This case study, based on one of Kathy Freeman Company’s successful search engagements, is intended to illustrate our unique approach to providing strategic advisory and executive search services to investment firms across the U.S.

Our Client:

A $5 billion independent wealth advisory firm that has served institutional fiduciaries and high net worth families for over three decades.

The Challenge:

The Founder & CEO was looking to hire the firm’s first Chief Operating Officer to streamline operations and eventually become the CEO’s successor. There were several fundamental challenges within this assignment:

1. The CEO had never partnered with an executive search firm and was a bit skeptical about the process and path to success.
2. Since the CEO wasn’t handing off any of his current responsibilities, the job description and mandate, along with the day-to-day role of the COO position, had to be carefully crafted from scratch.
3. The skillsets and experience for a typical COO role were insufficient in this instance because this COO would be eventually elevated to CEO. As a result, we needed to factor in the competencies and intangibles required to become a CEO. Many operational executives don’t possess the leadership qualities and client-focused sensibility to become a CEO.
4. The compensation package was at market for the COO role, but it didn’t include enough incentives for an executive being groomed for the CEO role.

Developing A Solution:

To properly define the position and support the CEO’s goal of identifying his succession plan, we did the following:

• Solidified the CEO’s succession timeline and determined which tasks he’d like to gradually hand off
• Identified the skills and experience required for this role as well as the areas the current CEO would develop
• Discussed the benefits of building a broad and inclusive slate of talent
• Confirmed the desired outcomes of the CEO and the Board of Directors in this new hire
• Conducted a cultural audit of the senior leadership team
• Benchmarked the role with the competitive landscape to ensure that the job description would be attractive
• Defined a compensation structure that made the opportunity compelling, given the competitive landscape for talent
• Discussed the benefit of leveraging a psychometric assessment tool for finalist candidates

Our Approach:

Our approach in a consulting engagement like this is to help educate a CEO about the market for talent. Since he had never hired a COO, he wasn’t sure what he was looking for in a potential successor. One of our goals was to present a broad slate of qualified candidates with operational skills and experience as well as leadership potential.

Next, we gathered input from the senior leadership team. We sought to identify operational deficiencies at the firm and potential areas of improvement. We then translated these insights into a position description.

During the process, it became clear that this particular search was more challenging than the standard COO search – many of the operational executives we interviewed didn’t have the DNA to become a CEO. Leadership dynamism is an intangible that isn’t apparent in someone’s resume. It requires engagement and dialogue. Many COO candidates were lacking the client-facing skills and experience required to become CEO. As a result, we reconvened with the CEO to determine his willingness to coach a potential successor.

We ultimately presented candidates from FinTech, the U.S. Military, Wealth Management, and Investment Management. Some were less experienced but within our client’s preferred compensation range. Others had the operational expertise but came from outside of the wealth management industry. Still, others had the experience and skillsets but needed a compensation package that was more than our client was inclined to consider.

Initially, the CEO was attracted to a highly polished COO candidate from outside the industry who was within the compensation budget. Ultimately, this candidate decided against working in an entrepreneurial environment and dropped out of consideration. The next candidate our client became interested in was outside of the compensation budget. Our client stepped up to meet the candidate’s compensation needs, but for personal reasons, this individual had to withdraw from consideration. Other candidates were within the compensation parameters but didn’t possess the CEO capabilities our client desired.

At that point, we recommended that the CEO increase the total compensation to attract stronger candidates. He consented which gave us the latitude to engage new candidates and re-engage with those who originally told us they needed more compensation.

Now armed with a more competitive compensation package, the finalist candidates during the second stage of the search were exceptionally strong operationally and possessed the right DNA to be the CEO’s successor. Our client ultimately hired an operations executive who worked locally within the industry. She brought extensive experience with the front office, back office, products, building and leading teams, and working directly with clients.

Key Takeaways:

After the search was completed, our client realized he was unaware of the numerous facets that needed to be addressed during this succession planning search. He recognized he didn’t understand the competitive landscape for talent and the compensation level required for this type of role. He also acknowledged that he underestimated the challenge of finding a COO with the skillsets necessary to step in as his successor.

Using our consultative approach, we conducted a complete assessment of the market and analyzed the talent pool by backgrounds, skills, and compensation requirements. To make sure this succession hire would be successful, it was crucial that our client had a deep understanding of the inherent trade-offs in identifying the perfect fit.

This case study, based on one of Kathy Freeman Company’s successful search engagements, is intended to illustrate our unique approach to providing strategic advisory and executive search services to investment industry companies across the U.S.

Our Client:

An investment manager, broker dealer, and wealth advisory firm that has been extraordinarily successful in growing its business over several decades.

The Challenge:

Despite their success, the firm’s focus on organic growth had left it without a deep understanding of the innovations occurring across the industry. As they confronted a leadership-level departure, they determined the time was right to reach out to the external market for talent to attract an executive who could infuse their wealth advisory business with fresh perspective and bring greater insight into the competitive landscape.

Developing A Solution:

In framing this new position, we helped our client do the following:

• Define, refine and prioritize the responsibilities that this new position should encompass.
• Benchmark the role with the competitive landscape to ensure the description would be compelling to the external talent market.
• Conduct a corporate and cultural audit to create a benchmark to assess executive talent against.
• Understand the competitive landscape and talk through compensation packages that would be required to successfully attract the desired caliber of talent.
• Think through criteria which, if identified in the chosen candidate, would allow this hire to serve as a potential succession plan for the CEO.
• Recognize the potential positive disruption this change agent would bring to the firm, allowing them to make early preparations for embracing change.

Our Approach:

First, we conducted a situation analysis that included a capabilities assessment and market evaluation. We began by interviewing the firm’s key stakeholders, including the CEO, to identify the strengths and gaps of the existing team, define the scope of the position, and identify the competencies needed in this new hire. Based on those conversations, we arrived at a comprehensive assessment of the firm’s culture and distilled those insights into a list of attributes for the position description.

Recognizing that the new role should be unique yet comparable to roles at competitive firms, we recommended expanding the scope of the position to be a “stretch” opportunity for an external candidate who could then grow into the position.

Of critical importance, we provided the proper context for creating an attractive compensation package.

Once the parameters of the role were set, we drafted a description of the position. We created a call list, supplementing our rolodex of national industry relationships with customized research of new talent specific to this opportunity. We then conducted an exhaustive nationwide search.

To source the most qualified candidates, we articulated our client’s story and gathered feedback from the market. The story was well-received, but there were several mitigating factors which inhibited greater resonance. This was a “needle in the haystack” search. We communicated back to our client some of the challenges we were facing, and they agreed to modify some of the existing parameters. Ultimately, we presented a slate of three candidates for consideration, one of which was hired.

To bring the assignment to a successful conclusion, we worked closely with both the candidate and the firm to negotiate the necessary deal points of the offer. The negotiation included cash compensation, equity, relocation, and a protracted start date to accommodate bonus payout.

Key Takeaways:

Think Strategically.
Some companies often think about a search for a new hire as a linear replacement for an existing role without thoroughly considering new skillsets that could be tremendously beneficial to the firm’s future growth. In this instance, our proven methodology helped the management team morph their legacy job description and crystalize what this role could and should look like. We transformed our conversations into an actionable strategy and a well-conceived position description.

Listen & Be Flexible.
During any search, the talent market always provides valuable feedback about the role, the firm’s story and whether the description compels interest among passive candidates. There is often a need to modify some components of the opportunity during the search process to make it even more attractive. We were able to show our client the benefit of minor adjustments in responsibilities as a mechanism to garner greater interest in the role.

This case study, based on one of Kathy Freeman Company’s successful search engagements, is intended to illustrate our unique approach to providing strategic advisory and executive search services to investment industry companies across the U.S.

Our Client:

A leading investment consulting firm in the investment industry.

The Challenge:

The firm determined it was time to identify a succession plan. Succession planning is always a complex and sensitive topic, and our client had the same sentiment. The CEO was considerably beyond retirement age and wasn’t looking to slow down. There was no one internally at the firm he had tapped as a successor, and none of the recent hires to the firm were sufficiently skilled to step into his big shoes. For three years, discussions about a succession plan were stalled.

The Opportunity:

Like other firms in the maturing investment industry, our client needed more than just a new CEO. The firm needed to do a staged transfer of management responsibility to the next generation of executives to continue the firm’s growth and best serve its clients.

Our Approach:

We were approached by the firm to help mediate their succession issue. The firm asked us to work directly with the CEO – an assignment that required engaging him in a purposeful transition plan and executing the initiative in a collaborative and personalized manner. First, we built a foundation for the search by conducting the necessary discovery to fully understand his competencies over his very long and successful career. We then inquired about his openness to consider a diverse range of backgrounds. Lastly, we proactively communicated the rollout of the search to his clients before reaching out to the market to get their input and perspective. By notifying the clients first, they were reassured that they were a critical part of the plan, rather than hearing the news from one of the firm’s competitors or someone from the market.

After a comprehensive review of the talent pool, we presented several capable executives with substantially different backgrounds. The most challenging aspect of the search was engaging someone who would commit to a multi-year transition plan. Following our disciplined proven process for six months, we identified one candidate who had the experience, credibility, energy and cultural values that the CEO and firm were seeking. He has proved to be a perfect fit.

Key Takeaways:

Difficult Succession Plans Benefit from An Outside Perspective.
The firm avoided addressing this success plan for over three years because they found it to be an awkward conversation internally. If the CEO had experienced any significant health issues during this time, and the firm didn’t have a net in place, it could have had detrimental consequences. These highly sensitive situations dictate investing in an experienced professional who can objectively define the challenge and execute against the mandate with a disciplined process.

Include Your Clients in the Process.
If your firm is considering a succession plan and the current executive is intimately connected with the firm’s key client relationships, engage those clients in the discussion before proceeding with the search process. Ask for their opinions and perspective on what they consider critical components in a successor. Clients are a great, if not overlooked, resource for ideas. Their participation in this search was instrumental in the successful outcome of this succession plan.

Patience Is Key.
Finding the right successor is often a “needle-in-the-haystack” endeavor. In this search, we spoke with over 250 executives during the process. Our client understood that this assignment would require an exhaustive search. Their patience allowed us to look broadly at the talent in the market and thoroughly screen those who could be a potential fit.