How to Find the Right OCIO to Support Your Firm

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:

Transition

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?

c level team

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.

East Bay’s View on Emerging Markets Debt (EMD)

tamp

Note: This is only a preview; East Bay clients have full access to the piece.

When creating a diversified portfolio, it’s common to include U.S.-based stocks as well as stocks from developed and emerging market nations. What’s not so common is to see that same globally diversified approach on the fixed-income side of the equation, or more specifically, having a dedicated allocation to emerging markets debt (EMD). This piece will highlight the various types of EMD that exist, some of their potential benefits as well as risks, and whether a place for EMD exists in a portfolio.

The Three Main Types of EMD Investing

There are three primary ways to invest in EMD including sovereign local currency debt, sovereign hard currency debt, and EMD corporate debt. As we review these options below, keep in mind that some asset managers will blend the various approaches, which creates further opportunities for investment.

Sovereign Local Currency Debt: Countries that have some currency stability and obtained a degree of market size and maturity can issue sovereign bonds in their own currency. Only higher-quality countries are typically able to issue their own debt, so the average credit quality of the index is currently investment grade, though near the lowest rung of the investment grade ladder. Because the bonds are issued in local currency, however, their returns are subject to currency risk and currency volatility.

Sovereign Hard Currency Debt: For countries that do not have stable currencies and/or do not have sizeable or mature markets, their sovereign debt is issued in US dollars. Because of this, investors don’t have the same currency concerns as they would with local currency debt. However, because the emerging countries issuing this type of debt are less economically sound, their average credit quality may be below that of local currency EMD (two of the three rating agencies consider this index below investment grade, one considers it investment grade).

EMD Corporate Debt: Rather than consisting of sovereign bonds like the two other types of EMD indexes, this index represents bonds issued in US dollars by companies based within these emerging market countries. Similar to hard currency, investors don’t have to worry about currency concerns with local debt. Unlike hard currency bonds, however, all three rating agencies categorize this index overall as being investment grade on average, though towards the lowest rung of the investment grade ladder.

How Large Is the EMD Opportunity Set?

As Exhibit 1 shows, EMD has been a growing part of the global bond market, representing almost 27% at year-end 2022 vs. just over 1% in 1989. Similarly, Exhibit 2 shows that the growth in EMD has come from the number of countries issuing bonds plus the number of instruments being issued.

Exhibit 1

Source: J.P. Morgan Asset Management; BIS. Global bond market regional breakdown may not sum to 100% due to rounding. As of June 30, 2023

Exhibit 2

Source: PIMCO, JP Morgan, data as of March 31, 2023. Number of countries refers to the JPM EMBI Global Diversified Index; Number of instruments is an aggregate of the 3 flagship JPMindices: JPM EMBI Global Diversified, JPM CEMBI Broad Diversified, and GBI-EM Global Diversified.

What Makes EMD Attractive to Investors?

Based on historical performance, there is evidence to suggest that adding EMD to a fixed income allocation may provide added return, as long as investors are willing to accept higher levels of risk. EMD has some characteristics of high-quality bonds (e.g. they are on the lower end of the investment grade spectrum), but they also come with their unique risks including country risk, political risk, currency risk (local EMD), and other risks associated with investing in emerging market countries.

This is only a preview; East Bay clients have full access to the piece.

For busy financial planners interested in spending more time with clients, we provide quarterly market updates of this nature which you may white-label and distribute. You get to spend more time doing what you enjoy while your clients stay up to date with high-quality investment analysis.

TAMP or OCIO: Which Is Better for My Firm?

Tamp or oicio

Whether you’ve recently gone independent or are looking to free up your time, there are a number of reasons why advisory firms choose to outsource their asset management services. While Turnkey Asset Management Programs (TAMPs) have historically been the go-to option for RIAs since the 80s, a fairly recent rise in digital adoption across the industry has brought new opportunities to light—namely, the option to work with an Outsourced Chief Investment Officer (OCIO).

The question is, which is right for you, your firm, and your clients? Let’s take a look.

The Benefit of Outsourcing

No matter where you are on your professional journey, it’s possible that you’re going to need to enlist some outside help.

Perhaps you recently left your broker-dealer, and now you’re building your own firm from the ground up. Not only do you have to navigate becoming a business owner, but you have to find a way to serve your clients without the backing and resources of a large institution. If you have significant resources, you may be able to hire an entire internal staff from the get-go. But in most cases, newly independent advisors keep staffing slim and instead rely on the expertise of outside professionals or platforms to operate efficiently.

Or, if you’ve been successfully growing your firm for a while now, you may find that your internal investment management team is stretched too thin — but hiring is a time-consuming and expensive gamble (especially if you’ve had bad experiences in the past). To free up their time, it could make sense to outsource some of their investment-related responsibilities.

Outsourcing can also help with transitions in the firm. When an owner retires, and the new owner takes over, it’s common that one may have a different investment strategy or philosophy than the other. Or, an internal CIO or senior advisor may choose to step down, and the firm needs an outsourced solution to step in quickly and keep operations running seamlessly.

What Is a TAMP?

TAMP is a rather broad term, but it generally refers to asset management programs that advisory firms can use to oversee and manage their clients’ portfolios. TAMPs are designed to save advisors time by addressing the asset management and research responsibilities that the advisor wants to delegate to a third party.

TAMPs not only save advisors time for other client-facing or business-oriented tasks, but they also eliminate the need for advisors to develop their asset management system from scratch. Because TAMPs can manage back-end administrative tasks like billing and reporting, they can help advisory firms address their compliance obligations and meet reporting requirements. TAMPs can also take on some of the risk and responsibility in the event the firm is sued for poor performance.

What Is an OCIO?

While a TAMP is typically a platform offered by a large institution, an OCIO is a strategic partner that provides comprehensive investment services. An OCIO 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.

Because an OCIO is a knowledgeable and unbiased third-party provider, they can help you and your key leaders make forward-focused decisions for the firm — as well as offer a professional second opinion on all investment-related matters.

An OCIO is meant to be a true partner to your firm, meaning they’re typically more involved in the inner workings of your asset management responsibilities and tasks than a TAMP ever would be. They can help you, for example, understand what responsibilities you may not be aware of now but should start doing in the future to better serve your clients.

Your OCIO can even be client-facing if you’d like, which can help increase your credibility with clients while saving you valuable time. 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 of responding to the email themselves.

Which Is Right for Me?

A TAMP can be a wonderful solution for advisors with very specific investment management needs who don’t require customized strategies, second-opinion guidance, or collaboration.

The problem with TAMPs is that they’re designed to be “turnkey” (that’s why it’s in the name!). What this means for advisors and their clients is that they don’t have much say in the strategies or options provided. TAMPs tend to be fairly “take it or leave it” options. In most cases, you may not be able to tweak or change what the TAMP offers.

TAMPs also don’t offer individualized investment support like an OCIO does. In most cases, with a TAMP, you won’t have a dedicated investment professional who can meet with you and your clients on a regular basis.

An OCIO can provide you with customized investment solutions so you (and your clients) get exactly what you’re looking for. They provide a much higher level of collaboration, flexibility, and overall customization. An OCIO is designed to fit in with your firm and offer their expertise wherever need be.

If you want an OCIO to attend client appreciation events or assist with a prospecting webinar, they can do that in addition to their portfolio management responsibilities. In most cases, a TAMP will not provide that level of interaction and support to your RIA firm.

Looking for an Outsource Partner?

While both a TAMP and an OCIO can help free up your time by handling portfolio-related tasks, only an OCIO can offer full, customizable support to you, your team, and your clients. At East Bay Investment Solutions, we serve as a trusted, go-to partner for managing our clients’ investment-related tasks and responsibilities — giving advisors hours back in their week to pursue more fulfilling work for their firm and their clients. To learn more about East Bay Investment Solutions and our OCIO services for RIAs, contact us today.

Supporting Your Internal Team With an OCIO

Supporting Your Internal Team With an OCIO

As your firm continues to bring in new clients, or clients with more complex planning needs, your team of advisors and support staff are stretched thinner and thinner. Over time, the need for additional support becomes more urgent — but the process of hiring another investment professional is time-consuming, expensive, and challenging.

To continue providing a high-touch client experience without putting too much stress and responsibility on your current team members, you may find it helpful to work with an outsourced Chief Investment Officer, or OCIO.

What Does an OCIO Do?

An OCIO 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. As a knowledgeable and unbiased third party, an OCIO can help your key leaders facilitate a smooth transition, make forward-focused decisions for the firm, and provide a professional second opinion on all investment-related matters.

Because an OCIO is experienced in managing investment tasks, they can also help you understand what responsibilities you may not be aware of now but should start doing in the future to better serve your clients.

Depending on what you’re looking for in an OCIO, they can be client-facing or work entirely behind the scenes to support your current team members. Some firms choose, for example, to forward emails with investment-related questions from clients to their OCIO, then either relay the information back to the client or schedule a call for everyone to work through it.

How an In-House CIO and OCIO Can Work Together

While an OCIO can completely replace the role of an internal CIO in a firm, they can also offer additional support for in-house advisors who wish to offload some of their investment-related responsibilities.

Internal CIOs are pulled in many directions, from managing their team to serving their clients and executing investment strategies. For many CIOs and advisors, being able to work one-on-one with clients was a big reason why they got into the business of financial services in the first place. The problem is, there are a number of ancillary 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 — and feel comfortable with who they’re outsourcing to — the more they’re able to focus their time and energy on meaningful tasks that they enjoy doing. 

See an OCIO in Action

While some assume that OCIOs are meant to replace in-house CIOs, East Bay Investment Solutions has helped a number of advisory firms by supporting their internal team with expanded capabilities. 

In one particular instance, one advisory firm’s internal CIO (we’ll call him Frank) was balancing far too many responsibilities on his plate. He knew something needed to change, which is why he turned to us to discuss his options.

Frank came to the conclusion that he had two options:

Option #1: Continue managing all the work himself, which would increase his risk of burnout, as well as increase the odds that he’d make costly mistakes or important tasks would slip through the cracks. Frank recognized that this was not a viable long-term solution, especially as the firm continued to grow its AUM and add new clients.

Option #2: Frank could hire someone internally to help him out. The problem was, expanding your firm’s team is no easy feat. It’s a time-consuming process, payroll is expensive, and this decision lacks flexibility (should demand drop in the future, for example, and the help is no longer needed). Not to mention, hiring internally is risky. The candidate may be a bad culture fit or they might decide to leave soon after starting. In which case the process would start all over again.

Frank didn’t like either option #1 or #2, so we introduced him to option #3: outsourcing his additional responsibilities to an OCIO.

We explained to Frank what an OCIO does, and together we talked about what his specific needs are and whether our team would be a good fit for him — which is a critical step in hiring an OCIO. Once he saw the expansive list of services we provide and the help we can give him, he decided it would be a much better investment to work with us than hire more internal staff members.

Now, we’re available to support Frank and his firm however we can, from conducting research to taking time-consuming and repeatable tasks off his plate.

Expand Your Capabilities With an OCIO

Whether you’re looking to replace a retiring CIO or support your current leadership team with experienced outside help, you need people you can trust. 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.

Going Independent? Here’s How an OCIO Can Help

Businessman Going independent

There is no shortage of reasons why an advisor might choose to leave a broker-dealer, institution, or large firm behind and explore other options. Perhaps they’d like to provide a more white-glove experience for their clients. Or, they don’t want to be forced to push certain products. Maybe the senior members of their firm follow an investment philosophy the advisor doesn’t believe in. Even a poor culture fit can make an advisor want to leave.

The problem with simply changing employers is that you could get stuck in the same scenario, just with a different firm. Instead, advisors who want total control over how they operate, who they work with, what strategies they use, or products they implement can choose to operate independently by starting their own firm.

If you’re thinking about taking the leap into the RIA space, or you already have, you likely know that running a firm presents a whole new set of challenges. Let’s take a look at what the road to independence looks like and what you can do to set yourself up for success.

The Challenges of Leaving a Large Firm

The primary challenge for advisors who choose to go independent after working at a larger firm is the lack of operational support, manpower, and access to resources.

Advisors may be used to having an entire internal team (or even a national team at larger institutions) that can provide them guidance on compliance, take care of marketing, offer investment support, manage back-office operations, and more. It’s an entire ecosystem of support at the advisor’s fingertips, and it’s what makes it possible for them to focus their time and efforts on developing financial plans and working closely with clients.

But when you go independent, not only are you now a business owner (which may be a new challenge altogether), but you’re responsible for finding a way to rebuild your ecosystem.

Depending on your available capital or resources, perhaps you have the means to hire a whole new internal staff who can handle the additional responsibilities. But in most cases, you’re going to need to curate a team of outside experts who can address your challenges in a more cost-effective and timely manner.

Even if you have the knowledge and capabilities to handle all aspects of running a business yourself, there are only so many hours in the day — and your time is likely better spent on high-priority tasks. Building your own firm with outsourced capabilities means you don’t have to do it all yourself, and you can rely on the expertise of others who understand your needs and can help you create your new ecosystem effectively.

What Does an Outsourced Chief Investment Officer (OCIO) Do?

One of the primary roles you can consider outsourcing is a Chief Investment Officer. An OCIO is designed to take the time-consuming task of overseeing all investment-related responsibilities off your plate as a business owner and advisor.

Because they’re a knowledgeable and unbiased third party, an OCIO can help you make forward-focused decisions for the firm and provide a professional second opinion on all investment-related matters. As a newly independent advisor, an OCIO can also help you identify potential pitfalls or missed opportunities and help you address them.

You have the ability to customize your relationship with your OCIO to what you’re most comfortable offboarding. If you’d like them to take a client-facing role, for example, they can do that. Or, your OCIO can provide back-office support (like research) if you’d prefer.

When selecting an OCIO, it’s important to determine if their approach and strategies align with your own investment philosophy. Because they’ll be playing such an integral role in your firm, you want to be sure you’re partnering with an OCIO you feel comfortable working with and trust to help you address your clients’ needs.

The Benefits of Working With an OCIO As an Independent Advisor

When you work with a consultant, like an OCIO, you still maintain ownership of your own business. You are the primary decision-maker, and you have control over all business decisions. While an OCIO can make suggestions based on their expertise or experience, it’s ultimately up to the advisor to have final say.

This can give newly independent advisors peace of mind in knowing they’re maintaining control of the firm and able to operate it the best way they see fit — while still benefiting from the expanded capabilities and support of an OCIO.

Looking to Build Your Own Advisory Ecosystem?

An OCIO can play an integral role in building up your new firm by offering ongoing support and guidance. To learn more about how East Bay Investment Solutions can help you build out your own ecosystem, feel free to reach out to our team today and schedule time to talk.

How an OCIO Can Help You Prepare for a Successful Transition or Takeover

Business,People,Join,Puzz

Every advisor needs to look out for the future well-being of their clients and their firm. Whether it’s preparing for an unexpected scenario or thinking long-term toward retirement, there are decisions you need to make now in order to facilitate a smooth transition for your future successor. Let’s take a look at the decisions involved in succession planning, and how an OCIO can help you prepare for a successful transition that appeases all parties involved.

Why Succession Planning Is Challenging

Until technology advances and advisors are able to clone themselves, you’ll never have two people with the exact same values, philosophies, beliefs, or workflows and systems. Even two advisors who work in the same firm, or may even be related to one another, will still work differently.

So when it’s time for a senior advisor or owner to step down, it can be challenging to build a succession plan that reflects both the retiring advisor’s wishes as well as those of the next-gen advisor.

For this reason, it’s important for advisors to start preparing a succession plan well in advance of any plans to retire or leave the firm. You need to not only think about the reputation and long-term success of your firm, but of the immediate needs of your clients as well. It can be a jarring experience to learn that the advisor you’ve been working with for 30 years is retiring. But the more preparation you can put into facilitating a seamless transition for your clients, the less anxious they’ll be (and hopefully, the less likely they’ll be to leave your firm altogether).

The Role an OCIO Plays During Transitions

An outsourced Chief Investment Officer (OCIO) can be a critical partner to bring in during or before any major transitions happening in your firm. They can work with both you and your successor to understand each of your investment philosophies, what your current responsibilities are, and what needs to happen in order to offer an uninterrupted client experience.

As an unbiased third party, an OCIO’s priority is setting your firm up for success by helping you address all aspects of your investment services and responsibilities within the succession plan. They can provide a second opinion in any areas of concern and identify opportunities to appease both the retiring advisor and next-gen leader.

See an OCIO in Action

East Bay Investment Solutions often works with firms preparing for transition. Let’s take a look at a recent example of how East Bay helped an RIA develop and execute a successful succession plan.

In this case, the founder, we’ll call him Steve, was preparing to retire and transition the firm to the next-gen advisor, Brad. Brad was a very planning-focused advisor, whereas Steve was more interested in the investment side of things. He spent the majority of his time looking at individual mutual funds and researching active managers, which he would change frequently. This was a practice Brad was not comfortable continuing with, which meant the founder and next-gen advisor were at odds about their investment approach.

When Brad and Steve first engaged with our firm, we spent a lot of time talking with both of them to learn more about their individual approaches to investment management. Then, we dove into how we could help them move forward in a mutually agreeable way. We explained what our approach would be from an investment perspective, and how we would think about the client transition from one philosophy to another. We knew that this was something that would take time, and trying to rush it — or force the next-gen advisor to adopt a philosophy he wasn’t happy with — would be ineffectual.

We worked together to develop a transition plan that made sense for both parties involved, and got Brad and his clients to a point where they were all satisfied with the plan moving forward.

This whole process took many candid conversations and full transparency from all parties involved. Both Steve and Brad needed to trust one another, and our East Bay team, in order to execute a seamless transition for their firm and clients.

Managing Family Dynamics

It’s not uncommon for small advisory firms to be run by multigenerational families — mothers and fathers looking to leave the practice to their kids or grandkids. Succession planning for family-owned firms can create an added layer of complexity, as sensitive family dynamics often need to be considered.

Having a neutral, unbiased third-party OCIO can be a big help during the planning process. They can serve as a much-needed sounding board by listening to both sides and sharing their own professional opinion based on what they believe will set the business up for long-term success.

An OCIO can be an incredible asset because they’re invested in the outcome of your firm, but don’t feel any biases or familial ties that may cloud their judgment or decision-making process.

Preparing Your Firm for Transition?

An OCIO can play an integral role in your succession planning by offering sound, unbiased guidance during the transition process. To learn more about how East Bay Investment Solutions can help your firm prepare, feel free to reach out to our team today and schedule time to talk.