Unlocking Your Potential: The Power of Outsourcing in Revolutionizing Your Advisory Practice

Imagine a world where the role of a financial advisor is no longer defined by the daily operational burdens that consume their time but by their ability to connect with and deeply impact their clients’ lives. This is the transformative potential of investment management outsourcing, a strategic shift that liberates advisors from mundane tasks, allowing them to focus on what truly matters—their clients.

Tailoring Your Practice for Greater Impact

Picture this: a workday without the burden of back-to-back administrative tasks. Instead, you have scheduled deep-dive sessions with clients to explore their long-term visions. Outsourcing the technical functions of asset management liberates you to concentrate on developing tailored financial strategies that closely align with your clients’ aspirations. This not only simplifies your operations but also elevates your role from a financial advisor to a trusted life advisor.

A recent Deloitte survey supports this transformation, highlighting that most organizations experience enhanced operational efficiency and better resource allocation through outsourcing. This efficiency isn’t just about doing the same with less; it’s about doing more with what you have—redirecting your time and efforts towards what truly adds value to your client relationships and personal satisfaction.

Elevating Client Service with Expert Backing

Now, imagine the confidence of consistently offering top-tier, customized investment solutions without having to think about resource limitations. Outsourcing provides access to a broad spectrum of high-caliber investment strategies managed by experts. This capability not only enriches your service offerings but significantly strengthens the trust and loyalty of your clients, providing them with peace of mind and satisfaction that their financial futures are in capable hands.

Transforming Operations with Strategic Outsourcing

Envision an operational structure where efficiency and effectiveness are the norms, not the goals. Outsourcing streamlines your business processes, reducing operational costs and enhancing compliance protocols. This strategic shift allows you to allocate more resources towards growth initiatives, such as market expansion or service diversification, setting your practice apart in a competitive industry.

Deepening Relationships Through Focused Interactions

With the logistical load managed by your outsourcing partner, your client meetings can now delve into deeper discussions about life changes, retirement plans, and legacy goals. This shift from transactional to meaningful interactions can significantly enhance client retention and attract new referrals seeking a more personalized advisory experience.

A study by DALBAR Inc. supports the importance of these deepened interactions. During the market volatility following the COVID-19 crisis, 86% of investors reported increased confidence in their financial advisors who maintained proactive communication. Additionally, 87% of these investors said they were more likely to retain their advisors, underscoring the critical role of engaging meaningfully and regularly with clients, especially during challenging times.

This enhanced engagement enriches your relationships, boosting client retention by demonstrating that you are not just a financial advisor but a committed partner in their financial well-being.

Redefining Personal and Professional Satisfaction

Finally, imagine a career where personal satisfaction and professional achievements are not in conflict, but rather complement each other. According to a study by an independent research firm, 95% of advisors reported having a better work-life balance as a result of outsourcing. This statistic emphasizes the fact that outsourcing allows you to free up your schedule and reduce stress, leading to a healthier work-life balance. This newfound balance can rejuvenate your approach to work, improve your client interactions, and reignite your passion for your career, making each day more fulfilling and impactful.

Embracing Outsourcing for a Future-Ready Advisory Practice

The shift towards outsourcing in financial advising is not just about keeping up with industry trends—it’s about pioneering a movement prioritizing effective, client-centered service. For advisors considering this strategic transformation, the partnership with a seasoned outsourcing firm like ours doesn’t just promise enhanced operational capabilities—it offers a reimagined way of doing business that places client relationships and advisor satisfaction at the forefront.

For advisors ready to step into this promising future, exploring a partnership with a leading outsourcing firm could be the next pivotal step in your professional journey. Let’s talk.

Holding a Concentrated Stock Position? Strategies to Mitigate Risk

The allure of a stock that skyrockets in value can be intoxicating. However, holding a large position in a single company, a concentrated stock position, exposes your portfolio to significant risk. Imagine all your eggs in one basket – if the company falters, your entire portfolio suffers. Fortunately, there are strategies you can employ to diversify your holdings and spread that risk.

What Exactly is a Concentrated Stock Position?

A concentrated stock position is when a significant chunk of your investment portfolio—often thought of as 10 % or more—is tied up in a single company’s stock. There are many ways to end up with a concentrated stock position, such as inheriting shares, receiving equity-based compensation from your employer, or simply investing heavily in one particular company.

Here are some key strategies to diversify a concentrated stock position:

Gradual Selling and Strategic Reinvestment

The most straightforward approach is to gradually sell a portion of your concentrated holding and reinvest the proceeds into a diversified portfolio. This allows you to capture some of the gains from the stock while mitigating risk. Here’s how to approach this:

Develop a selling schedule: Determine a set amount or percentage of your holdings to sell at regular intervals. This could be weekly, monthly, or quarterly, depending on your comfort level and the stock’s volatility.

Choose diversification targets: Based on your risk tolerance and conversations with your advisor, invest the proceeds into a diversified asset allocation.

Potential tax implications: Consider the tax implications of selling. If the stock has appreciated significantly, you may incur capital gains taxes. Consult with a tax advisor to understand your tax liability and explore strategies to minimize it.

Tax-Advantaged Gifting

Gifting a portion of your concentrated stock position to family members or charitable organizations can be a win-win strategy. It reduces your portfolio concentration and potentially offers tax benefits:

Family gifting: Gifting shares to family members allows you to gradually transfer wealth while potentially reducing your estate tax burden. Annual gift tax exclusions will enable you to transfer a certain amount of assets tax-free. Consult with a tax advisor to understand the current limits and potential tax implications.

Charitable donations: Donating appreciated stock to a qualified charity allows you to deduct the full fair market value of the stock from your taxes, potentially reducing your tax liability. Consult with a tax advisor to understand the current limits and potential tax implications.

Utilizing Options Strategies 

Options contracts offer more complex strategies for experienced investors to hedge their existing positions or generate income. Here are three common methods, but remember, these may involve significant risk and require a thorough understanding of options:

Selling covered calls: You sell call options on your stock, granting the buyer the right to purchase your shares at a specific price by a certain date. If the stock price rises and the option is exercised, you are obligated to sell your shares at the predetermined price. By selling the covered call options, the seller is able to generate income.

Buying put options: This strategy helps protect your downside risk. Put options give you the right to sell your shares at a specific price by a certain date. If the stock price falls significantly, you can exercise the put option and sell your shares at the predetermined price, limiting your losses.

Collar: This strategy is a combination of both selling a covered call and buying a put option.  In theory, the income received from selling the covered call allows the investor to pay for at least some of the cost of the put option.

Exchange Funds

Exchange funds allow for diversification from a concentrated stock position into units of a more diversified pool of securities, an Exchange Fund  (Note: exchange funds are different vehicles from exchange traded funds, or ETFs).   There may be differences among exchange funds but it is expected that investors must be qualified purchasers (QPs) in order to participate.  In addition, the exchange fund must have capacity to accept the particular security the investor is looking to diversify away from.  Also, it is strongly suggested to speak with a tax professional to fully understand any tax consequences.

Separately Managed Account (direct indexing)

The use of a separately managed account (SMA) is another way to help diversify away from a concentrated stock position.  For example, with direct indexing (the SMA is the investment vehicle used), the investor would hold a number of individual stocks that aim to replicate a particular index.  Through holding the individual stocks, the investor would be able to sell any of the stocks that have losses and use those losses to offset any capital gains from selling the concentrated stock position. Consult with a tax advisor to understand the current limits and potential tax implications.

Holding and Managing Around the Concentrated Position

If you have a firm conviction in the long-term prospects of the company, you might consider holding onto the stock while building a diversified portfolio around it:

Focus on core portfolio construction: Invest in a diversified mix of assets based on your risk tolerance and time horizon. This could include a combination of index funds and actively managed mutual funds and bonds.

Rebalance periodically: Over time, the weightings of your assets will inevitably shift. Regularly rebalance your portfolio to ensure it aligns with your target asset allocation.

Monitor your overall risk profile: While the concentrated position remains, monitor its impact on your overall portfolio risk. Consider adjusting your diversification strategy if the concentrated position becomes a disproportionately large share of your portfolio.

Step-up in cost basis: Finally, if you hold the security until your death, the cost basis of the security receives a “step-up” in cost basis for those inheriting the asset, potentially reducing capital gains exposure.

East Bay Investment Solutions cannot provide tax advice and would recommend speaking with a tax professional before implementing any of these possible solutions.

Creating Moments That Matter: How an OCIO Empowers Advisors to Focus on Life’s Milestones

Have you ever considered how an Outsourced Chief Investment Officer (OCIO) can revolutionize the way you connect with your clients? Financial advising is evolving, and the traditional role of advisors as investment managers is expanding into a more meaningful realm. Imagine being a pivotal guide in your clients’ lives, helping them navigate through their most significant milestones, all enabled by the strategic support of an OCIO.

Such a partnership enables advisors to shift their focus from the day-to-day market fluctuations to their clients’ crucial life events, like welcoming new family members, planning retirements, and strategizing for generational wealth transfer. Through this collaboration, advisors can genuinely be there for the moments that matter most in their clients’ lives.

Unlocking New Possibilities with an OCIO

An OCIO offers more than just asset management; they open doors to new opportunities for you and your clients. By taking on the complexities of investment decisions, market analysis, and risk assessment, an OCIO frees you to focus on what truly matters—the personal and impactful facets of your clients’ lives. Imagine the depth of conversations you could have, knowing the day-to-day financial intricacies are expertly managed. This partnership doesn’t just enhance your role; it transforms it, enabling you to align your knowledge and skills with clients’ aspirations, crafting personalized strategies that resonate deeply.

Enriching Client Interactions at Every Life Stage

Your role as an advisor shines brightest when you’re involved in your clients’ most critical moments. Whether guiding them through healthcare decisions or aiding in a business transition, your input is invaluable. Research, like that from Vanguard, emphasizes advisors’ significant impact, especially during these transformative periods. With an OCIO’s backing, you’re not just an advisor; you become a life strategist, aligning your advice with clients’ values and long-term goals, ensuring they feel supported and understood at every step.

Real-Life Transformations: Stories of Impact

Consider the story of a family who navigated the financial complexities of adoption with their advisor’s support, turning a dream into reality. Or a retiree who, through personalized planning, transformed their retirement years into a phase of discovery and joy. These narratives are powerful testaments to the advisor-client relationship’s potential, magnified by an OCIO’s strategic support. They illustrate the profound impact personalized, empathetic guidance can have on individuals and families during significant life transitions.

Building Lasting Relationships: Beyond Financial Advice

When you focus on what’s truly important to your clients, you transcend the role of a financial expert—you become a trusted partner in their life’s journey. This enhanced relationship fosters deeper trust, heightens client satisfaction, and builds a foundation for loyalty and referrals. It’s about creating a shared path where financial stability supports personal dreams, culminating in a partnership that redefines the essence of financial advice.

Embrace the Future: The Transformative Power of an OCIO

Partnering with an OCIO isn’t just a strategic business decision; it’s a commitment to elevate the advisor-client relationship, focusing on the milestones that matter most in their lives. This collaboration invites you to deepen your impact, guiding clients through life’s pivotal moments with insight and empathy.

Are you prepared to transform your advisory practice? To step into a world where your expertise impacts not just financial outcomes but life trajectories? Join us in this new chapter where your advisory role is not just about managing wealth but about creating moments that matter. Let’s talk!

The Emotional Freedom of Delegating Investment Management: A New Era for Advisors and Clients

Imagine a world where your day isn’t consumed by the constant flux of the market or the intricate demands of investment management. Instead, envision dedicating your time to what initially drew you to this profession: forging meaningful connections with your clients, deciphering their deepest aspirations, and steering them toward their financial goals. This isn’t a mere fantasy—it’s the tangible reality for financial advisors who opt for the backing of an Outsourced Chief Investment Officer (OCIO). Picture the additional hours you could invest in understanding your clients’ needs, fostering deeper relationships, and crafting more personalized financial plans without the burden of daily market monitoring.

The Transformational Impact of an OCIO Partnership

Choosing to outsource investment management is a strategic, not just operational, shift. It’s a decision that can fundamentally redefine your practice and how you interact with your clients. By assigning the intricate, time-intensive tasks of investment management to an OCIO, you’re not just delegating duties; you’re liberating yourself to concentrate on the essential aspects of financial planning that demand your expertise and personalized touch. But what does this transformation entail, and what concrete benefits can you anticipate from an OCIO partnership? Think of the newfound space to innovate, create, and engage with your clients on a level that transcends financial transactions.

Your Scarcest Resource? Time 

One of the most significant challenges advisors face right now is time. If you think about it, time is a finite resource. You only have so many hours in a day — and only so many hours you want to spend in a workweek. For that reason, the more you can outsource (and feel comfortable doing so), the more time you have to focus on what matters most to you.

Cultivating a Deeper Connection with Clients 

Visualize your client meetings, enriched by the knowledge that a team of experts is managing the investment strategies. This allows your discussions to probe deeper into life planning, aligning your clients’ financial strategies with their personal ambitions. Such engagement fosters a robust advisor-client relationship rooted in trust and comprehensive understanding, moving beyond mere transactional exchanges. Consider the added value you could offer by having the bandwidth to focus on your clients’ life goals and aspirations, plus the tailored strategies to achieve them.

Potential Benefits and Impact of OCIO Partnerships

Advisors transitioning to OCIO partnerships may experience transformative changes in their professional practices and personal satisfaction. The shift could give advisors more time for family events and individual milestones, alleviating the constant pressure of monitoring market movements. Moreover, the confidence that comes from knowing investment strategies are managed by experts could enhance client interactions, fostering more profound and meaningful dialogues. Imagine the emotional fulfillment that could arise from being fully present during life’s significant moments, secure in the knowledge that your professional duties are managed efficiently and effectively.

Realizing Aspirational Goals 

The OCIO framework empowers advisors to pursue ambitious growth targets that might have previously seemed unreachable. Liberated from the day-to-day of market analysis and portfolio adjustments, advisors can broaden their client base, delve into niche markets, or enhance their service offerings. This model is not about maintaining a status quo; it’s about providing the foundation for remarkable growth and realizing long-term aspirations. Imagine scaling your practice to new heights, reaching more clients, and impacting more lives without the constraints of investment management.

Client Experience Enhancement 

The advantages of an OCIO partnership extend to your clients as well. They benefit from heightened attention and reassurance that their investments are under meticulous care, fostering deeper trust and satisfaction. These elements are pivotal in enhancing client retention, loyalty, and the likelihood of referrals. Clients can sense the shift when their advisor is more available, engaged, and in tune with their needs—a transformation that cultivates lasting relationships and trust.

Embarking on a New Chapter 

Consider this an invitation to transform your advisory journey. Partnering with East Bay Investment Solutions means gaining an ally committed to your growth and deepening client relationships. What could you accomplish with additional time and the proper support structure? It’s an opportune moment to reflect on how offloading investment management can liberate you and help you focus on the core of your practice and your clients’ lives.

Picture the freedom. Envision the future you can forge with an OCIO’s support. Are you ready to embark on this journey? Let’s talk.

East Bay’s Position on Dividend Reinvestment Strategies

Navigating Dividend Reinvestment Decisions

In the ever-evolving landscape of investment strategies, one question frequently surfaces among our clients: Is it better to reinvest dividends and capital gains distributions or take them as cash? This seemingly straightforward decision involves a deeper dive into the operational nuances that can significantly impact your investment strategy. At East Bay, we’ve dissected this complex issue to offer clarity and direction, ensuring you’re equipped to make informed choices that align with your long-term financial goals.

The Dilemma of Dividend Reinvestment

We are often asked whether it is preferable to reinvest dividends and capital gains distributions back into the mutual fund or ETF that pays them. Our opinion on whether or not to reinvest is based more on operational aspects than just a straightforward investment decision.

The Compounding Appeal vs. Operational Reality

To be clear, many articles on the topic simply talk about dividend reinvestment in the compounding sense, in which case you are clearly better off reinvesting rather than spending the distributions. In an advisory account with multiple holdings, though, the decision gets nuanced and comes down to advisor/client preferences.

The Case Against Automatic Reinvestment

We suggest not reinvesting dividends back into the security that paid them because that may not be the security you actually need to buy in the portfolio. Not only can it contribute to overweighting a particular holding (if its value had also been rising), getting you outside your risk tolerance, but it can lead to more transaction activity (having to trim the position more often), potentially incurring additional costs and/or encumbering your ability to “buy low, sell high” during rebalancing. Of course, we must note that many advisors have increased their usage of ETFs, which don’t have transaction fees on the most-used custodians, reducing the importance of the cost consideration.

Managing Withdrawals and Advisory Fees Without Selling

Reinvesting dividends may also mean more selling when withdrawals are needed from the account. While not all accounts need to make withdrawals, most advisory accounts need to pay advisory fees, and, assuming a balanced portfolio, distributions from its holdings are typically sufficient for covering them without the need to sell portfolio assets.

The Importance of Regular Portfolio Rebalancing

On the flip side, if the investor or advisor cannot monitor and rebalance the portfolio somewhat regularly, then cash can indeed build up and create a performance drag. This is fine if the advisory firm has a dedicated team (in-house or outsourced) to perform regular rebalancing. For what it’s worth, the outsourced trading teams we queried on this topic agree that not reinvesting dividends makes it easier to keep portfolios near their asset allocation targets, as long as you have cost controls in place, which they do, reinforcing our preference.

Tax Implications of Dividend Reinvestment

Last but not least, each of those reinvested dividends will likely result in many small purchases, each with its own cost basis, which could present headaches later on when calculating capital gains taxes on sales of each of those small tax lots.

Conclusion: A Tailored Approach to Dividend Reinvestment

Ultimately, trying to answer the question about reinvesting dividends is one without a clear and direct answer for all possible situations; it depends on quite several different factors.

Crafting Your Dividend Strategy with East Bay

Deciding whether to reinvest dividends is a multifaceted dilemma, influenced by various operational, tax, and strategic considerations. Clearly, a one-size-fits-all answer doesn’t exist, emphasizing the need for a tailored approach that aligns with your unique investment objectives and operational capabilities.

At East Bay, we’re committed to guiding you through these intricate decisions, ensuring your portfolio remains optimized for your financial aspirations. Whether you’re leaning towards reinvesting for compounding benefits or prefer maintaining flexibility in asset allocation, our team is here to offer the insights and support you need.

Ready to refine your investment strategy? Connect with us at East Bay. Our experts are on hand to discuss your portfolio’s specific needs and how we can help you navigate the dividend reinvestment conundrum with confidence.

Elevating Your Advisory Practice: The Emotional and Strategic Benefits of OCIO Partnership

In an era where the financial landscape is increasingly complex, and client expectations for personalized investment strategies are higher than ever, financial advisors face the dual challenge of deepening client relationships while managing an array of intricate investment portfolios. And this is where the profound value of an Outsourced Chief Investment Officer (OCIO) partnership comes into focus, offering a strategic edge and emotional relief by providing advisors with the freedom to focus on what truly matters.

Unlocking Emotional and Professional Expertise

The journey with an OCIO unlocks access to an expansive suite of professional expertise, bridging the gap to a world where in-depth research, asset allocation, and investment management are seamlessly integrated. This collaboration extends beyond mere strategic support; it nurtures the advisor’s capacity to deliver exceptional service, enriched by a depth of understanding and expertise that resonates personally with clients.

The Power of Personalization at Scale

Striking a balance between personalized service and scalable solutions is a significant hurdle in today’s market. OCIO partnerships offer a lifeline, empowering advisors with institutional-grade investment management and bespoke strategies. This alliance not only meets the direct needs of clients but does so with warmth and care that transforms numbers and charts into dreams and goals realized.

Transforming Time into Meaningful Connections

For advisors, time is not just a commodity; it’s the currency of relationships. Research indicates that top-performing advisors, despite working extensive hours, allocate significantly less time to managing portfolios and more to nurturing client relationships. The strategic delegation of investment management functions to an OCIO liberates advisors from the back-office and positions them to invest deeply in the human side of their practice.

Safeguarding Dreams with Diligence and Compliance

In the ever-evolving dance of regulations, advisors shoulder the immense responsibility of protecting their clients’ futures. The OCIO emerges as a vigilant partner in this dance, offering comprehensive due diligence capabilities and support. This partnership goes beyond mitigating risks; it’s about safeguarding the trust and dreams entrusted to advisors by their clients, ensuring peace of mind amidst the storms of market volatility.

Deep Dive into Manager Selection: An OCIO’s Craft

The meticulous process of selecting money managers is both an art and a science, demanding vast amounts of time and specialized knowledge. By entrusting this critical function to an OCIO, advisors can tap into a deep well of expertise and networks. This access broadens the horizon of investment options and weaves a richer tapestry of opportunities for clients, painted with the brushstrokes of thorough diligence and strategic foresight.

Balancing Cost with Invaluable Returns

While there are costs associated with OCIO services, the return on this investment is measured in more than just financial terms. It’s found in the hours reclaimed for client engagement, the stress alleviated from navigating compliance, and the confidence that comes from having a dedicated expert in your corner. According to Kitces, the average independent financial advisor spends only about 9 hours a week on business development. An OCIO partnership can significantly increase this time, offering a direct pathway to growth and success.

Crafting Unforgettable Client Experiences

At the heart of the advisory role is the commitment to creating unforgettable client experiences. OCIO services are a cornerstone in this endeavor, enabling advisors to dedicate themselves fully to their clients. This partnership does more than optimize portfolio management; it enriches the advisor-client relationship with deeper understanding, empathy, and shared success.

As we look to the future, an OCIO partnership’s emotional and strategic benefits are unmistakable. It’s a relationship that transcends the transactional, touching the core of what it means to be a financial advisor.

Journey with East Bay

Embark on a journey with East Bay and discover how our OCIO partnership can transform not only your advisory practice but also the lives of your clients. Reach out today, and let’s explore together how we can bring more hours of meaningful engagement, deeper client connections, and enhanced peace of mind into your practice.

What Services Does an OCIO Firm Offer?

An Outsourced Chief Investment Officer delivers advisory firms the best of both worlds — access to best-in-class investment strategies developed by experienced industry veterans without the commitment of hiring full-time team members.

But what many firms don’t realize is that OCIOs offer a wide range of services, which can be adjusted to meet your team’s needs. Let’s take a look at what an OCIO does and the different capacities in which they help advisory firms better serve their clients while maintaining their bottom line.

How Involved is an OCIO?

That’s up to the advisory firm and the OCIO. Each relationship is customized to help fill the gaps or offer support in specific areas of need. Some OCIOs step in seamlessly to serve the same critical functions as an internal CIO. Other times, they provide more supplemental support or address especially complex concerns.

At East Bay, we’ve served firms in a number of different ways. For example, we’ve offered guidance during tough transitions, helped support overloaded internal teams during periods of growth, and enabled advisors to regain their time by taking full control of investment-related responsibilities.

But each OCIO firm operates differently, so their capabilities and involvement in your firm will depend on their size, pricing structure, resources, and industry experience.

4 Common OCIO Services

An OCIO can help you with your portfolio construction and management responsibilities from top to bottom. From reassessing your investment philosophy and approach to adapting and implementing those changes into model portfolio construction, an OCIO provides full-service support.

Some OCIO firms, like East Bay, offer additional services beyond investment-specific responsibilities. For example, we provide advisory firms with business consultation services and access to robust industry resources that our clients can use to support their growth and business goals.

The most common OCIO services fall into one of four broad categories:

1. Investment  management

An OCIO can take on the full spectrum of investment management-related tasks, or offer assistance on more specific services like:

  • Portfolio construction
  • Assist with best practices on topics like rebalancing parameters, cash management, etc.
  • Due diligence
  • Mitigating portfolio risks (primarily through diversification and asset allocation)

2. Client support

OCIOs can often help advisors address the needs of a firm’s clients on an individual basis through answering client questions or, reviewing client specific needs, as examples.

3. Firm support

OCIO firms can be a resource for the overall firm too.  Working with many different  clients, we can provide insight into topics  like  various technologies, staffing needs, or other operational issues.

4. Advanced insights

An OCIO is more than just another team member, they often serve as the connection between your advisory firm and state-of-the-art investment resources or networks. Many OCIOs offer firms and their clients access to market commentary or analysis, as well as stay on top of changing market conditions and trends.

How Are OCIO Services Priced?

At East Bay Investment Solutions, we price our services rather uniquely. We provide a flat-fee pricing model for advisory firms.

As you start researching and comparing OCIO firms that may fit your outsourced investment needs, we encourage you to reach out and schedule time to talk with our team. We’d be more than happy to walk through our offerings, pricing, and investment philosophy in more detail.

How OCIOs Help Financial Advisors Strike the Perfect Balance

The financial services landscape has evolved greatly in recent years, thanks in large part to the widespread adoption of technology platforms and AI-enhanced tools. Today, investors have more access to financial advice and investment resources, such as roboadvisors and online courses. With greater accessibility to financial services and education, it’s no surprise that investors and clients want more from their advisors. Gone are the days when portfolio management was the sole focus for clients. Now, numerous surveys and studies indicate that clients want a financial partner who helps them achieve their financial goals and enjoy a higher quality of life.

In fact, a recent survey by the American College of Financial Services found that more clients valued their advisor’s ability to help them meet their financial goals (52.5%) than provide investment evaluations (47.5%).

Portfolio management and investment research are a big part of what your firm does — and it takes up a big chunk of your time. Yet, studies show that clients value qualitative, personalized services more.

This begs the question, how can advisory firms continue providing portfolio and investment management services while still prioritizing their clients’ primary concerns? By leveraging the expertise and guidance of other professionals, like an Outsourced Chief Investment Officer (OCIO).

What Does an OCIO Do?

In terms of investment management, the better question may be what can’t an OCIO do? An OCIO has the robust resources and capabilities to address all of the same investment-related responsibilities as an internal CIO (or possibly even more).

Many OCIOs have decades of investment experience and will leverage it to help you address your clients’ investment needs no matter the complexity. They can also help your firm run smoothly during periods of turmoil or transition, say when an owner passes the torch to the next generation or a key leader leaves the firm. An OCIO can also help facilitate discussions between leaders, especially if there are varying perspectives on investment philosophy or other investment-related decisions.

One big advantage an OCIO offers is the ability to educate advisors on things they may not have much experience with — or bring to the advisor’s attention potential concerns they weren’t aware of before.

Most OCIOs can operate in either a client-facing capacity or stay entirely behind the scenes, depending on your preferences. If you’d rather save time and streamline the client experience, you may encourage clients to reach out directly to the OCIO for questions regarding their portfolios. Or, perhaps you like to host educational client events (like webinars) and invite your OCIO to assist in answering investment-related questions live.

Hiring an OCIO vs. Growing Your Team Internally

When you find that the firm’s investment-related workload exceeds your current team’s capabilities, you have two options in front of you: grow your team internally or hire an OCIO.

The first factor to consider is the hiring process (and the possibility that you’ll need to do it all over again in the not-so-distant future). Hiring is an arduous process, and it always results in a gamble. Will the person you select live up to the standards you’ve set before them? Are they going to be a good culture fit? Will they stay with the firm long-term, or leave for other opportunities elsewhere? If so, are you prepared to start the hiring process from scratch?

The hiring process aside, expanding your team of portfolio managers is expensive when you consider base salary, benefits, bonuses, yearly raises, insurance, etc. It’s also inflexible — meaning if your current growth trajectory stalls out or changes course, you may find yourself with too many internal hires to support the work coming in. This can impact your bottom line, or force you to make tough decisions, like laying off excess employees.

Because an OCIO is not an internal hire, there’s a greater level of flexibility. They’re able to fill in the cracks when your team feels overloaded, without straining resources at times when demand lessens.

Plus, an OCIO tends to have greater access to resources and tools that an individual may not. As an unbiased, third-party professional, their opinions, guidance, and strategies are based on extensive, proven experience.

Of course, there will be times when you find it more prudent to hire internally. But it’s certainly worth considering the benefits of bringing on a more flexible outside hire to address your firm’s needs.

How to Find the Right OCIO Partner for Your Firm

The vetting process for finding an OCIO for your firm is incredibly important, especially if the purpose of hiring one is to offload investment-related tasks so you can focus your time on delivering more value to your clients. You need someone you trust implicitly, and who you feel comfortable enough to put in front of your team and (in some cases) your clients. As you start researching options, be sure to ask OCIO firms about their investment philosophy, experience, and pricing.

To learn more about East Bay Investment Solutions and our OCIO services for RIAs, contact us today.

How to Find the Right OCIO to Support Your Firm

Whether you currently have a CIO who’s overloaded with responsibilities or you’re looking to entirely outsource your firms’ investment-related responsibilities, an Outsourced Chief Investment Officer (OCIO) can help.

But what, exactly, does an OCIO do? They can handle as much or as little of your firm’s investment-related responsibilities as you need in order to regain your time and meet the ongoing demands of your firm and your clients. 

OCIOs are often home to investment professionals with decades of deep industry experience, which they use to provide you with unbiased, data-driven investment support. OCIOs can help your key leaders facilitate a smooth transition to the next generation, make forward-focused decisions for the firm, and provide a professional second opinion on all investment-related matters.

The question is, how do you find the right OCIO for you and your firm? Let’s take a look at what every RIA should look out for when vetting and hiring an OCIO.

First, Think About Why You Need an OCIO

Over the years, our team at East Bay Investment Solutions has found that the reason why RIAs engage with OCIOs varies greatly. Before beginning your search, do some internal reflection first to determine why, exactly, you’re looking to hire. This will give you a clear objective, which you can then communicate more clearly with any OCIO firm you end up engaging with.

Here are a few of the most common reasons why RIAs tend to hire OCIOs:


Whether they’re pursuing another opportunity or looking to retire, CIOs leave for many reasons. The transition process can be difficult for the firm, especially if the move is sudden and unexpected. An OCIO can help fill in the gaps and facilitate a smoother transition in this scenario.

Lack of Time

Time is a finite resource because you only have so many hours in a day — and only so many hours you want to spend in a workweek. The more you’re able to outsource (and feel comfortable doing so), the more time you have to focus on delivering a better experience for your clients and prioritizing other important tasks. 

By outsourcing your investment-related responsibilities to a knowledgeable OCIO, you’re able to take back your time without sacrificing your investment philosophy or standards.

Additional Support

Your CIO is likely feeling overwhelmed with responsibilities and pulled in too many directions. Not only do they need to manage an entire team, but they’re expected to serve clients and research and execute complex investment strategies as well.

In reality, most CIOs and advisors didn’t get into the financial services business to get bogged down in portfolio management tasks. Most RIAs want to be able to work one-on-one with clients to help them achieve their goals. The problem is, there are many tasks that have to be done during the workweek — but there are only so many hours in a day to do them.

The more a CIO or senior advisor can outsource to a trusted OCIO, the more they’re able to focus their time and energy on meaningful tasks that they enjoy doing.

Questions to Ask OCIOs During the Vetting Process

The process for hiring an OCIO firm should include the same level of due diligence as hiring an internal candidate. Just as you’d interview an individual, consider their credentials, and keep an eye out for red flags — the same should be done during the vetting process for any third-party firm.

Here are a few questions you should ask any OCIO you’re considering working with, as well as what to look for in their answers:

“What is your investment philosophy?”

 Your OCIO will serve as an extension of your firm, so it makes sense that you work with someone who shares a similar philosophy and values as you do. This is incredibly important, as it will likely impact your client portfolios and overall investment strategies.

If you and your OCIO clash with your philosophies, this can create ongoing turmoil and frustration for everyone involved. Not to mention, the collateral your OCIO is spending time and resources to create may go unused because the RIA doesn’t agree with the philosophy it’s based on.

“Will you take on a client-facing role?” or “Do you have experience operating as an OCIO in a client-facing role?”

In many cases, RIAs will want their OCIO to work directly with clients in order to save time and streamline processes. Otherwise, it can be a hassle to serve as the middleman who must field communications between clients and the OCIO.

But putting a third party in front of your valued clients is no small decision, meaning you need to hire a firm that you trust to represent you positively in a client-facing role. At East Bay, for example, we regularly are asked to respond to investment-related questions from clients or attend webinars where we can answer questions and interact with investors. However, we are not conversing with clients directly via email or phone but will participate in conversations as long as the advisor is present.

“How do you price your services?”

The industry standard for OCIOs is to use an asset-based pricing service model. This means that as your firm grows (as you likely intend it to), so do the fees of your OCIO. Other firms, like East Bay Investment Solutions, offer a flat-free pricing model. No matter how large your firm grows over time, a flat-fee model ensures you don’t pay more because of it. 

Finding the Right OCIO for Your RIA

The vetting process for finding an OCIO for your firm is incredibly important, especially if you’re looking for someone to provide support for years to come. When working with a knowledgeable and responsive OCIO, you have the peace of mind and freedom that comes with knowing your investment-related tasks and responsibilities are well-cared for. To learn more about East Bay Investment Solutions and our OCIO services for RIAs, contact us today.

Expanding Your C-Level Team or Hiring an OCIO: Which Is Better for Your Firm?

No matter the size of your firm, your C-level leaders play a critical role in its overall functionality and success. Teamwide cohesion and progress trickle down from the top — which means your Chief Investment Officer (CIO) and other senior leaders must be high-functioning, motivated, and aligned with the firm’s greater growth initiatives.

Sometimes, employees (even C-level employees) turn out not to be a good fit for your firm. Or, just when the pace is quickening, they move on to new opportunities — leaving you struggling to find a suitable replacement fast.

This leaves you with a dilemma… Is it better to roll the dice and hire internally again or outsource responsibilities to a third party? Let’s explore this important decision, specifically as it applies to a CIO.  

Should You Hire Internally to Replace Your CIO?

Adding a new internal hire to your team is no easy feat, especially when you’re replacing someone at the C-suite level. The process is time-consuming, payroll and benefits are expensive, and the decision is fairly inflexible. Should the person you end up bringing on not be a good fit, or should their investment philosophy evolve away from yours over time, it creates a stressful work environment that may not ease up for years.

As we mentioned earlier, your entire team’s success relies on the leadership they receive from the highest team members (which certainly includes your CIO). For that reason, who you put in these positions of power are the most important hiring decisions you’ll ever make — which puts an immense amount of pressure on both you and the people you’re hiring. 

Even if you do hire an incredibly capable CIO who embodies every trait you’ve been looking for in a leader, there’s always the underlying risk that they’ll leave or retire. When that happens, you must start the process all over again — which can be a daunting journey that takes valuable time away from important client work.

While there are many instances in which hiring a new CIO internally works out well, it’s certainly worth considering the alternative — hiring an outsourced CIO (OCIO) instead. Or, in many cases, hiring an OCIO to support your newly hired CIO during the transition (or even on an ongoing basis).

What Is an OCIO?

An OCIO can manage all of the same investment-related responsibilities of an internal hire, without the added risk of leaving suddenly or being a poor team culture fit. They can still help you make forward-focused decisions about your firm, and even provide a professional, unbiased second opinion on any investment-related matters. 

Depending on what you’re looking for in an OCIO, they can be client-facing or work entirely behind the scenes to support your other advisors and staff. Some firms choose, for example, to forward emails with investment-related questions from clients to their OCIO, — which ensures a timely, accurate response and saves the initial advisor the time and hassle.

If you are weighing your options and considering an OCIO, they should be vetted carefully — just as you would with an internal hire. You’ll want to determine if their approach, investment philosophy, and strategies align with your firm’s positioning. Just like an internal CIO, an OCIO plays an integral role in your firm, so you’ll certainly want to be sure you’re partnering with one you can trust and feel comfortable leaning on as needed to address your clients’ concerns.

See an OCIO In Action

East Bay Investment Solutions has helped a number of advisory firms by stepping in to replace internal CIOs who, for various reasons, leave their firms.

Let’s take a look at one recent incident in which East Bay helped one firm address the missing gap in their C-suite level team.

Firm owner, we’ll call him Josh, approached us because his CIO left quickly and unexpectedly, which left him in a lurch. Josh was, understandably, frustrated by the situation and torn on what his next move should be.

Looking at his options, he considered at first hiring another individual to become the firm’s new CIO. But, he was worried that he’d be stuck in the same position a few years from now if that person decided to leave too.

Then, he heard about East Bay and scheduled a meeting with our team. He found that our investment philosophy was a good fit for his firm, and he saw that the scope of services we offered suited his firm well. He felt much more comfortable knowing that years from now, we weren’t just going to leave him and shut our doors. As OCIOs, we provided him with more long-term stability than an internal hire would.

He also liked the idea that if someone on the East Bay team were to go on vacation, there’d be another person there to still provide ongoing, uninterrupted support.

Should Your Next Hire Be an OCIO?

When it comes time to replace your CIO, you need an option that provides stability and ongoing support. Having a knowledgeable and responsive OCIO can bring you the peace of mind and freedom that comes with knowing your investment-related tasks and responsibilities are well-cared for. To learn more about East Bay Investment Solutions and our OCIO services for RIAs, contact us today.