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8 Questions To Ask When Evaluating an OCIO

As an RIA or IAR, you are likely facing increasing complexity in managing client portfolios. Whether it’s staying on top of the markets, handling asset allocation, or maintaining compliance, the daily challenges can stretch even the most experienced advisors thin.

To ease these pressures, many advisory firms are turning to Outsourced Chief Investment Officer (OCIO) services. An OCIO can provide you with the specialized investment expertise and operational support you need to scale your firm and manage portfolios more efficiently.

However, choosing the right OCIO partner isn’t a decision to take lightly. Every RIA firm has unique needs and objectives, and not all Outsourced OCIO providers operate the same way. That’s why asking specific questions when evaluating an OCIO is important for finding the right fit for your firm.

At Cornerstone Portfolio Research, we bring over 70 years of combined investment expertise to help RIAs make informed strategic decisions about outsourcing. In this guide, we’ll walk you through the eight key questions you should ask when considering an OCIO partner.

Chapter 1

What Is Your Experience and Track Record With Firms Similar to Ours?

When evaluating an OCIO partner, it’s wise to inquire about their experience with firms like yours. A proven track record can provide valuable insights into their capabilities. Consider the following:

  • Years of experience: A longer tenure usually leads to a better understanding of market dynamics and the specific challenges within the industry.
  • Number of clients served: This provides a glimpse into their capacity to manage diverse portfolios and handle different firm sizes.
  • Types of RIA firms: Inquire if they have experience working with firms similar to yours in size, client demographics, and investment goals. Their background with RIAs may reflect their capability to provide strategies that align with your objectives.
  • Client retention rate: High retention typically signals consistent client satisfaction and long-term value.
  • AUM growth: Strong asset growth suggests that the OCIO is skilled at both attracting new clients and maintaining successful investment strategies.

Cornerstone partners with firms across the U.S., providing tailored solutions without requiring you to give up equity or change custodians. We serve as a custodian-neutral partner, simplifying the integration of our services for your firm.

Chapter 2

How Do You Approach Investment Strategy and Asset Allocation?

When selecting an OCIO partner, understand their approach to investment strategy and asset allocation. Your firm’s success depends on a partner who can provide solutions to your client’s unique needs and ever-changing market conditions. Here are key aspects to evaluate:

  • Strategy development: An OCIO should take a holistic approach by assessing each client’s risk profile, long-term objectives, and market trends. This ensures they aren’t simply applying one-size-fits-all solutions but offering strategies that match your firm’s values and goals.
  • Tactical vs. strategic allocation: An experienced OCIO can skillfully balance tactical allocation with long-term strategic asset allocation services. Tactical adjustments enable more responsive decision-making to short-term market changes, while strategic asset allocation services provide a stable foundation to support your client’s long-term goals.
  • Risk management tools: OCIOs often employ advanced techniques such as stress testing and scenario analysis to evaluate how portfolios will perform in various market conditions. These insights can help manage client portfolios more effectively during market volatility.
  • Customization and adaptability: Not every client portfolio is the same, and an OCIO that offers flexibility in asset allocation—by incorporating alternative asset classes or adjusting based on life events—can provide significant value to your firm.

Cornerstone avoids cookie-cutter approaches and offers customized research and investment models that can fit with your firm’s existing strategies. Also, our process is tax-aware whenever we recommend strategic or tactical asset allocation changes.

Chapter 3

What Are Your Reporting Capabilities and Transparency Practices?

Transparency is fundamental to building trust. When evaluating potential OCIOs, their reporting capabilities and transparency practices should be a priority. You want to make sure that the partner you choose offers clear, detailed insights into portfolio performance and decision-making processes.

A proficient OCIO will use advanced reporting tools that provide in-depth data on your clients’ portfolios. This includes the ability to track performance across multiple asset classes, risk metrics, and adherence to investment strategies. 

Ask how often reports are generated and whether they are customizable to meet your specific needs. Ideally, you should expect regular, comprehensive reports that offer a clear snapshot of both short-term movements and long-term performance.

Transparency also extends to how closely an OCIO adheres to industry standards. They should be fully compliant with regulations governing transparency in investment reporting. This level of openness is crucial in demonstrating accountability and ensuring your client’s assets are managed with integrity.

Cornerstone provides high-level communication on a weekly basis, so you are kept informed with clear, regular updates. Our commitment to transparency minimizes client disruption and maintains clarity in the decision-making process.

Chapter 4

Can You Describe Your Fee Structure and How Costs Are Managed?

Knowing the financial commitment required when partnering with an OCIO is crucial for deciding if their services suit your firm. Fee structures can differ widely among providers, so it’s important to fully understand how costs are calculated and managed.

OCIOs typically offer several types of fee structures, including fixed, variable, or performance-based fees. While fixed fees offer predictability, variable or performance-based fees fluctuate based on portfolio performance, aligning the OCIO’s interests more closely with those of your clients. Knowing which model they use will help you anticipate costs and understand how fees might evolve over time.

Cost comparison is another essential aspect. While OCIO fees might seem higher upfront than managing investments in-house, the value they bring—through access to high-level expertise, robust technology, and ongoing research—often offsets the cost. Comparing OCIO fees to in-house management costs should factor in time savings, access to advanced strategies, and the potential for improved client outcomes.

Cornerstone offers a competitive fee structure, with CIO fees ranging from 5 to 20 basis points, allowing you to keep client fees low. You don’t have to pay a CIO a six-figure salary, taxes, and benefits. This cost-effective, high-value approach gives you a significant advantage when comparing OCIO services to the expenses of in-house management.

Chapter 5

How Do You Handle Risk Management and Compliance?

When evaluating an OCIO, it’s important to thoroughly research their approach to mitigating risk and maintaining compliance, as client portfolios need to be protected from unnecessary risk and adhere to industry standards. Key considerations include:

  • Risk assessment strategies: An experienced OCIO will use sophisticated tools to identify and assess potential risks across various asset classes. They should perform thorough due diligence, from evaluating macroeconomic trends to stress testing portfolios under different market scenarios.
  • Compliance protocols: No doubt you would agree following legal and ethical standards is non-negotiable. Be sure to inquire about their methods for adhering to SEC regulations, fiduciary responsibilities, and other key industry requirements.
  • Ongoing monitoring: Effective risk management is not a one-time task. OCIOs should employ continuous monitoring systems that track market conditions, portfolio performance, and regulatory changes. This allows for timely adjustments when risks arise.
  • Adaptability during market volatility: The OCIO should demonstrate flexibility in adjusting strategies during market turbulence, helping safeguard portfolios against potential losses while seeking growth opportunities.

Cornerstone’s white-labeled services allow for smooth integration into your firm’s compliance and branding efforts. This boosts client confidence while preserving your identity and maintaining regulations with all relevant standards.

Chapter 6

What Technology and Tools Do You Use To Enhance Efficiency?

Technology is vital to making portfolio management more efficient and accurate in today’s fast-moving investment world. When assessing an OCIO, understand what innovative tools they use and how these technologies can enhance your firm’s performance.

OCIOs often leverage cutting-edge software for portfolio management, risk analysis, and reporting. These tools can provide real-time data on market trends and portfolio performance, allowing for more informed decision-making. Advanced analytics and algorithm-driven models help OCIOs adjust allocations quickly based on emerging risks or opportunities.

Another consideration is the OCIO’s ability to integrate its technology with your existing systems. Whether it’s CRM software, custodial platforms, or reporting tools, seamless integration ensures that your operations remain smooth and uninterrupted. A well-integrated tech stack can streamline workflows and reduce manual errors, saving time and resources.

Beyond efficiency, these tools can also improve client outcomes. For instance, automated rebalancing and real-time risk monitoring can help portfolios stay aligned with client goals, even in volatile markets.

As technology continues to evolve, future trends such as AI-driven insights and blockchain-based security may further reshape the OCIO space, making it increasingly important for RIA firms to partner with providers who prioritize technological innovation.

Chapter 7

How Will You Tailor Your Services To Fit Our Firm’s Unique Needs?

Standardized approaches aren’t effective for advisory firms with diverse clients and varying goals, making customization a vital element of a successful OCIO partnership. Understanding how an OCIO tailors their services to meet your specific needs will help you determine if they’re the right fit for your firm.

Assessment of needs: A thorough evaluation of your firm’s unique objectives, client base, and investment philosophy is the starting point. The OCIO should analyze your firm’s risk tolerance, growth strategies, and portfolio structure to create a customized plan.

Customization process: The best OCIOs work collaboratively to design solutions that correspond to your specific goals. Whether it’s asset allocation, risk management, or reporting, they should offer services personalized to your firm’s operational preferences and investment strategies.

Flexibility: As your firm grows or your client’s needs change, the OCIO must demonstrate flexibility in adapting their services. Whether adjusting strategies to accommodate new market conditions or evolving client priorities, their ability to stay responsive plays an important role in the long-term success of the partnership.

Cornerstone focuses on tailored services that match your firm’s goals while keeping your current strategies intact. We can also assist with succession planning if you’re considering long-term options.

Chapter 8

What Is Your Client Service Model, and How Do You Handle Client Relationships?

In investment management, client service is just as important as portfolio performance. A trusted OCIO partner should offer a service model that enhances advisor-client relationships for smooth communication and ongoing satisfaction.

Service model overview: An Outsourced OCIO should provide a clear structure for how they interact with your firm and clients. Whether through regular check-ins, detailed reporting, or collaborative meetings, their service model should be designed to keep you and your clients informed and engaged.

Relationship management: Ask how the OCIO manages client interactions—do they offer dedicated account managers, and are they available for joint client meetings when needed? This support can help strengthen your advisor-client dynamics by providing expert input at critical moments.

Client satisfaction: An experienced OCIO will have mechanisms in place to measure and manage client satisfaction, from performance reporting to feedback loops. Whether they offer surveys, performance reviews, or regular client updates, these practices are vital for understanding and meeting client expectations.

By selecting an OCIO that prioritizes strong relationships, your firm can enhance both tactical and strategic asset allocation services, providing a personalized, high-touch experience for clients with consistent communication and trust.

Cornerstone offers full-service CIO availability during normal business hours. We can conduct virtual meetings with you and your clients as needed. We’re also available to assist with any one-off needs that may arise.

Consider Partnering With Cornerstone

Cornerstone is an independent portfolio management and investment research firm serving RIAs and IARs nationwide. We strive to make outsourcing easy for your firm so your clients won’t feel disrupted as we implement changes gradually. Also, you’ll be partnered with a CFA® Charterholder, a well-regarded industry designation, to provide expert guidance throughout the process.

By partnering with us, you can focus on what you do best—serving your clients—while we handle back-office tasks and offer customized solutions tailored to your firm’s goals. Our expert team is dedicated to helping you create high-quality portfolios, integrating seamlessly into your workflow and supporting your long-term success.

If you have more questions or want more details about how an OCIO model can benefit your RIA firm, contact us today to schedule an introductory call.

Cornerstone Portfolio Research (“Cornerstone”) is an SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training.  This publication should not be construed by any consumer or prospective client as Cornerstone’s solicitation or attempt to effect transactions in securities, or the rendering of personalized investment advice over the Internet.

The statements in this publication are the opinion of Cornerstone regarding Outsourced Chief Investment Officer (“OCIO”) services. These are not personalized recommendations and you should consider your own criteria when choosing an OCIO.

A copy of Cornerstone’s current written disclosure statement as set forth on Form ADV, discussing Cornerstone’s business operations, services, and fees is available from Cornerstone upon written request.  You should not assume that any discussion or information contained herein serves as the receipt of, or as a substitute for, personalized investment advice from Cornerstone or the professional advisors of your choosing.