How to Be a Great COO (and Why Every Firm Needs One)

One reason it’s difficult to be in charge of operations at an advisory firm is that the chief operating officer, or director of operations, typically has to live with one foot in two different worlds.

On one side, they need to walk with the firm owner, who often is an entrepreneurial spirit who focuses on sales and client experience. On the other, the COO must be fully invested in operational workflows and how staff members can accommodate the organization’s growth goals.

In a healthy organization, these two sides — strategic and tactical — have to work hand in hand and support each other. Strategic planning focuses on what can be done to bring clients into the firm and to create an ongoing positive experience. Tactical work covers the internal procedures necessary to support the client experience.

For most advisory firms, the client experience gets more attention. It’s the outside of the house —the roof, the front door, the window trim, the paint.

But, a good client experience has to be supported by an exceptional operational experience. The exterior of the house is only as good as the plumbing and wiring inside the walls and the foundation it all rests on. That foundation is called the OX, for operational experience.

As silly as it sounds, when I think about the relationship between a good client experience (CX)  and a strong OX, the story of the three little pigs comes to mind.

Building a Strong Firm

For our purposes, the big bad wolf represents all the things that can go wrong for a business — tax law updates, new regulations, challenging employees — anything that can throw you off track and out of normal operating procedure.

The houses the pigs made show the varying ways in which advisors pay attention to their OX and how that attention (or lack thereof) affects the business.

• A Firm Made of Straw: If an advisor has no written processes and doesn’t take good care of their employees, they have basically a straw house. The smallest change or problem leads to lost time, lost money, and hurt feelings.

• A Firm Made of Sticks: These firms may have a nice exterior client experience. But if a client begins to huff and puff about a down market, and the operational support isn’t there to boost the client experience, then that wood may begin to erode. Soon, the entire structure falls.

• A Firm Made of Brick: This symbolizes the advisor who’s taken time to stack one good process on top of another to support their staff first, like a craftsman laying bricks, so they can go out and support clients.

The advisor who prioritizes OX has a practice that is sturdy. They’ve invested the time and built the foundation to think correctly about what they can withstand, and the business operates accordingly.

Tech Solutions?

Many advisory firm owners believe new technology can solve their OX problems. However, adding a new tech solution is like adding new paint to the outside of the house — it probably won’t impact the materials used to build it.

Of course, there are times when tech helps your team. Before you add new technology, though, follow these steps:

• Document every client interaction, from first contact to ongoing support.
• Match each step in the client interaction flowchart to an operations task; if there is no corresponding OX task for a CX moment, you’ve identified a weak link.
• Once you’ve established each step along the process, then you can begin to add new tech, like a CRM that makes staff more efficient by reducing duplicate data entry tasks.

When we deal with OX issues, we tell advisors to remember a simple contrast. If you give a great employee decent technology and no process, they’re likely to fail. But if you give decent tech and a proven process to mediocre employees, they’ll likely get better at their jobs and usually succeed.

The bottom line is you can spend all day on the client experience and (re)designing it. Yet, if you don’t take the time first to dig into the details of your operations to analyze the strengths of your team’s inner workings, such efforts are useless. By giving OX the attention it deserves, you can make smart tech decisions and grow your operational support to be even stronger.

Jarrod Upton, MBA, MS, CFP® is Chief Operations and Senior Consultant at Herbers & Company, an independent growth consultancy for financial advisory firms. He can be reached at jarrod.upton@herbersco.com.

ProcureAM’s Space ETF (UFO) Takes Off: Portfolio Products

(Photo: NASA)

Exchange-traded product issuer ProcureAM is boldly going where no one has gone before with the launch of the Procure Space ETF (UFO).

The global ETF, which is the first product launched by ProcureAM, gives investors pure-play access to the expanding space industry.

UFO tracks (before fees and expenses) the S-Network Space Index, which focuses on companies that are significantly engaged in space-related activities. Index constituents span multiple industries, including satellite-based consumer products and services, rocket and satellite manufacturing, space technology hardware, and space-based imagery and intelligence services.

Approximately 80% of companies in the index derive the majority of revenues directly from their involvement in the space industry, enabling investors to potentially capture this growing segment of the global economy. UFO has an expense ratio of 0.75%.

Global X Launches ETF targeting the Transformative Genomics Industry

Global X ETFs, the New York-based provider of exchange-traded funds, launched an ETF that’s designed to benefit from advances in the field of genomic science.

The Global X Genomics & Biotechnology ETF (GNOM) tracks the Solactive Genomics Index, which holds a basket of companies that potentially stand to benefit from advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics, and biotechnology. GNOM has a total expense ratio of 0.68%.

First Ascent Launches Flat-Fee, Multi-Factor, Open Architecture Portfolios

First Ascent Asset Management announced the launch of its Factor Select portfolios, which are factor-based portfolios to be offered for a low, flat annual fee of $500.

The new portfolios were developed in response to advisor demand.

The portfolios tilt toward the value, size, quality, and momentum factors because there is strong historical evidence that they can provide a performance advantage.

First Ascent built these portfolios using an open architecture approach that allows it to utilize funds from different asset management firms. Each firm defines and manages exposure to the factors somewhat differently, giving the Factor Select portfolios additional factor diversity.

The Factor Select portfolios hold between five and eight positions and their internal expenses range from 0.11% to 0.23%.

SoFi Releases SoFi Select 500 and SoFi Next 500 ETFs

SoFi announced today the availability of two new ETFs: the SoFi Select 500 ETF (NYSE: SFY) and the SoFi Next 500 ETF (NYSE: SFYX).

Both funds have fee waivers in place that lower total fund expenses to zero through at least June 30, 2020.

(Related on ThinkAdvisor:  SoFi Files for First Zero-Fee ETFs)

SoFi Select 500 ETF (SFY) is composed of the 500 largest publicly traded U.S. companies and  each stock’s contribution to the ETF is based on the company’s growth rates. SFY tracks the performance of the Solactive SoFi US 500 Growth Index, weighing each company based on three key growth signals – top-line revenue growth, net income growth, and forward-looking consensus estimates of net income growth. Traditional indexed ETFs often weigh only market capitalization.

SoFi Next 500 ETF (SFYX) is composed of 500 mid-cap U.S. companies, and similarly, weighs each stock’s contribution based on the company’s growth rates. SFYX tracks the performance of the Solactive SoFi US Next 500 Growth Index, focusing on the 501st through the 1000th largest domestic companies.

LPL Financial Adds RightCapital Financial Planning Software to Vendor Affinity Program

RightCapital has been selected to join LPL Financial’s Vendor Affinity Program.

As a member of the program, RightCapital’s solutions – which offer , a next-generation financial planning tool that provides advisors with the ability to create custom, comprehensive financial plans – are  available to the more than 16,000 financial advisors affiliated with LPL.

The Vendor Affinity Program is designed to help advisors reduce the complexity and costs of running their businesses. It consists of a centralized repository of vendors that have agreed to provide their products and services to LPL advisors at discounted prices. Vendors are selected for the program based on advisor experience, ease of doing business with LPL advisors and ability to meet certain security and compliance requirements.

In addition to providing key financial planning functions for advisors, RightCapital integrates tax, retirement, investment, insurance, college education funding, and budgeting into a modern client portal that helps advisors deliver “right-fit” financial plans to their clients.

FTSE Russell introduces Multi-Asset Composite Index Series

FTSE Russell launched a new index series designed to provide broad measures of cross-asset market performance across a diverse selection of global regions and risk exposures.

The FTSE Multi-Asset Composite Index Series includes a wide range of indexes across major asset classes covering global, regional and emerging markets including the U.S., Europe and China.

FTSE Russell developed the new index series in response to clients who invest across asset classes and are looking for ways to measure this multi-asset performance in a consistent and accurate way. The new Series is overseen by FTSE Russell’s transparent global index governance framework and is fully customizable on request.

Market participants can choose the equity to fixed income asset allocation (i.e., 80/20, 60/40, 50/50, 30/70) to fit their strategy and can further customize in other ways including asset classes, weightings, currencies, countries, sectors and hedging.

See last week’s portfolio product roundup here:  State Street Global Advisors Launches To Sector Rotation ETFs: Portfolio Products

 

Orion to Restructure, Rebrand Operations

The brand name for Orion Advisor Services, its parent company and related businesses will be brought together and packaged as Orion Advisor Solutions in the fall, when the company plans to make a major product announcement.

“For more than 20 years, the Orion brand has been known as an industry leader for best-in-breed portfolio accounting technology and integrations …,” according to Orion CEO Eric Clarke. “Now, consolidating our tech and investment companies under the same brand challenges even our largest competitors with a more connected, more seamlessly serviced, and all-around better offering.”

Orion’s parent entity, NorthStar Financial, acquired turnkey asset management platform FTJ FundChoice last year; it has $15 billion in assets. It also owns asset manager CLS Investments, which has $9 billion in assets, and Constellation Trust.

The announcement of Orion’s rebranding and related efforts comes about three months after rival Envestnet restructured its operations by forming two business groups: Envestnet Wealth Solutions and Envestnet Data & Analytics.

More recently, Envestnet — which counts BlackRock as an investor — said it was buying the MoneyGuide suite of tools for $500 million and acquiring PortfolioCenter, Schwab’s portfolio management and reporting technology.

In response to the Schwab development, Orion said in February that RIAs seeking alternatives to PortfolioCenter could use its portfolio-accounting technology for free for nine months.

“They make us better in the competitive environment,” Clarke said of Envestnet. With NorthStar’s announced changes, “we want those on our technology and managed-account sides of the business to gain access to money managers we have on that front. We think our [restructuring and rebranding] definitely will increase our competitiveness in the enterprise marketplace.”

Clarke is set to take on the role of CEO for Orion Advisor Solutions, while continuing to serve as CEO of Orion Advisor Tech (the new name for Orion Advisor Services).

“We are excited about the news and hope it simplifies our message to the industry,” he said.

New Software Service for Advisors Drops Monthly Price

(Image: Thinkstock)

Technology provider Chalice Financial Network says it now offers advisors its software-as-a-service plans for less than $100 a month.

The news comes less than two weeks after Charles Schwab started selling its Intelligent Portfolios Premium plan to investors for $30 a month rather than charging 0.28% of assets each year. 

Since its launch in January, Chalice has beaten its business goals, according to Chairman and CEO Keith Gregg, and that means it can lower its prices: “This accelerated growth enables us to immediately make good on our promise to continuously deploy our growing scale and resources towards enhanced cost savings for independent financial advisors who join us as members.”

The firm, which has been on a roadshow for the past few months, sees further growth ahead as advisors seek out new ways to add technology.

“There is enormous pent-up demand among independent financial advisors from all firms and business models for access to deeply discounted, top third-party solutions on a fully ‘unbundled’ basis, free of the ‘all or nothing’ affiliation agreements that are typical throughout the industry,” Gregg explained.

Chalice — which aims to be the “Amazon Prime” of indie advisors — gives clients access to a digital marketplace that includes group health insurance and has a “optional refund” for advisors who do not recoup their costs of joining within three months.

Some providers on the firm’s platform are Redtail, WealthForge, Venture Co., Vestwell, Oasis Outsourcing, QuickBooks and ProSites.

“Our new pricing structure underscores the strength of our value proposition for independent financial advisors at every stage of the business life cycle, and our ability to deliver on the promise and potential of our platform,” Gregg added.

The firm’s advisory board includes Riskalyze CEO Aaron Klein; Eric Clarke, CEO of Orion Advisor Services; Rich Cancro, CEO and founder of AdvisorEngine; Steve Dunlap, founder of Stratym Consulting; Spenser Segal, CEO of ActiFi; Stephanie Brown, former general counsel of LPL; Daniel Krueter, founder of Gladstone Group; Morris Nutt, CEO of Trinity Capital Management; and Don Plotsky, managing member of Uinta Investment Partners.

– Ginger Szala contributed to this report.

 

Envestnet to Offer Pre-Qualified Loans on Client Platform

Envestnet executives at NYSE.

With a single sign-on process, advisors on the Envestnet platform soon will have the ability to provide pre-qualified loan offers  — such as real estate, commercial and business loans and security-based loans  — to their clients.

The Envestnet Credit Exchange, to be operational in the second half of this year, has Envestnet partnered with Advisor Credit Exchange (ACE), which created an advice-driven program that supports advisors in providing loans to clients. The partnership was announced today.

The idea took hold over the past two years, Bill Crager, Envestnet’s CEO, told ThinkAdvisor. “We looked at the advice model, and how consumers pull together their financial lives,” he said. He noted they have separate banks, advisors and insurance brokers, typically none of which are connected. “We [wanted] to provide an infrastructure that integrated advice,” he said.

Recently the firm launched its insurance exchange, and the next step, said Crager, was “a credit storefront.”

Advisors will be able to enter the storefront from their computer, which allows “access to a streamlined screening process that generates real-time, immediately available loan offers for their clients with direct referrals to lenders,” according to Envestnet.

The hope is that throughout the client’s life stages — for example, from buying a home to sending kids to college to retiring — the integrated process allows the advisor to rebalance the client’s portfolio along the way. This includes opportunities and ease-of-access for loans for homes or businesses at a competitive rate, Crager said.

“The  concept is through a financial plan … and through our infrastructure, the advisor will be able to see that consumer’s ‘borrowability,’” Crager said. “We can optimize and save the client [money] with affordable, smart lending, at an advisor’s fingertips.”

This latest news follows a busy year of acquisitions for Envestnet, with its recent  $500 million purchase of MoneyGuide, its Tamarac unit’s purchase of Schwab’s Portfolio Center, and its Yodlee unit’s purchase of Abe AI.

— Related on ThinkAdvisor:

Almost All Advisors Are Using Social Media: Survey

More than four out of five financial advisors are using social media for businesses purposes and close to 100% are using social networks for business or personal purposes, according to Putnam’s sixth social media survey.

The survey of 1,021 advisors across the U.S. in late 2018 found that advisors are using social media to acquire new clients (92% of those who use social media for business said social media helped them do this, up from 49% in 2013), initiate contact with referrals from existing clients (57%), connect with clients’ heirs and adult children (47%) and increase their assets under management. The average new AUM gained from social media initiatives is $4.9 million.

Nearly nine in 10 advisors say social media plays a key role in marketing efforts, up from 23% in 2014.

“The use of social media for business purposes by financial advisors has matured during the six years we have conducted this study, evolving from the periphery of the advisor experience into a critical tool for business development and client services,” said Mark McKenna, head of global marketing for Putnam, in a statement.

LinkedIn remains the most popular network for advisors, followed by Facebook, Twitter, YouTube and Instagram, but fewer advisors cite Facebook as their primary network following years of study growth (30%, down from 36%). More advisors are using Twitter to promote themselves as thought leaders.

The average advisor using social media is almost 44 years old, working in the business for 11 years and male (two-thirds of advisor users). Over 60% of advisors surveyed report that social media increases their efficiency “a great deal.” More specifically advisors said that social media makes it easier for them to share information with clients and communicate with clients more frequently and make decisions.

Over 60% of advisors surveyed consider themselves an expert in using social media, but Putnam believes only a quarter of those self-described experts actually meet that definition in practice, based on its own internal benchmark.

Advisors who want to check where their use of social networks ranks among their peers can take a short quiz at Putnam’s advisorsaresocial.com website under the “Your Practice” tab and receive some pointers on how to increase and manage their social presence.

As for future use of social media, the survey found that among current advisor users, over 50% expect to integrate social media into their marketing automation systems (53%), while 47% expect to add staff dedicated to social media responsibilities. Sixty percent expect to dig deeper into their existing social network presence.

— Related on ThinkAdvisor:

 

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