PFI Advisors, a consultancy focused on transitioning $1 billion plus breakaway teams out of the wirehouses, has introduced a new operations consulting service called COO Resource for registered investment advisors.
CEO Matt Sonnen, a former vice president of strategic operations with Focus Financial Partners and COO/CCO at Luminous Capital, said an outsourced chief operations officer service has been the top request he’s received since launching PFI in 2016. He’s been declining each request.
“The reason I’ve been saying ‘no’ is 60 percent of that job is HR-related,” Sonnen said. “It’s getting the employees to execute on the CEO’s vision. I feel the COO has to be onsite, interacting with those employees on a day-to-day basis.”
Then he started thinking about the compliance consultants out there in the marketplace, such as MarketCounsel and AdvisorAssist, which act as a resource to firms’ onsite chief compliance officers.
In the same way, PFI will act as a resource to RIAs’ onsite COOs, helping them with business strategy, system tools and integration, workflows and processes, and staff development and hiring needs. The firm will help RIAs identify and hire a COO and assist that person in their day-to-day management of the firm. And clients pay a retainer fee for these services.
“A successful COO needs to master a varied set of responsibilities, ranging from technical knowledge to strategic thinking to employee management,” Sonnen said, in a statement. “This unique combination of experience and knowledge is not always available in one professional, so as a result we have created COO Resource to help bridge the gap between all of these skills.”
Sonnen’s original thesis when he launched PFI was to provide transition assistance to breakaway teams with $1 billion or more in assets. But instead of taking a stake in these firms, as other models do, he charges a one-time fee. These larger teams, he argues, only need consulting services for the first 10 months or so of leaving a wirehouse.
“The larger teams have scale on their own and don’t need to give up money for multiple years,” he said. “Everything that the platforms have to offer, they can do on their own. All of those models of multi-year, I’m charging basis points on assets, I think when those contracts come up, they’re going to say, ‘Hey, I’ve gotten educated. You did a great job. We talk to Salesforce everyday. We talk to Orion. We’re comfortable removing you.’”
Sonnen has a history of transitioning large teams out of the wirehouses; he did it for his team that left Merrill Lynch in 2008 to become Luminous Capital. He navigated the firm through its sale to First Republic Bank for more than $100 million in 2012. He then moved to Focus Financial Partners, where he built out a breakaway division and helped large teams make the jump to independence.
