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Going Independent? Here’s How an OCIO Can Help

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.

East Bay Investment Solutions, a Registered Investment Advisory firm, supplies investment research services under contract.

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