industry. The term ‘operations’ in general conflates ‘strategic operations’ and the building of a service model with the execution of commodity tasks like paperwork; which I think has opened us up for getting gaslit into believing that operations should take a subordinate role to sales and relationship management.” In our most recent episode, Jennifer Wagoner Kirksey shared a similar sentiment when she said, “I’ve always disliked the term ‘back office’” because, as Jason alluded to, ‘back office’ further perpetuates the notion that sales consists of ‘front office’ activities and operations is not as important to the client relationship because its activities occur in the shadows of the organization.
Operations was thrust into the spotlight in March 2020 when each RIA was forced to reinvent how it supports its clients in a remote environment. The fact that our industry experienced record growth for two straight years during an extremely volatile period is a true testament to the value operations brings to our organizations. RIAs have continued to evolve their service models and delivery as the entire world adjusts to our “new normal” in the wake of the pandemic. The question for all operations professionals is: How do we keep our momentum and prevent being pushed back into the shadows?
Trevor Phillippi of 6 Meridian advised, “It’s really up to the leaders within operations to set expectations for how their team is going to add value to the firm, to the advisors and, ultimately, to our clients. My belief is that those in operations should view advisors at our firm as our clients. It’s certainly not ‘Us vs. Them’; it’s far from it, actually. We’re constantly looking at how we can prove our value to the advisors, just as they’re having to do for their clients every single day.”
With the growth experienced by most firms in the past two years, many RIAs are turning to their operations teams to keep the progress going for years to come. Tom Preston of Brighton Jones pointed out during our conversation with him, “Everything we bring to bear every single day in the areas of finance, technology, our ability to recruit internally for new candidates, the ability to train internally, the ability to provide our teams with support across business lines—these are all strategic advantages, brought about by operations, that help us grow faster.” Jennifer Wagoner Kirksey commented, “Operations is really an integral part of the growth of any firm. We evaluate what processes are burdensome, manual, or not effective and try to tackle those head on.” She then added, “We’re here to get the organization where it needs to go, so I actually feel really supported in my role and I think my firm truly understands the importance of needing a strong infrastructure to operate at such a high level.”
While I continue to combat this notion that “operations is boring” whenever I have the opportunity, others think this mentality will simply fade away through natural selection. Tom Preston said, “I find myself shaking my head whenever you mention this sentiment that other firms have, simply because I think it misses out on such great potential for growth in the firm.” He added, “Frankly, the feeling I have is happiness because if some of these folks are competitors, then there’s probably not as much that I need to worry about if the attitude at these firms is that operations can’t really move the needle.”
Jason Mirabella concluded our conversation on this topic by saying, “As competition increases and the sophistication of running these businesses increases, I would say that if you’re saying things like, ‘operations is boring’ and ‘salespeople are the most important around here,’ you’re probably falling behind right now. And if you’re still saying these things in five or 10 years, you’re probably not growing, fired or completely out of business. I think we just have to wait. I tell the other partners on our team that ‘sales gives you the opportunity to have the business, but operations is the business.’ I think the industry is coming around to that, slowly but surely.”
For the sake of our industry’s continued growth, let’s hope Jason is right!
Matt Sonnen is founder and CEO of PFI Advisors, as well as the creator of the digital consulting platform The COO Society, which educates RIA owners and operations professionals how to build more impactful and profitable enterprises. He is also the host of the popular COO Roundtable podcast. Follow him on Twitter at @mattsonnen pfi