Alternative investment firms face a recurring dilemma: Build full-time capacity or borrow fractional expertise?
The traditional answer has been to hire directly. Need a COO? Hire one. Need a CFO? Hire one. Need a CISO? Hire one.
The problem? You’re paying $300-500K annually for roles that require 10-15 hours per week of strategic oversight—and 25-30 hours of execution work that could be handled by junior staff or outsourced.
That’s where fractional leadership changes the equation.
What Is Fractional Leadership?
Fractional leadership means accessing C-suite expertise (COO, CFO, CISO, CTO, CLO, IR) on a part-time basis—typically 10-20 hours per week.
These aren’t consultants who parachute in with recommendations and leave. They’re experienced executives who embed with your team, attend leadership meetings, manage direct reports, and are accountable for outcomes.
The difference:
Full-time COO: $350K salary + 20-30% bonus + equity = $450K+ annually
Fractional COO: $120-170K annually (10-15 hrs/week) = 62% cost savings, no equity dilution
Same expertise. Same accountability. Fraction of the cost.
When Fractional Leadership Makes Sense
Deploy fractional expertise when:
✓ You need strategic oversight, not full-time execution
A fractional CFO builds your financial operations framework, implements cash management processes, and oversees portfolio reconciliation—then your internal team executes the playbook.
✓ You’re scaling but not ready for full-time overhead
A $300M fund doesn’t need a full-time CISO, but institutional investors expect cybersecurity protocols. A fractional CISO builds the infrastructure without the $300K+ commitment.
✓ You need specialized expertise episodically
A fractional CLO handles regulatory filings, compliance frameworks, and legal oversight quarterly—not daily fire drills.
✓ You want to avoid long hiring cycles and mis-hire risk
Fractional placements happen in 2-4 weeks. Full-time C-suite searches take 6+ months. If it’s not the right fit, you can pivot quickly.
When Full–Time Hiring Makes Sense
Hire full-time when:
✓ The role requires constant, high-volume execution
Your lead portfolio manager needs to be in the market daily. That’s a full-time, permanent role.
✓ The position is core to your competitive advantage
If your investment strategy depends on proprietary quantitative models, hire the full-time head of quantitative research. Don’t fractional that.
✓ You have consistent 40-hour/week workload
If operations, compliance, and investor relations genuinely require 40 hours of strategic leadership weekly, hire full-time.
✓ You’re at institutional scale ($2B+ AUM)
At that point, you’ve earned the operational complexity that justifies full C-suite coverage.
So, Which Is Better?
Should you engage in fractional outsourcing or invest in a full-time hire?
In many cases, your budget will determine what you’re able to do. But be sure to also consider the following:
- How the need originated
- Is the project short-term or long-term/ongoing that will need someone on it all times
Give yourself time to make the best decision by weighing the need of the project, its length, ongoing resources needed to maintain it, and ultimately, how quickly you need to complete it.
Additionally, remember to examine the larger economic trends when determining whether to hire a full-time employee or an outsourced contractor or firm.
The Real Question: Build, Buy, or Borrow?
The decision isn’t binary. Elite funds use a three-tier model:
TIER 1: BUILD (Full-Time, In-House)
Core investment team—portfolio managers, analysts, deal professionals
TIER 2: BORROW (Fractional Leadership)
Strategic C-suite oversight—COO, CFO, CISO, CTO, CLO, IR
Cost: 60-70% less than full-time, no equity
TIER 3: BUY (Strategic Outsourcing)
Execution work—fund administration, compliance, regulatory reporting, tax
Cost: Fixed fees, scalable with AUM
The integration: Tier 2 (fractional leaders) oversee Tier 3 (outsourced partners) while supporting Tier 1 (investment team).
While there are certainly pros and cons to these approaches, what’s most important is to be thoughtful in your decision. (Arootah has a tool that can help with that: our Decision Matrix app.)
How to Decide: The Framework
Use this decision matrix:
| Factor | Full-Time Hire | Fractional Leadership |
|---|---|---|
| Volume of Work | 40 hrs/week consistently | 10-20 hrs/week strategically |
| Strategic Value | Core to competitive advantage | Critical but not differentiating |
| Timeline | 6+ months to hire | 2-4 weeks to place |
| Cost | $300-500K + equity | $120-200K, no equity |
| Risk | High (mis-hire = 12-18 months lost) | Low (flexible, can pivot quickly) |
| Growth Stage | $2B+ AUM, stable | $50M-$2B, scaling |
What builds credibility at $50M (lean + fractional) becomes a constraint at $2B (needs full-time depth). Evolve your model before allocators force you to—not after operational breaks expose your gaps.
The Bottom Line
The question isn’t “fractional vs. full-time.”
The question is: “Where do we need strategic oversight without full-time overhead?”
If you can’t answer that, you’re either:
- Overengineering (burning capital on premature full-time hires), or
- Underpreparing (missing allocations because operations can’t scale)
The firms that win deploy fractional leadership to build operational optionality—the flexibility to scale when opportunity appears, not scramble when growth arrives.
Want to assess your operational model?
Arootah offers complimentary 30-minute diagnostic calls where we’ll map your operations to the Build vs. Buy vs. Borrow framework and show you where fractional COO, CFO, CISO, CTO, CLO, or IR leadership could drive immediate impact.
I really like the flexibility!