Build Client Confidence by Utilizing an Outsourced CIO

Build Client Confidence by Utilizing an Outsourced CIO

Half the work of a financial services firm is building and then retaining client confidence. Achieving this requires a consistent experience from the very first contact you make. As a result, this article offers some practical tips for building client confidence in your independent broker-dealer firm.

We believe the most favorable outcomes can result from utilizing a reputable fiduciary outsourced CIO. This experienced, vetted, reg-BI-compliance-aware, budget-friendly professional can be an ace up your firm’s sleeve. What’s truly important is taking full advantage of everything the right one brings to the job.

This blog covers the following:

  • What is an outsourced CIO?
  • The importance of a documented strategy
  • How could an OCIO be advantageous?
  • Ways an OCIO can help you keep adaptable

Start With an Outsourced CIO

The chief investment officer is the cornerstone of any firm’s business model. They are often responsible for setting the overall investment strategy and overseeing all trading and portfolio management activities. While most CIOs are internal employees, some firms choose to outsource this critical role. So, why would they do that?

The short answer might be, “In order to gain access to an affordable, experienced, and dedicated executive:” The right outsourced chief investment officer (OCIO or “outsourced CIO”) can help them consistently implement their strategies across all client types. They can also provide oversight for investment strategy development and asset allocation to your independent Broker-dealer firm or RIA. 

At the same time, although your interaction with them may be mostly online, this executive officer becomes part of your team: You may be able to list them on your website’s who-we-are page. The working relationship is real, but it doesn’t require the costs incurred by bringing someone else physically under your roof. In other words, you don’t pay an annual salary, bonuses, or benefits.  

All of these advantages (and more) could boost your own confidence in the firm going forward. At the same time, they could help boost retention—by helping increase your clients’ confidence, as well. Outsourcing to an experienced, dedicated investment manager could help. 

Possibly best of all, it can allow you to focus on what you do best: managing client relationships and providing a full suite of advisory services. Your research may also be more up-to-date with an OCIO’s input, giving you the flexibility necessary to execute the latest investment strategies. Finally, hiring a fiduciary can eliminate any appearance of potential conflicts of interest that come with getting your investment research and ideas from wholesalers.


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Document a Strategy

The best-skilled fiduciary outsourced CIO on the planet cannot give you what you need if you haven’t mapped it out for yourself beforehand: Your strategy implementation plan must be developed, implemented, and communicated to clients. Additionally, it should include the following:

  • A clear definition(s). This should include the overall investment philosophy, your investment approach, and your process for selecting managers. The more transparent you are about how you arrive at an investment decision, the more confident your clients will be that their money is managed properly.
  • A consistent approach across client portfolios. It’s important to avoid cherry-picking investments that fit your preferences but not those of your clients’ portfolios; doing so can undermine trust in your firm and its ability to deliver returns over time.
  • An established monitoring process. This should facilitate spotting problems early on (e.g., adverse performance by a sub-advisor); before they become serious enough to impact client confidence. 

Monitor Your Strategy

Once you have the standards, it’s time to set them. For your outsourced CIO to be effective, you must monitor their work and hold them accountable. This should include measuring their performance against your strategy on a regular basis. Similarly, compare their performance against benchmarks like peer groups or index funds. 

The idea is to verify how well they do against both the market as a whole and competitors in your space. Keeping an eye on these metrics should help you verify that you get what you pay for out of your OCIO relationship.

Communicate Results

The next—and arguably, most important—aspect of building client confidence is communicating your RIA’s or Broker-dealer firm’s results. The classic lawnmower’s rule applies here: If no one sees you delivering value, however tremendous, it doesn’t count. The record-keeping abilities of better OCIOs can benefit you here as well, helping to keep your output verifiable. 

Never underestimate clients’ appreciation for proof of what you accomplish. This builds trust, and it can be done in a variety of ways. For example, you can provide transparency by publishing your investment strategy regularly and updating clients on what you are investing in, how you are doing it, and why those decisions were made. 

Deliberately obvious accountability helps build trust with clients, who know that you’re not hiding anything from them. Consider providing comfort by offering regular updates on the performance of their investments, as well. This allows clients to see upfront when things are going well or otherwise. In fact, it can help ensure client confidence remains high over time, even if there are ups and downs along the way.

Adapt to Changing Environments

The market is seldom static. It is constantly changing, and independent broker-dealers need to adapt their operations accordingly. With this in mind, here are some things to help you prepare:

  • Identify where you have opportunities for improvement. Pay attention to what is happening in your marketplace and industry. You never want to embrace a new trend blindly, but at least make sure that you’re keeping up with the latest trends in fintech and technology, overall.
  • Adopt new ways of doing business that reflect what customers want today. Try to keep flexible about how you do your job: If a client wants something done differently with their investment portfolio, there may be a significant reason for the change.
  • Don’t let changes intimidate you. This is important because it helps keep clients happy. Meanwhile, it also works to ensure that your firm stays relevant as time brings market shifts in and out. 

A confident client on phone


As we’ve seen, there is tremendous value in the right outsourced chief investment officer. The right one can help you build client confidence through the consistent implementation of an investment strategy, assist you in adapting to changing market environments, and potentially much more. 

Outsourcing may also help you stay competitive by saving your time and money. Meanwhile, it could provide simultaneous access to specialized expertise that would otherwise be difficult or impossible for competitors to obtain on their own. Contact Cornerstone Portfolio Research today to get started.

CPS eBook Reasons to Outsource

More about the author: Thomas Balis

Thomas holds a Bachelor of Science in Business from Ohio State and has since earned the Chartered Financial Analyst® (CFA®) designation as well as the Accredited Portfolio Management Advisor (APMA®) and Chartered Mutual Fund Counselor (CMFC®) certifications.