Outsourced Chief Investment Officer Ocio


What Is An Ocio

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In todays complex investment environment, an outsourced chief investment officer can take on the fiduciary responsibility for your organizations investment portfoliomanaging assets, navigating market volatility, and optimizing portfolio performance to help reach your desired goals. An OCIO lets you delegate investment decisions efficiently, enhances governance, and saves you time so you can attend to other priorities.

Vetting Ocio Candidates And Assuring Effective Oversight

Key criteria for a successful OCIO search and engagement include:

  • Flexibility of providers. As when entering into any business relationship, engineering contingencies for an exit strategy is essential. An OCIOs proposed allocation to illiquid investments deserves much scrutiny from the board. From the outset, boards should be vigilant to identify and avoid candidates who might bring about a scenario in which their organization could be blocked from ready access to assetsand thus be reluctant or unable to fire a possibly under-performing OCIO. To be proactive in this regard, boards should be sure to ask about the use of illiquid investments in any proposed program. OCIO firms often claim that they use illiquid investments to boost performance, of course. Yet the real motivation for this may be to lock in long-term revenue streams or make them opaque, given that some illiquid assets are notoriously difficult to value, especially in the absence of recent arms-length transactions. By corollary, organizations should be watchful for contract clauses that affect illiquid assets upon an OCIOs termination.

  • Ask candidates to show the percentage of their clients that beat their custom benchmarks, over 1, 3, 5 and 10 years.

  • Be sure to compare net, not gross, returns. Make sure performance is actual, not backtested or simulated.

  • Ask for historical average returns by institution size, asset class and type of organization or institution.

  • Question #: In What Market Do They Specialize

    As the OCIO model has evolved and expanded, a number of financial players have entered markets they frankly may not understandsuch as nonprofit institutions.

    Consider this: The key variable in an OCIO approach is the institution itself. Each endowment or foundation has its own strategic needs, objectives and mission. It is the OCIOs responsibility to conduct the upfront due diligence to determine the interplay among each of those factors, understand the issues, and develop solutions to meet objectives.Who would be more familiar with these matters than an OCIO who specializes in nonprofit institutions and has focused there for decades? Such a provider can offer optimal guidance on spending methodologies, donor management, debt management, and other factors. Not only does that experience flatten the learning curve to near zero, it also ensures that the OCIO will proactively ask the right questions and intuitively recognize problem areas that general practitioners may overlook.

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    Who Can Benefit From Ocio

    Institutional investors such as defined benefit plan sponsors, defined contribution plan sponsors, healthcare systems and non-profit organizations partner with outsourced CIO providers to satisfy a range of objectives, including fiduciary requirements, enhanced governance structure, improved funded status, decreased volatility, risk reductions and lower costs.

    Submit An Ocio Rfp Today

    Five Reasons for Nonprofits to Hire an Outsourced CIO

    Our team is ready to discuss your investment goals and determine an appropriate course of action.

    1Pensions and Investments, CIO Outsourcing special report, July 2022.

    2As of Dec. 31, 2021. Other asset management entities of Principal Financial Group® includes Principal Bank®, assets managed by segments of the insurance company and sub-advised assets within the Retirement and Income Solutions segment.

    Principal Global Advisors is a specialized investment management group within Principal Global Investors®. Principal Global Investors leads global asset management at Principal®.

    Custody and trust services are provided by Principal Bank®, Member FDIC, and/or Principal Trust Company®. These services are provided under the trade name Principal® Custody Solutions, a division of Principal Bank. Principal Trust Company is a trade name of Delaware Charter Guarantee & Trust Company.

    When Principal Custody Solutions is providing investment management services, Principal Custody Solutions serves as the investment manager or discretionary trustee but leverages the investment expertise of Principal Global Advisors. Customers may also contract directly with Principal Global Advisors for investment management services. In those instances, Principal Custody Solutions serves solely in a custodial or trustee capacity. Please refer to your underlying service agreements for details.


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    Can Cio Outsourcing Provide Cost Savings

    Many organizations can also save significant amounts of money by outsourcing some or all of their investment function. How? There is a well-documented inverse relationship between asset management costs and portfolio size. In other words, large OCIO providerswith billions of dollars of assets under managementcan use their scale to negotiate more competitive rates with sub-managers. They can also accomplish this by pooling the assets of multiple organizations together. In aggregating this buying power, investment outsourcing providers can pass along these efficiencies, which are, quite frankly, unachievable when an organization negotiates independently.

    Another popular feature offered by leading investment outsourcing providers is transition management. Organizations seeking an asset allocation policy or investment manager change can reduce unnecessary costs and risks by partnering with a CIO outsourcing provider to execute a well-planned transition management strategy. The cost-saving benefits of this can be substantial, due to the reduction in trading costs stemming from the providers ability to consolidate multiple transactions.

    Our Experience Prepares Us

    We continue to find ways to take our OCIO program to the next level. We keep enhancing our solution and delivering additional services that OCIO clients truly value in their providers. We welcomed our first OCIO client in 1992, and theyre still with us today. Over the years, weve guided our clients through many market environments, and we are set up to navigate challenging times. Our program offers the core OCIO services you need, but has evolved to include the extra services that contribute to your success.

    • Investment portfolio management – 100+ investment professionals dedicated to finding the best managers and asset classes for your well-diversified portfolios with full transparency
    • Strategic advice – Our experts leverage data and technology to support your team for better decision-making
    • Organization and operational support – Integrated reporting, custom video recordings, donor/participant education and marketing support.

    Check the 5 areas where your OCIO should excel.

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    Holistic Ocio: A Wise Choice

    The outsourced CIO model has evolved. Once, it was merely an investment advisory function. Today, however, OCIO is about a total partnership, one that expands the aperture beyond an institutions portfolio.Choose wisely, and you will have a trusted fiduciary partner who takes a broader and deeper approach to your institution and addresses myriad factors that extend well beyond investment management. Thats how you benefit from a Holistic OCIO.

    Outsourced Chief Investment Officer

    An OCIO Search Experience

    Cornerstone Management is uniquely qualified to provide outsourced chief investment officer and administration services. We believe the integration of these services adds significant value over time. As an outsourced chief investment officer we utilize a consulting-based approach to ensure that we fulfill our role as a co-fiduciary for our clients.

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    How We Construct Portfolios

    IntegratedOur strategy, manager research, and portfolio management teams work closely together to incorporate our best thinking in investment decisions.

    Open Architecture Our skilled due diligence team seeks opportunities in active and passive vehicles wherever they may be found including investment offered by highly rated third parties, as well as targeted/customized in-house solutions where applicable.


    Investors who know what they own and why they own it have greater conviction in their portfolios and tend to stay the course when markets are stressed.

    We strive to be clear and set expectations up front so that investors have confidence in what they own.

    Always with an Eye on RiskThere are many risks to worry about when investing: shortfall, volatility, unintended exposure, liquidity, and operational risks.

    We employ a rigorous risk management framework monitoring all of these risks to enhance the probability of reaching your goals.

    Designed For Independent Advisors

    As an independent advisor ourselves, we understand your clients and the important interplay between financial planning and investments. RIAs serve a sophisticated array of clients in an environment that is constantly evolving in complexity, risk, and the speed and agility required to respond to markets.

    Rather than a subscription service that is one-size-fits-all, we build a customized relationship with firms to create deliverables they need most, freeing up their time to engage with clients on the more personal side of investing.

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    Can Outsourced Cio Also Help With Back

    Investment outsourcing also means that the outsourced CIO provider takes charge of the associated daily administrative tasks, reducing the strain on an organizations resources. This, in turn, frees up more time for the organization to spend on core business activities and programswhile simultaneously ensuring that its fiduciary duties are still being carried out.

    Question #: Are They Thought Leaders

    Outsourced Chief Investment Officer (OCIO)

    An effective OCIO stays constantly on the cutting edge of market and industry trends, conducting ongoing research and calling your attention to its findings on a regular basis. This is critical in implementing investment policy, because it informs the strategies, asset allocation and policy goals that the OCIO and institution develop together.

    Its not only todays trends that the OCIO must monitor its tomorrows as well. The marketplace changes. So do internal goals. Strategies require adaptation and enhancement over time. And when it does, the OCIO must provide the very latest industry information from which to make critical adjustments to portfolio and policy and to execute in an efficient, cost-effective manner.

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    Question #: How Do They Construct A Portfolio For You

    When it is time to build your portfolio, a holistic approach pays true dividends. The OCIO recognizes that the construction of the portfolio hinges on multiple factors, including long-term investing goals, liquidity needs, in-house resources and other institutional mandates.

    In aggregate, those variables will dictate not only the components of the portfolio but of the investment program as well. Would the institution benefit from separate accounts, hiring individual, dedicated managers? Is a funds-of-funds approach more appropriate? Institutional commingled funds, passive index funds, and/or exchange-traded funds ? The decision drivers are not just financial issues. A holistic OCIO brings a total institutional perspective to the portfolio construction process.

    Potential Benefits Of Outsourcing

    Bringing on an OCIO can carry myriad benefits for boards. This move can mean a shift to improved and more varied investment management expertise, bringing significant increases in short- and long-term net returns to fund programs and liabilities while fortifying risk management. By hiring the right OCIO and providing the right kind of oversight, boards can derive these benefits to reach their investment goals while reducing fees and expenses.

    Moreover, a successful OCIO program can free boards and investment committees from the headaches associated with managing in-house investment offices HR issues, expanding budgets, day-to-day management giving them more time to deal with the policy matters that represent the raison dêtre of the institution. Hence, for some boards, a well-crafted, well-overseen, well-monitored OCIO program can redirect an investment management program to the purpose for which it was originally conceived: a means to an end rather than an end in itself.

    However, setting up an effective OCIO program thats aligned with the organizations goals and finding the right contractor are complex undertakings. These tasks require specialized knowledge and expertise, including a true understanding of client needs and mission, a familiarity with the viable structural models, performance assessment skills to assure accountability and an understanding of the range of professionals seeking OCIO business and their limitations.

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    Portfolio Monitoring And Reporting

    Following the implementation decision, comprehensive monitoring and reporting are required for proper fiduciary oversight. Cornerstones portfolio management and rebalancing systems allow us to track every transaction inside our clients portfolios and to monitor policy adherence on a daily basis. Further, our quarterly reporting is designed to allow Investment Committees and Boards to quickly ascertain if the portfolio is in compliance with policy guidelines, in adherence with UPMIFA, if fees are in line with market norms, and if spending parameters are being followed. As an outsourced chief investment officer, Cornerstone leverages these tools to efficiently rebalance portfolios, monitor manager and portfolio performance, and facilitate distributions.

    What Is An Outsourced Chief Investment Officer

    Choosing the right OCIO partner

    An outsourced chief investment officer is a resource for organizations that can take on accountability and fiduciary responsibility for an asset pool, including strategic investment decisions. An OCIO also aims to manage liquidity trading costs, protect against drawdowns and shield investment committees from potential litigation. Given the increased complexity of institutional investment programs, an OCIO can help investors access the expertise and scale they need to get the most out of their portfolios.

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    Outsourced Chief Investment Officer Survey With List Of Ocios Providers

    Better risk management is the top reason that asset allocators farm out their investment management, according to our 2021 Outsourced Chief Investment Officer Survey.

    Given the tumultuous capital markets that the pandemic has produced, thats understandable. Of survey respondents, 83% called risk management moderately important to very important in their choice to assign investment chores to outside managers.

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    What Is An Ocio Responsible For

    If youre considering outsourcing your chief financial officer, they might be responsible for:

    • Managing assets: An OCIO handles creating, managing and adjusting portfolios to meet your goals and needs as well as minimizing risk.
    • Hiring experts: This person will hire managers and other professionals to oversee your portfolios.
    • Acting as a fiduciary: Your needs come first for most OCIOs. They work for you, so theyll be choosing the best investments to hit your financial goals.

    An OCIO isnt necessarily the right fit for all companies, but many companies who might not have the budget to hire someone in-house could benefit from outsourcing their CIO.

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    What Does Ocio Stand For

    OCIO stands for Outsourced Chief Investment Officer, or, more broadly, outsourced investment management. The term refers to the full or partial outsourcing of an organizations investment function to a third party, such as an asset management firm or investment consultant. In delegating investment tasks to a third party, the organization typically retains some level of fiduciary responsibilityoften times, maintaining control over the strategic asset allocationwhile other fiduciary duties are transferred to the outsourced CIO provider.

    Outsourced Chief Investment Officer Services

    Outsourced Chief Investment Officer (OCIO)


    An OCIO such as Vestcor is a professional investment services organization that provides discretionary investment activities and related operational services under the delegated instructions of a Trustee or Board of Directors type governance structure.

    Public sector clients who partner with Vestcor as their OCIO gain immediate access to an experienced investment team, allowing their trustees to focus on a more strategic purpose or fiduciary mission while avoiding the cost and complexity of building their own internal team. They also benefit from significant economies of scale by accessing Vestcors global investment management platform.

    Working with an OCIO provides confidential access to trusted and proven expertise that may otherwise be out of reach to smaller pools of investment capital. It can also more efficiently address the challenges and risks of the continually evolving global financial markets, fund cashflow transitions, legal obligations, and regulatory requirements.

    In addition to decreasing operational complexities, working with an OCIO partner can provide unexpected added benefits. These benefits include streamlining governance roles, improving net long-term investment performance, and reducing administrative effort, while potentially reducing overall costs to your organization.

    Vestcors services include:

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    Our Ocio Services Offer These Core Features:


    Portfolios are customized to meet client objectives and allocated to strive for both short- and long-term success.


    We are dedicated OCIO professionals that bolster your internal talent with advisors, portfolio management, back-office, and research professionals.


    We are asset managers and service specialists rooted in a client-centric firm.


    We follow a disciplined decision-making process developed and executed by tenured professionals.


    We utilize our long-term insights to opportunistically position portfolios.


    We are independent, fostering an alignment of interests in manager selection and fee negotiations.

    How Can An Outsourced Cio Or Ocio Model Improve Governance

    One key reason an organization may shift the management of its investment program to an OCIO provider is to improve its governance structure. The traditional governance model used by organizations to make investment decisions is rife with several shortcomings, many of which have been exacerbated by todays increasingly complex regulatory and investing environment.

    Many companies, for instance, establish and review their investment policies and asset allocation during quarterly meetings run by an investment board or committee. This means that on an annual basis, a shockingly small amount of timeas little as 16 hoursis spent making high-impact investment decisions for corporate pension plans, defined contribution plans, university endowments and more. This isnt even remotely close to the ballpark range of time we believe is necessary to review and refine an investment strategy.

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    How Can Outsourced Cio Supplement Your Strained Resources

    A year into the pandemic, with more and more companies facing resource constraints and tighter budgets, theres increasingly less time to spend on activities that arent core to the business. A public electric utility, for instance, is better served focusing its time on power generation and distribution efforts than on managing employee retirement plans. Yet both demand stringent, around-the-clock attention.

    Thats where an investment outsourcing provider can step in.

    Schedule Your Discovery Session

    Why Do Advisors Need an OCIO? | Education Station (E2)

    Heres what you can expect at a complimentary discovery session with HighView:

    • We will take the time to understand the goals of your family and your future giving plans.
    • We will explore your approach to risk and your previous investment experience.
    • We will discuss how to want your various advisors involved and who you want around the table.
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