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:

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.