Most registered investment advisor firms maintain organizational charts showing who reports to whom but fail to document the workflow charts that determine how client requests actually move through the organization, according to Matt Sonnen, chief operating officer at Coldstream Wealth Management.
Sonnen wrote that the typical RIA org chart sits in a forgotten slide deck with the chief executive at the top and advisors and client service teams beneath. That chart tells almost nothing about how work gets done at the firm, he said.
A client calls to pull $20,000 from an account. Most firms cannot answer in under 10 seconds who picks up the request, who decides which assets to sell, who executes the trade, who wires the funds once proceeds settle, and who tells the client it is handled, Sonnen wrote.
The gap between the official org chart and operational reality matters more as firms grow, he said. In the early days with five employees sitting within shouting distance, the workflow can live in people's heads. That informal system breaks the moment a firm adds headcount, Sonnen wrote.
New hires cannot learn how things work unless it is written down or someone takes time to explain it. If nothing is written down, every new employee becomes a liability because they are guessing at a process that exists only as tribal knowledge, he said.
Sonnen previously wrote about the importance of a documented operations manual. The workflow chart is an extension of that idea, he said. Before a firm can document a process, it has to know who owns each piece of it.
Firms should start with the requests that touch clients most often, Sonnen wrote. For money movement, account opening, performance report delivery and billing, walk through every step from start to finish and assign a named owner to each stage. Firms will likely find steps where no clear owner exists and the honest answer is whoever happens to see it first, he said.