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When RIAs add professional managers beyond the founding group of advisers to add professional managers, they can finally achieve the levels of growth and profitability the advisers envisioned upon launching their firm. 

The origin story of many RIAs is somewhat similar: Four advisers band together and say, “We no longer need this large organization behind us and all of the bureaucratic hassles that come along with it — let’s go into business for ourselves!” 

Those advisers usually draw straws as they divvy up responsibilities — one adviser agrees to take on the role of chief executive, one adviser agrees to serve as chief investment officer, another chooses to be responsible for the chief operating officer role, and one is assigned to be chief compliance officer.

This structure works for a while, but the primary function of each of the four advisers, and the primary mechanism by which they are paid, is based on the number of clients they can bring in. Their focus continues to drift from their responsibilities for running the business to focusing more and more on client service and business development. That’s when they determine they need to bring in professional management.

Compliance is usually the first task that RIA owners want to offload and, considering the ramifications for the business if compliance is not handled by someone 100% focused on mitigating and managing business risk, it makes sense that the chief compliance officer is usually the first specialized position filled. 

The next outside hire is usually the chief operating officer. As the adviser-owners of the RIA arrive at the office each morning ready to tackle the day and focus on bringing in new clients, they often find a line of employees at their desk with administrative questions ranging from problems with performance reports to billing setup to issues with the client portal. The owners quickly realize the best use of time is elsewhere, and they bring in a qualified professional to fill the COO role.

The zenith of professional management for RIAs would be the hiring of a chief executive — someone who’s not juggling client relationships but who can focus solely on building the RIA’s brand, communicating the vision of the organization to employees and outside stakeholders, and shaping the culture and values of the firm.

In addition to the benefits a CEO can bring to an RIA, PFI Advisors’ latest white paper, “Exploring the Benefits of Professional Management for RIAs: A Deeper Look Into Chief Executive Officers,” examines how CEOs spend their time and details key performance indicators tracked by CEOs.

In one of five profiles of CEOs at the helm of successful multibillion-dollar RIAs, Adam Birenbaum of Buckingham Wealth Partners said, “My job [as CEO] is to create the structure and the environment to empower firm leaders to inspire people to do their best work.”

With their C-suite expanded to professional managers beyond the founding group of advisers, RIAs can finally achieve the levels of growth and profitability the advisers envisioned upon launching their firm.

This article originally appeared on InvestmentNews.com.