As demand for competent wealth management grows, the need for efficient and successful business operations is greater than ever. Yet in a Registered Investment Adviser (RIA) industry notably thin on operations experience, statistics suggest this dearth of management know-how is taking its toll. How, advisers are wondering, do I craft effective operations?

According to Mission Possible: Finding the Optimal Operations Model, a report published jointly by Pershing and Moss Adams, one solution in particular is very clear: "Operations staff must become as vital to advisory firms as investment advisors are today," the report says. "Successfully deployed operations enhance a firm's ability to translate client advice into profitability, leverage and growth." According to the study of 41 diverse RIAs, the result of such an investment is undeniable; firms with a chief operations officer see their revenue leap 189% compared to firms without.

For those firms not spending adequate resources on the operations side, the effects are grim. According to the report, an inefficient operations model costs the typical advisory practice 8.3% of its total revenue--an estimate that does not factor for the resulting loss of productivity. Moreover, change is hard to implement in the face of turnover rates that approach attrition. A staggering 25% of operations positions in the industry turn over every year "as operations staff often lack a clear career track and feel neglected." Turnover rates for these positions are only a little better at the biggest firms, hovering around 20%. "In an advisory firm's 'portfolio of capabilities,' the report concluded, "operations are the underperforming asset."

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