Other Emerging Roles. Larger financial advisory firms may also seek to fill other high-level management positions, including chief financial officer, chief compliance officer and chief marketing officer.
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The CFO role is seldom a distinct position; instead, the work is typically outsourced to a third party as the firm has a need for more refined financials. At larger, more sophisticated firms, the CEO and CFO roles may be combined into one function.
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In response to the heightened regulatory environment, some firms are electing to hire a CCO. Although some advisors might consider the position an unwelcome expense, others see it as a necessity to address compliance risk and relieve the advisor from providing the required supervision.
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Hiring a CMO may make sense for firms that aggressively pursue high-level marketing and PR strategies. The CMO heads up all branding and social media initiatives, as well as communicating with existing clients and driving prospecting activity.
The Growth Paradox
Many solo producers with minimal overhead are no doubt puzzled as they watch large firms grow larger. After all, why would anyone bother when such growth means advisors must either embrace tasks and responsibilities they have little or no interest in, or hire someone else to handle them? Growth that requires a firm to fill internal management positions may simply seem like it’s not worth the effort.
And it’s true: the bigger the organization, the greater the specialization and division of labor within the firm—and the more margins may shrink, even as revenue increases. Growing from a solo practice into a large firm isn’t right for every advisor, but neither is remaining the same size and forgoing growth opportunities.
Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network.