In the financial advice industry, the star performers are usually client-facing advisors. Just as the largest contracts in football go to those who score the touchdowns, the best compensation and career advancement opportunities seem in the financial advice industry to go to those who bring in clients.

The contributions of operations and administration people, on the other hand, can be more difficult to define and measure. ESPN will always tell you who scored in a soccer game, but you will never see the name of the goalies on ticker tape.

And yet the easiest way to lose soccer games is by having a bad goalie.

In the same way, operations and administrative employees often struggle to measure and show their contribution, even if everyone has a sense that their contribution is valuable, especially as firms grow.

As a result, the industry is accumulating experience in developing career tracks for non-advisory staff.

In the future, in fact, the CEOs of large, successful independent advisory firms may not even be advisors, but people drawn from the operarations ranks.

There are many talented, ambitious and dedicated second-generation professionals in the industry, and they are challenging the notion that you need to be a client-facing advisor to be a leader.

So how is the industry creating career paths for operations people? In this article, we will try to find out.

Who Are The Non-Advisors?
Non-advisory positions include all the staff responsible for:

• Client service administration. This includes all custodian interactions. These administrators also gather and maintain client account data and other data and they respond to general service requests.

• Technology staff. These professionals select and implement all information systems such as performance reporting and trading, CRM, planning and e-mail, as well as hardware. They also increasingly oversee the security of all systems and client data, and their ranks include the chief technology officer (CTO).

• Investment operations staff. These staffers may include traders.

• Human resources. This includes all staff responsible for employee recruiting, training, performance management, HR compliance, payroll and benefits administration. The director or senior director of human resources is included here.

• Marketing. These professionals coordinate and implement all marketing strategies, including a firm’s website creation, content creation and distribution, its events and other marketing efforts.

• Accounting and finance. This department includes the chief financial officer of the firm.

• Compliance and legal. This department includes the chief compliance officer and legal counsel.

• General administration.

• Office management. This includes managers overseeing all office functions. In smaller firms, they oversee the entire administrative area of the firm.

• Operations. This includes the chief operations officer of the firm—i.e., the person overseeing the entire staff.

The impact of these professionals is felt throughout an advisory firm. In the largest firms in the industry (“super ensembles”) they account for almost half the total staff (22 out of 49 employees) according to a 2016 survey of the industry sponsored by Pershing and produced by the Ensemble Practice. Inside the largest firms, operations and administration staff account for more than $2.5 million in total payroll on average or of 12% of the revenue of the firm.

For this reason, every firm should be ensuring that its non-advisory departments are staffed with talented and motivated employees. Again, this means that there must be a career track in all areas of the firm.

Are There Careers in Operations?
A “career” by definition means growth in a person’s scope of responsibility, and then in status and income. For someone to become a manager or a leader he or she needs to have people to manage or a team to lead. But too many firms bestow promotions on employees simply because they are performing well and have accumulated tenure in the firm. For example, when I joined my previous firm Fusion, every single employee had the title of director or managing director. All five employees. But what were they director of? Whom were they managing?

Inflated titles do not help either the firm or the employee. They often create unrealistic expectations about compensation. Even worse, the employees themselves realize the positions are really no more challenging than lesser ones and come with no actual rewards.

Some professional businesses, accounting firms for instance, add a partner for every million or more in revenue. This ensures that for every partner there is a team to manage and a scope of activities to match the title. While this may seem mechanical, advisory firms should also consider some similar method that allows staff to gain responsibility as their firm grows.

The problem with finding advancement opportunities for non-advisors is more acute in smaller firms. We noted that in firms with more than $1 billion in revenue, there are as many as 22 or more administrative and support employees. If we assume that every five to seven employees are overseen by a manager, we can easily see room for advancement within these units. But a firm with less than $500 million in assets under management usually has only two or three administrative employees. Finding a career track in such a firm would be problematic—since all career tracks are limited by the firm’s size. You can’t really grow a big tree in a small pot.

The stages of growth and advancement in an advisory firm should perhaps rank in this order:

1. Operations And Admin Specialist
This would be an entry level job for new hires into operations or administration.

People in these positions would have specific responsibilities such as overseeing client service administration, administrative support or executive support. People at this level could be performance reporting analysts or new account specialists.

People in such entry level positions would support an advisory team or be a member of a client service team.

2. Senior Specialists
This would be somebody at a higher level of the same position—and would include, for example, senior client service administrators. The “senior” label indicates a higher level of experience and higher expectations for an employee’s productivity. These employees may also be empowered to make more decisions independently and may have a budget that they manage. Also very important is that they would have the responsibility for training other staff members.

3. Team Leader Or Director
The person in this position leads a team of operations and administrative specialists. This is a management position and prioritizes performance management, training, coordination and coaching. At this level, employees can also be “player-coaches,” who combine supervisory responsibilities with service or administrative activities. It may include positions such as office managers, trading managers, directors of client service administration, human resource managers and others. For these positions to be meaningful, the employee needs to manage at least three or more employees.

4. Department Leader
These employees have the highest level of responsibility, overseeing multiple teams and a significant portion of the operations or administrative functions of the firm. Such positions will include chief administrative officers, chief technology officers and, most important, chief operations officers. Department leaders will typically supervise team leaders (directors) and will have significant budgets under their control. In a large firm, the technology department, for example, can have a budget of more than $500,000. The COO of a firm may be responsible for an overall budget of $2 million or more. As a general rule of thumb, department leaders should be included in ownership discussions.

Note that the transition from step one to step two shows merely a progression in an employee’s responsibilities while the two steps up after that require the firm itself to grow so it can offer an increase in team size and budgets.

Partnership Criteria for Non-Advisors
This brings us to partnership questions, namely: Should operations and administrative leaders become owners or partners? To me the answer is obvious: Of course they should. Even now, COOs are usually among the partners in advisory firms. Other people such as CCOs, CFOs and directors of administration could also be considered.

The key for adding non-revenue partners is being judicious with the pace of such additions. If we return to the $1 million rule (for every $1 million in new revenue we should consider adding a partner) every time the firm grows enough we should ask the question, “Who has contributed the most?” If there is someone who has contributed substantially to the growth of the firm and works very directly with the clients who created this growth, it is very difficult to pass them over and elect a non-revenue partner. That said, in practical situations the highest contributor is often not an advisor but may instead be somebody in the back office.

Another way of looking at the addition of partners is to think of partners as leaders. Partners should definitely lead by example. We can then scan the organizational chart and ask ourselves, “What is an area of the firm where we have seven or more employees that are not led by a partner?” Alternatively, we can look at the firm budgets and ask, “Who controls a significant budget and has a significant impact on the profitability of the firm?”

With that criteria in mind, the key word becomes “contribution.” Contribution is what we expect from all partners, advisory and non-advisory alike. For advisory partners the criteria should be in the form of “revenue” and “client relationships.” For non-advisory staff, the criteria should be the number of people managed and developed, the budgets controlled and executed, the systems implemented that benefit the firm, the intellectual capital created and utilized … and so on.

While I make the statement about careers in operations with a great deal of confidence, I also want to express a couple of important conditions. The first is that any career, in any part of a firm, is only unleashed when that firm grows. The second is that while I very much believe that every good soccer team needs a good goalie, we also cannot have a team of goalies. In other words, the number of non-advisor leaders in the firm cannot and should not exceed the number of client-facing, revenue-generating advisors.

The Non-Advisor CEO
I used to take it for granted that the leaders of advisory firms would mostly be advisors. But then we started the “G2 Institute,” Ensemble’s management and leadership training program for future leaders. The first two classes consisted of over 100 individuals from across the industry, representing some of the largest firms but also many smaller, ambitious firms as well. I was somewhat surprised to see that approximately a third of the group came from the non-advisory departments. The talent, ambition and ideas of that group were undeniable. They were just as full of ideas for the future of their firms as their advisor colleagues and perhaps even had more. Many of them are MBAs, many are experienced in management, most are very strategic in their thinking while grounded in the practical reality of implementing strategies. Looking at that group, I am convinced that many of them will lead their firms into the future.

I am now also convinced that some of the best leaders in the advisory industry are not advisors—and that’s great!

Philip Palaveev is the CEO of the Ensemble Practice LLC. Philip is an industry consultant, author of the book The Ensemble Practice and the lead faculty member for The Ensemble Institute.