Jason Grooters is CFO of New Republic Partners, a recently launched investment, wealth advisory and credit solutions firm for individuals and families, endowments, foundations and advisors. The Charlotte, NC-based national firm also acquired New Republic Bank in 2020 to provide concierge financial services to its highest-end investment and wealth advisory clients.
All this took place in the midst of the Covid-19 pandemic. Grooters spoke with StrategicCFO360 about the special challenges of building a business during such difficult times, the role of technology and the CFO propensity for liking control.
What are the unique challenges and opportunities that come when establishing a new business in the Covid era?
Just imagine someone pitching the idea to you of starting a new national firm during a pandemic. People who have only met once or twice in person will have to develop and implement a business plan and transition it into a fully functional enterprise. There will be communication challenges in bringing together people who haven’t worked together before, as they figure out how the firm will be distinctive in a competitive marketplace. It will take longer to get comfortable with one another and begin working as a cohesive unit because you’ll have only virtual conversations. It will be more difficult to get to know one another on a personal level.
Forget in-person client and vendor meetings that can facilitate quicker sales and agreements. Those are gone for now. So are in-person meetings with regulators such as the Fed or FDIC. Some members of your board will not have met each other. They have essentially agreed to provide oversight and governance to the business with a group of strangers. As a result, it will take longer than you anticipated to establish committee dynamics and build trust.
Who would say yes to that pitch?
The key was that we developed a vision that everyone could buy into. We had shared values around a business concept that aligned the interests of the investors with the business leaders and prospective clients.
Actually, the pandemic opened up exciting and unexpected opportunities as well. We believed in the value of our new firm and knew we would launch it, Covid or not. We discovered we could move our team forward with virtual meetings and conversations even when we didn’t yet have a physical facility in place. While our board members are located in numerous cities, they grew comfortable communicating virtually. Remote work can allow for much more flexibility in scheduling. It eliminates traffic and travel time.
I think most people at my firm are looking forward to being together in person again and building relationships face to face. But we didn’t let the swift shift to a virtual world stop us.
How can you leverage digital platforms to meet client needs and preferences as well as internal requirements?
Automated systems allow us to streamline our reporting, accounting and compliance activities, enabling a lower employee headcount and a faster turnaround time. Vendor digital platforms can allow a firm to provide solutions for reporting without having to develop software from the ground up. They also provide you with updates to keep the platforms current with software changes and new capabilities.
At our firm, we’re able to provide interfaces among a variety of platforms, such as between our investment management affiliate, New Republic Capital, and custodians such as Schwab and Fidelity. We brand these platforms as New Republic Partners to provide a consistent client experience across all systems.
Integrated reporting software allows us to do the types of data analyses we need from both a client service and a business operations viewpoint. This type of technology replaces costs and reduces time that would be required with manual efforts.
We were also fortunate to acquire a bank with an existing digital platform that creates significant efficiencies for bringing our products and services to market. We are adding enhancements to customize it for our business model.
Digital platforms allow you to choose the best provider for the firm and client needs. You can be fully integrated, from compliance to fund administration to internal and external reporting. When selected carefully, digital platforms can produce greater efficiencies with less overhead. You accomplish more work in a shorter time frame.
How do you create a common set of practices for HR, operations and financial reporting when establishing a new firm with a group of professionals who enter from a variety of different firms?
You have two equally important priorities. You want to set standards for requirements from a compliance and best practices standpoint. You also want to encourage ideas and build consensus on what practices will work best for the new firm.
At our firm, the bank acquisition gave us a good foundation of human resources, operations and financial reporting policies and procedures. We continue to enhance and improve those legacy processes and procedures to fit a national firm. We’ve found it useful to leverage third-party resources to assist with some of our HR functions such as health benefits.
We have hired leaders with extensive operational and financial reporting experience, which allows us to refine our reporting processes. Although the individuals come from different firms, all have similar financial-related backgrounds with similar regulatory, shareholder and managerial expectations. So there was some uniformity that already existed. That’s important from a hiring perspective.
What are key take-aways for other CFOs in establishing a new firm?
Everything takes longer than you think it will. Keep the process moving forward, but don’t let impatience get the best of you. It’s important to practice understanding and empathy with your C-suite colleagues, employees and other co-workers. Self-awareness and relationship management are both critical to get results for your firm.
Clearly understand the expectations of your senior executive team and board. You need a cohesive team that is willing to participate, push back when necessary and hold each other accountable. But you also want team members who are willing to reach consensus for the greater good. Look for that quality in new hires and make clear this value is part of your firm culture.
Understand what “success” looks like for your firm—immediate, interim and long-term. Create that vision with colleagues and co-workers. It may be obvious to say so, but it’s easier to work toward common goals when everyone knows what they are. No matter what business you are in, the key is to communicate clearly and often to your team so that everyone understands the company mission, their role and the importance of their contribution.
One other thought—most CFOs like to have control. I’m one of them. But I’ve learned not to waste time worrying about things I can’t change. Focus your efforts on how you react and respond to those things not in your control.