What Can an Outsourced CIO (OCIO) Firm Do for You?

Provide you more time to focus on what matters most, at a cost-effective rate.

You’ve built an independent practice. It wasn’t an easy journey, but thankfully the bootstrapping days are over. There’s enough revenue to bring on help so that you can focus on what you enjoy most – financial planning.

But delegating is hard for entrepreneurs. We’re so used to doing everything ourselves, how can we trust someone else to get the job done? And if we can bring ourselves to trust, how do we find help that’s also affordable?

East Bay’s outsourced CIO firm is your solution. We offer in-depth analysis, portfolio construction, and manager due diligence for planning-focused financial advisory practices to create cost-effective customizable investment management solutions.

When it’s time, let’s talk.

Table of contents:

1. What is an OCIO?
2. What’s the Difference Between an OCIO and a TAMP?
3. Why Hire an OCIO?
4. Can a Fiduciary Make Use of an OCIO and Remain Compliant?
5. My Firm Uses Mainly Passive Investments, so How Would I Benefit From an OCIO?
6. Questions to Ask When Vetting an OCIO Firm
7. What Does it Cost to Hire an OCIO?
8. East Bay’s Outsourced CIO Solutions
9. East Bay’s Investment Philosophy
10. Who We Serve

What is an OCIO?

An OCIO, or Outsourced Chief Investment Officer, is a collaborative partner who helps advisors design and execute investment plans to fulfill their clients’ objectives.

They bring specialized expertise in investment management, allowing advisors to tap into a wealth of knowledge and resources. Advisors who outsource can focus on their core competencies while leveraging the OCIO’s guidance in strategic asset allocation, portfolio construction, risk management, and market insights.

What’s the Difference Between an OCIO and a TAMP?

Choosing between an OCIO and a TAMP, or Turnkey Asset Management Program, depends on the specific preferences of an advisor. Both are outsourced investment solutions, but there are advantages to selecting an OCIO over a TAMP.

• Customization: OCIOs are more customizable. A TAMP typically offers a pre-packaged investment solution while an OCIO will work closely with you to tailor investment strategies to specific client goals, risk tolerances, and preferences.
• Access to Expertise: With an OCIO firm you have a direct line to a dedicated team of investment professionals that can work with you, and also your clients and prospects.

A TAMP goes one step further than an OCIO. They allow advisors to outsource many back-office functions, such as trading, rebalancing, and reporting. This elevated level of support is great, but can be more expensive than an OCIO. East Bay has relationships with firms that allow advisors to outsource many back-office functions, providing the advisor the ability to create a TAMP-like solution that can be more customizable and likely less expensive.

Why Hire an OCIO?

Hands-on Support

Has a client ever asked about an investment vehicle or market event you aren’t familiar with? An outsourced CIO frees you from the burden of being the expert on everything. With an OCIO, you could tell that client, “Great question, let me check in with our chief investment strategist and get back to you.”

Time Savings

No one can be an effective business owner, business developer, compliance expert, financial planner, and investment professional all at once. It’s not realistic.

Cost Savings

You could hire an in-house of course, but CFA charterholders and experienced CIOs aren’t cheap. An OCIO firm leverages their work across multiple clients and, as a result, can charge less than what hiring your own CIO or a TAMP might cost. They’re a happy medium for your stage of growth.

Broaden Service Offerings

An experienced OCIO also broadens an advisory firm’s scope of offerings. Hiring one means that an expert in alternative investments, such as private equity or debt, is part of your team.

Expert Resources

Even if your firm uses passive investments, new products are regularly brought to market and it pays to keep in the know. Whether you want to learn more about ETFs, bond indexes, or market cap-weighted index products, an OCIO can provide an independent viewpoint and support due diligence to demonstrate which investments make the most sense for their clients.

Improved Bottom Line

An outsourced CIO frees you to focus on your key strengths. Whether you’re looking for new clients or providing stellar customer service to existing ones, the time we afford you to dedicate elsewhere will pay off.

Can a Fiduciary Make Use of an OCIO and Remain Compliant?

In short, yes.

An advisor using an outsourced CIO can still act as a fiduciary by fulfilling their responsibility to act in their client’s best interests. Here’s how:

• Carefully select a provider who demonstrates the necessary expertise, competence, and integrity to act in the best interests of your clients.
• Maintain ongoing oversight. While advisors may delegate investment decision-making to an OCIO, they remain responsible for ensuring their actions are in accordance with stated objectives and plans.
• Transparently disclose to your clients that you have a relationship with an OCIO, what their roles and responsibilities are, fees, and how the arrangement ultimately benefits them.
• Continue performing regular client reviews and updates.

My Firm Uses Mainly Passive Investments, so How Would I Benefit From an OCIO?

Today many investment management firms provide advisors with both strategic asset allocation models and passive investments. However, OCIO providers wouldn’t be in business—let alone growing—if they did nothing more than deliver model allocations and lists of approved managers.

All passive investments aren’t created equal, and new products come out regularly; it is hard for the average advisor to keep up. Therefore, whether investing in market cap-weighted index products, fundamental index products, or any other type of passive investment, OCIOs can provide an independent viewpoint and the supporting due diligence to show which investments make the most sense for the advisor’s clients.

Questions to Ask When Vetting an OCIO Firm

Finding a good fit in an OCIO advisor relationship is crucial to the success of the partnership. When engaging an OCIO, consider asking some of the following questions at the start of the relationship to ensure alignment.

• What is your investment philosophy?
• What is your process for selecting investment managers?
• How are you compensated? What kind of technology infrastructure do you have?
• How do you manage risk?
• What is your approach to client communication and reporting?

There’s more to an OCIO relationship than investment expertise. Outsourcing means working with a CIO on a remote basis. It’s important to make sure that they are in the habit of responding in a timely manner and keeping deadlines despite working from afar. Here are some additional questions to ask.

• How do you prefer to communicate? (e.g. email, phone)
• What remote work experience do you have?
• Can you provide client references?
• How does your firm handle remote collaboration?
• What availability and response times can I expect?

What Does it Cost to Hire an OCIO?

We charge a flat fee, rather than a percent of AUM, so when you grow, our bill doesn’t grow with you; and we can be much more affordable than hiring an internal staff member, especially when you consider the all-in costs of benefits, PTO, and the like.

East Bay’s Outsourced CIO Solutions

We’re here to make your practice more efficient so that you can focus on what you do best. Our range of services can be tailored to your specific needs.

• Investment Philosophy: As your CIO, we’ll work closely with you to craft your customized investment approach and philosophy
• Asset Allocation and Portfolio Construction: We’ll determine appropriate asset allocations, taking into account risk-return trade-offs, market conditions, and client-specific requirements
• Investment Manager Selection and Due Diligence: After conducting rigorous due diligence on investment managers, we’ll help you select those that align with your client’s investment strategy and objectives
• Risk Management and Monitoring: By monitoring portfolio risk exposure, performance, and market dynamics we’ll help mitigate investment risk and make recommendations for adjusting where appropriate
• Reporting and Communication: Maintaining open lines of communication while clients progress toward their goals is important. We’ll provide regular updates and reports to help you fulfill your fiduciary duty

We’re also dedicated to building a strong relationship with you. That’s why we’re available for daily questions, monthly calls with your investment committees, regular benchmark reporting, provide quarterly market analysis, annual office visits, and more…

East Bay’s Investment Philosophy

We believe in a strategic asset allocation model. The framework provides a consistent approach to decision-making that minimizes transaction costs and sets our clients up for long-term success.  Some of the other tenets of our philosophy include asset allocation being a primary driver of returns, global diversification, regular rebalancing but infrequent trading, and an overall focus on items we can control.

Who We Serve

East Bay generally works with small to mid-size planning-focused practices and we have built our business specifically to serve the needs of this group.

Our clients appreciate being able to delegate to a CIO, so they can focus on areas that matter most to them, with our sweet spot for new client relationships being at or above $50M AUM.

When the time comes, let’s talk about how our OCIO solutions can serve your firm.