In 2025, increasing compliance demands, higher client expectations, and fast-paced technological advancements are making in-house investment management more demanding.
While some firms believe keeping control over portfolios allows for greater customization, the reality is that maintaining an internal team comes with hidden costs—both financial and strategic.
Many RIA firms now turn to OCIO services to streamline operations and improve efficiency. By outsourcing investment management, advisors can focus more on client satisfaction while benefiting from institutional-level expertise and resources.
This article from Cornerstone Portfolio Research discusses the costs of in-house management and how outsourcing to an Outsourced Chief Investment Officer (OCIO) can provide a more scalable and cost-effective solution.
The Burdens of In-House Management
Financial Costs
Running an internal investment team is a significant financial commitment. Staffing experienced professionals, maintaining proprietary research, and investing in advanced portfolio management solutions require substantial capital. The cost of hiring analysts, traders, and risk specialists—along with ongoing training—can quickly erode profit margins.
Beyond salaries, RIAs must invest in cutting-edge financial technology, trading platforms, and data analytics. Staying competitive in investment management services means continuously upgrading these tools, which can be expensive and time-consuming. Also, managing assets in-house comes with growing compliance demands, necessitating specialized legal and regulatory teams to effectively mitigate risks.
Opportunity Costs
Focusing on internal investment insights and portfolio management can shift attention away from core business priorities. Managing multiple asset allocation models, interpreting economic forecasts, and determining the best investment strategies for 2025 and beyond can consume valuable time that could be spent strengthening client relationships.
For many wealth managers, the real value lies in client-facing activities—helping clients navigate financial decisions, providing guidance on retirement and estate planning, and delivering a high-touch service experience. The more time spent on back-office investment functions, the less time there is to prospect new clients and grow your firm.
By shifting resources from in-house management to an experienced OCIO, your firm can alleviate operational burdens and continue providing high-quality, customized investment solutions for your clients.
Inefficiencies of In-House Operations
Limited Access to Advanced Technology and Tools
One of the biggest challenges when managing investments in-house is the lack of access to institutional-grade technology. The best investment management services leverage sophisticated tools for risk assessment, real-time market analytics, and performance optimization. However, acquiring and maintaining these resources can be cost-prohibitive.
Many advisors rely on standard portfolio management software, which may not provide the same level of insight as the technology available through OCIO services. OCIOs use cutting-edge platforms incorporating detailed financial market analysis, automated rebalancing, dynamic asset allocation models, and stress-testing capabilities to assess portfolio resilience in various market conditions.
Without these tools, in-house teams may struggle to match the efficiency and precision of OCIOs.
Scalability Challenges
As your practice grows, investment management needs become more complex. Expanding into new asset classes, offering customized portfolios, or scaling services to accommodate more clients requires additional expertise and resources. Many firms find their in-house capabilities stretched thin as their client base increases.
Managing portfolios for a handful of clients is very different from overseeing a larger, more diversified book of business. RIAs risk operational bottlenecks, increased administrative burdens, and declining service quality without scalable portfolio management solutions.
Outsourcing investment management provides access to institutional-level research and asset allocation strategies, allowing your firm to scale while maintaining high-quality service.
Risks Associated With In-House Investment Management
Compliance and Regulatory Risks
Maintaining evolving fiduciary responsibilities, reporting requirements, and investor protection rules demands constant attention. RIAs managing investments internally must allocate significant resources to compliance efforts or risk costly penalties and reputational damage.
By working with an OCIO, you can leverage dedicated compliance teams that stay ahead of regulatory changes, reducing the likelihood of violations. An OCIO also helps streamline audit processes and reporting, making it easier to maintain compliance without diverting attention from client-facing activities.
Market Adaptation Challenges
Financial markets are increasingly volatile, requiring advisors to be agile in adjusting portfolio strategies. In-house teams may struggle to respond quickly to sudden market shifts, geopolitical events, or economic downturns. RIAs may struggle to make timely, data-driven decisions due to limited access to advanced tools and in-depth research.
Partnering with a seasoned OCIO provides you with a team of experts skilled in risk management and tech-driven portfolio management, helping client portfolios stay proactively adjusted to adapt to changing market conditions.
Benefits of Outsourcing to an OCIO
Cost Efficiency and Resource Allocation
Working with an Outsourced Chief Investment Officer shifts the financial burden of staffing, technology, and research to an external team, allowing you to allocate resources to client relationships and business development. Instead of hiring and maintaining an in-house investment team, outsourcing provides immediate access to institutional-grade expertise at a fraction of the cost.
Enhanced Technology and Expertise
An OCIO offers access to top-tier investment management services, cutting-edge analytics, and sophisticated risk management that would otherwise be out of reach for most RIAs. This level of expertise helps your firm build effective asset allocation strategies and potentially improve client investment outcomes.
Improved Compliance and Risk Management
Staying ahead of regulatory changes and minimizing compliance risks is a growing challenge. An OCIO handles regulatory oversight, recordkeeping, and audit preparation, helping you focus on your core responsibilities without worrying about costly errors.
Why Cornerstone Portfolio Research?
Cornerstone is an independent portfolio management and investment research firm based in Chester Springs, Pennsylvania, serving RIAs and wealth managers across the U.S.
With over 70 years of combined experience, our team provides the expertise of a CIO and CFA® Charterholder without the usual disruptions or administrative burdens. We manage back-office tasks so you can focus on what you do best.
Why choose us:
- No equity dilution—gain CIO-level expertise without paying a six-figure salary plus taxes and benefits.
- Competitive OCIO services fees range from 5 to 20 bps (most fall between 5 to 10 bps).
- Custodian-neutral—no need to re-paper clients, transfer assets, or open new accounts.
- Tax-aware investment strategies are designed to minimize unnecessary tax burdens.
- Consistent communication, including weekly updates and virtual meetings with you or your clients as needed.
- White-labeled services are fully integrated with your RIA’s branding.
Interested in learning more? Schedule a consultation today or call us at (484) 631-3684.
