Comprehensive consulting for investment advisors, broker-dealers and private funds.

Growth to a New Scale

Pamela and her brother Dan had a small partnership that grew into a firm of over 100 people. They had always wanted a flat organization, but they knew they couldn’t have that number of employees reporting directly to them, so over time they wound up with several layers of management.

There were other problems, though, they didn’t see coming. The ways in which different departments interacted had changed completely when the scale of the company shifted. There was tension between the firm’s relationship managers and operations about who was responsible for what work. Complaints of incompetence and laziness were common. Compliance found itself playing mediator. Trade errors had increased, there were lots of special requests being accommodated, and Pamela and Dan were worried about misalignment between portfolio construction and the firm’s investment philosophy. They were concerned that staffing seemed bloated in some areas, but they also wanted to respect the complaints of overwork they were hearing from both operations and compliance. 

They contacted us because they wanted help implementing a new portfolio management system they thought would improve efficiency and address some of the other "people problems."

We conducted a careful data-gathering process, finding out what was working, and what was not from the employees who were responsible for all the day-to-day transactions and operations. This work had to be done in a way that felt objective and supportive of different people and different agendas, while also being comprehensive. Ultimately, we wanted greater buy-in from both front-line employees and managers for whatever course management ended up taking.

What became clear was that oversight policies that worked well when the company had 25 people created bottlenecks and frustration at 100. The CCO had supervisory obligations for every department, including approval of business processes she had limited understanding of, even though she had a good command of the risk issues. It was also clear that the company had outgrown the capacities of some of the front-line employees, but that the work was being designed for those employees rather than the company’s needs. That meant lots of micro-managing, duplicate approvals, and wasted time. It was also turning a company that used to have a hard-working and collaborative climate into a group of back-biters and finger-pointers. 

Instead of an expensive new portfolio management system that wouldn’t have solved the underlying issues, we developed trade management functions that supported the advisors, and were better aligned with the company’s investment approach. The company was then able to re-train existing employees, and restructure compliance oversight to help existing subject matter experts step up to supervising business units, rather than having everything “supervised” by Compliance. Part of the process involved new skill training in better communication and conflict management. The CCO was able to step back and get a handle on the overall risks of the firm and how compliance policies and testing could be improved to respond to the emerging needs of the business. This approach was both more effective and less expensive than the original “fix,” and it laid the groundwork for the next stage of the company's growth.

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