CASE STUDY

The Transformative Impact of a Fractional CFO on a Registered Investment Advisor’s Financial Strategy

CLIENT OVERVIEW

Company: Centerline Wealth

Industry: Registered Investment Advisor (RIA)

Annual Revenue (at start): $916,000

Annual Revenue (End of 2023): $2,683,843

Assets Under Management (AUM): Increased from $130 million to $350 million

In today's competitive landscape, many businesses are turning to fractional CFO services to help streamline their financial operations and focus on growth. A Registered Investment Advisor (RIA) client, Centerline Wealth, led by its CEO, Andy Arnold, took this step in 2015. This blog dives into Andy Arnold’s journey with a fractional CFO, exploring the challenges he faced, the transformative solutions provided, and the remarkable outcomes of this partnership.

UNDERSTANDING THE CLIENT

Industry and Market Position

Andy Arnold operates as the CEO of Centerline Wealth, a Registered Investment Advisor (RIA) firm that guides clients through investment strategies and portfolio management. At the start of the engagement, Centerline Wealth generated revenue of approximately $916,000, which has now grown to $2,683,843 by the end of 2023. The firm experienced a significant expansion in Assets Under Management (AUM), growing from $130 million to $350 million—a nearly threefold increase in business over eight years.

CHALLENGES

Financial Challenges before Engaging with A Fraction CFO

Before the partnership, Andy Arnold and his team at Centerline Wealth found themselves overwhelmed by the demands of handling payroll and categorizing transactions, which consumed valuable time that could have been used for client meetings and strategic decisions.

Without a structured financial system in place, Andy struggled to manage day-to-day operations while also trying to steer the company’s growth.

Additionally, Centerline’s financial statements did not provide a clear picture of gross revenues, complicating their ability to make informed business decisions.

Why Choose a Fractional CFO?

Andy Arnold’s decision to hire a fractional CFO over a full-time financial officer was a strategic one for Centerline Wealth. A trusted partner recommended the service, making it a natural choice. More importantly, Andy realized that a fractional CFO could offer the expertise he needed on a flexible basis without the overhead costs of hiring a full-time CFO. His goal was straightforward: reduce administrative burden, focus more on strategic planning, and improve the accuracy of financial data to drive growth.

The fractional CFO engagement included a suite of services tailored to meet the needs of Centerline Wealth:

Bookkeeping: To handle day-to-day financial record-keeping, ensuring accuracy and efficiency.

Payroll Processing: Streamlining payroll processes to save time and reduce errors.

Fractional CFO Services: Providing high-level financial strategy, insights, and planning to align business goals with financial performance.
The collaboration began in 2015 and has continued to this day, evolving alongside the needs of Andy Arnold and Centerline Wealth. From the start, the focus was on creating a more efficient financial system that would allow Andy to step back from the minutiae of bookkeeping and payroll, enabling him to dedicate more time to client engagement and strategic initiatives.
The initial assessment revealed that Andy's main issue was the lack of accurate financial data due to Centerline Wealth receiving net payments after fees, obscuring the actual gross revenues. To address this, the fractional CFO team devised a customized plan that included implementing technology solutions for streamlined bill payments and receipt management, as well as a robust system for payroll handling.

This approach not only provided Andy Arnold with the financial clarity he needed but also ensured that his CPA had precise data for tax planning, compliance, and audit preparedness. The fractional CFO also worked closely with Andy, his internal team, and external advisors like his CPA to create a seamless and collaborative financial management process.
One of the biggest challenges Centerline Wealth faced was the inability to visualize the full financial picture of the business. The fractional CFO's team tackled this by developing processes to accurately depict gross revenue and earnings. This clarity allowed Andy to make more informed decisions, ultimately contributing to the remarkable growth of Centerline Wealth.
Since the start of the engagement, Centerline Wealth has experienced exceptional growth:

Revenue Growth: From $916,000 to over $2.6 million, nearly tripling the firm's earnings.

AUM Expansion: From $130 million to $350 million, indicating a robust increase in client assets under management.

Earnings Improvement: The EBOC (Earnings Before Owner’s Compensation) surged from 28% to 61%, highlighting the significant boost in profitability.

This transformation was made possible by Andy Arnold’s decision to let go of the financial details and focus on higher-level strategic goals. The fractional CFO’s efforts gave him the time and data-driven insights he needed to concentrate on what mattered most—serving his clients and growing Centerline Wealth.

THE CLIENT'S PERSPECTIVE

Andy Arnold’s feedback on his experience working with the fractional CFO was overwhelmingly positive. He praised the team's attention to detail, their calm and methodical approach to problem-solving, and their ability to handle complex financial challenges without assigning blame. This professional approach not only reinforced Andy’s trust in the fractional CFO but also made financial management a stress-free experience for Centerline Wealth.

WHY ANDY ARNOLD WOULD RECOMMEND A FRACTIONAL CFO

Based on his experience, Andy Arnold has become a strong advocate for fractional CFO services, frequently referring other clients to the team. He finds immense value in the collaborative problem-solving approach that involves not just the CFO team but also his CPA, which has led to more efficient financial processes and better strategic planning for Centerline Wealth.

KEY TAKEAWAYS FOR BOTH THE CLIENT AND THE FRACTIONAL CFO

The success of this engagement provided valuable insights for both Andy Arnold and the fractional CFO:

Focus on Core Competencies: By outsourcing financial tasks, Andy was able to channel his energy into client relationships and business growth.
Streamlined Operations: Implementing technology and standardized processes was key to improving efficiency and accuracy.
Continuous Improvement: The engagement evolved over time, showing that financial strategies must be dynamic to adapt to business growth.

LOOKING AHEAD: FUTURE FINANCIAL STRATEGY

As Centerline Wealth continues to expand, the ongoing partnership with the fractional CFO will focus on further enhancing financial strategies and leveraging data-driven insights to sustain growth. The relationship is a testament to how a fractional CFO can be a game-changer for RIAs looking to scale their business without losing sight of their strategic objectives.

Andy Arnold’s journey with Centerline Wealth showcases the transformative power of a fractional CFO in navigating financial challenges and driving substantial growth for Registered Investment Advisors. By leveraging this flexible and costeffective solution, Centerline Wealth not only tripled its business revenue and AUM but also set the foundation for sustained financial stability. For any RIA looking to scale efficiently, a fractional CFO might just be the strategic partner you need to reach the next level.