10 signs a firm needs a COO

1. The firm generates $1.5 million a year in revenue. About 50% of firms at that level have dedicated management in place. By $3.5 million in annual revenue, that number jumps to 90%. 2. There are seven or more members at the firm. Once the business gets large enough, one person can't run it all. 3. The firm wants to build its client base faster. Firms with dedicated management increase their clientele 12% faster than companies without management. 4. The firm wants to increase income per owner. Companies that invest in management roles have 36% higher income per owner than companies without, an average of $387,274 per owner, compared with $284,918 per owner for firms with at least $500,000 in revenue. 5. The firm wants to give its advisers an edge, with increased flexibility, productivity and em-ployee engagement. Hiring management roles can free up more of advisers' time to develop a specialty and work to forward the firm's strategic goals. 6. The firm is experiencing growing pains. Often as firms grow, miscommunication and other inefficiencies can come out of the woodwork. Thirty-six percent of firms surveyed by TD Ameritrade Inc. listed increasing dependency on key individuals, and 29% said that the inability of technology to keep pace as the biggest hindrances to growth. Hiring management can help your firm get past these roadblocks. 7. The chief executive needs a thought partner. Chief operating officers can help delve into business metrics and be co-creators of the firm's business strategy. 8. More than 45% of the firm's revenue goes toward overhead. At that level, a manager might be needed to come in and take charge of the company's spending habits. 9. The total amount of hours that the team is dedicating to management activities is greater than the equivalent of one full-time worker. Hiring someone to handle those duties can create increased efficiency. 10. The bottom line is large enough to afford to spend $156,238 in additional annual salary. That number is the industry's median compensation for a COO. — Megan Durisin