RIA firms with at least one operations manager grew faster over the last two years than those without one, according to a new independent study done by Moss Adams LLP for Pershing Advisor Solutions.

Properly trained and engaged operations staff will best leverage an advisory firm's professionals and technology, as well as assure consistent, high-quality service and operational efficiency, says the study, Mission Possible II: The Link Between Operational Efficiency and Human Capital.

The firm's operations staff must also have a framework for organizing workflow, and advisory firm owners must take a proactive stance toward defining, refining and implementing efficient processes, it adds.

"In this current economic climate, advisors need to take significant measures to protect profits while simultaneously developing their best people," says Mark Tibergien, chief executive officer of Pershing Advisor Solutions, a subsidiary of The Bank of New York Mellon Corp.

Other key findings of the study include:
Operational risks and technology spending are putting upward pressure on overhead costs. From 2006 to 2007, for example, overhead expenses as a share of revenue rose from 36.9% to 39.3% for the average firm. Firms must effectively manage and utilize employees if they want to be more efficient.

A performance-driven culture will help get the most out of employees and operational efficiencies. Firms must diligently monitor and measure performance in ways that go deeper than basic financial and operating metrics. More detailed benchmarking information results in more informed management decisions regarding the effectiveness of processes and allocation of resources.

The study was based on financial and operating data gathered from the 743 firms that participated in the 2008 Moss Adams Financial Performance Study of Advisory Firms and the 2007 Moss Adams Compensation and Staffing Study of Advisory Firms.