Can an OCIO Help Stabilize Broker-Dealers’ Retention?

Can an OCIO Help Stabilize Broker-Dealers’ Retention?

The investment management industry is seldom static; it is almost ever-changing. With the advent of robo-advisors and alternative investment options, it is becoming more difficult for independent broker-dealers to attract and retain clients, especially amid current market volatility. So what can a small firm do? 

Start outsourcing some of your burdensome administrative responsibilities to a third-party OCIO (outsourced chief investment officer). As a team member, they can often provide a full range of time-saving services, including compliance awareness and investment consulting. These can help bring stability to a broker-dealer firm, whether they need help cutting costs or mitigating risk exposure.

Explore these questions with us:

  • Why is retention especially important now?
  • How might an OCIO improve your retention game?
  • Could an OCIO help you long-term; with growth?
  • What else could you use recouped work hours for?

Visibility Is Vital

You earn your pay—because, behind the counter, daily life at an independent broker-dealer firm would not be worth working for free. In fact, it almost gets alarming to note how easily you can get bogged down with the day-to-day administrative work of managing a brokerage firm. Thankfully, an OCIO can provide both the human capital and technology resources to help you get back to focusing on your clients.

If the end result includes growth initiatives, that could ultimately benefit everyone on your contact list. Today’s market volatility makes every positive retention measure you can make worthwhile. Investors should never be left surrounded by dramatic economic headlines with no reassurance. This is a rookie mistake, but it encourages people to switch advisors, every time that it gets made.

They are not interested in how much the minutiae of back-office work comes between you and them. You might be the most passionately diligent value generator in the history of broker-dealers, 24/7. Regardless, if they perceive you as distant (or worse yet, apathetic), you might as well be handing out your competitors’ business cards. 

Remember the lawnmower rule: You can do the most meticulously beautiful landscaping job possible, but if no one sees you mowing the lawn, you are unlikely to get any credit for it. In the financial industry, our clients have to see us reaching out to them—and know, firsthand, that we care about their concerns. 

Tagging in an experienced fiduciary team member that you can delegate the grind work to could possibly make a night-and-day difference in this regard. Imagine how many work hours you could recoup, once freed of having to sweep the shop. If you have been spreading yourself thin to cover it all, you might even boost the value you provide clients by serving them better-rested. 

The OCIO Difference

OCIO havding broker dealer market challenges

As an independent broker-dealer in the industry, it can be difficult to compete with larger firms who have more capital at their disposal. You do not want to sacrifice quality for quantity; you want both. The good news is that this is another way in which adding an OCIO to your roster might improve your game. 

A reputable outsourced CIO (OCIO) is a third-party investment manager with the potential to help you do just that. The right hire should provide hassle-free record keeping, help getting (and staying) reg-BI-compliant, and more. These possible improvements could help your firm grow its businesses and increase revenue—while allowing you to focus on your clients. 

An outsourced CIO can provide additional resources you need without tying you down to any one investment product or bank. In addition to offering technological solutions that could help every stage of growth (from onboarding clients onward), they may also provide financial support from internal teams within your firm and external third-party providers. This can help an independent broker-dealer like you have greater flexibility when the time comes for expansion or retention efforts.

Now more than ever, the pressure is on to retain your clients. Competition, the market, and the economy all necessitate keeping them happy. The same can be said for your firm’s internal pressures as well: Larger numbers of competitors vying for attention within a crowded marketplace has made retaining clients more essential than ever before.

All of this is happening at a time when advisors are expected to do more with less. Many are being asked to provide better services, increase client satisfaction, and improve their practices while keeping staffing levels down. All is not lost, though. The cost structure for running OCIO programs may be a flat monthly fee. 


Want To Learn More? We’re Always Happy To Discuss the Cornerstone Advantages


The benefits of an OCIO also go beyond just being a differentiator: A vetted fiduciary CIO can help you scale your business and attract new clients, as well. For example, the potential added prestige (not to mention your possibly newly-streamlined capabilities) might attract more assets under management. Now comes the fun math: More money coming could potentially lead to hiring more staff or opening additional offices in other cities. 

Clients of Cornerstone Portfolio Research have access to the kind of institutional-quality investment strategies that both institutional investors and wealth managers often utilize. This means your clients could potentially invest in the same types of funds historically limited to large clients.

That, in turn, could give them a level of security and peace of mind that can be rare in the self-directed space. Contact us today to learn more. 

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.