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Back to articlesIs the COO an impossible role?
Chief Operating Officer (COO) is one of the most misunderstood roles in modern business. It's loosely defined, cross-functional, and often seen as little more than a stepping stone on the way to the CEO position.
But in fact, the COO faces one of the most daunting sets of responsibilities in their organisation. They are the lynchpin, charged not only with ensuring that the daily operations run smoothly but also with charting the course set by the CEO, the board, and other stakeholders.
In practice, this means they need to know.....everything.
Alphabet soup
In regulated industries, that involves learning a lot of acronyms. Compliance is the bedrock on which financial services organisations are built, and the COO needs to be across every element of their business's regulated activities. From liaising with the FCA to understanding MIFID II and AIFMD, the COO is responsible for ensuring that the organisation they are heading up is fulfilling its legal obligations. In addition to keeping on top of the latest acronym and its impact or not on the business.
In financial services, therefore, we can think of the COO not only as the Chief Operating Officer, but as the Chief Oversight Officer. They are the point-person charged with overseeing the day-to-day activities of the business in such a way as to ensure that business goals are met while remaining fully compliant.
COO as the nexus of the modern fund
For new and growing hedge funds, and for other early- or growth-stage financial services businesses, a new model is emerging.
Rather than building out a large team, committing to a long lease on a premises, and sinking money into the other huge overheads associated with the traditional hedge fund model, the new generation of firms is choosing a more agile approach.
These businesses are focusing on building a small, core team, augmented and supported by outsourced experts.
Specialist providers such as OSMO are able to deploy tactical support to these growing firms across every function, from operations to finance and compliance, allowing them to leverage best-in-class talent and expertise without adding to headcount. By assuming responsibility for back-office processes, OSMO enables fund managers and founders to spend their time doing what they're actually good at: generating alpha and talking to their investors.
The days of 'outsourcing' being misunderstood are long behind us, as has been explicitly recognised by regulators and industry. The FCA handbook says funds can outsource almost everything, as long as the regulated firm has oversight - and that, in turn, brings us back to the new role assumed by the COO.
As Chief Oversight Officer, this individual is the nexus of the modern hedge fund. Think of it like Trivial Pursuit: they are the container into which all of the pieces fit. They may have specific experience on one of those “triangles” such as Finance or a Legal background. By deploying outsourced expertise mindfully, they can cover their area of expertise whilst bringing in the specific knowledge and resources to cover any gaps. New and growing funds can win big at far lower costs - all under the watchful eye of the COO.