Can Outsourced Investment Management Help Advisory Firms Close More Prospects?

Can Outsourced Investment Management Help Advisory Firms Close More Prospects?

If you’ve ever found yourself thinking, “If we could just grow our client base…” you may not be as out-of-luck as you think. The key may simply be outsourcing your CIO.

What Are OIM’s Advantages?

Outsourced Investment Management (OIM) is a growing trend in the financial industry. We think that’s may be because it can bring multiple significant competitive edges to wealth management firms.

However, before we get into those, let’s make sure that we have the basics down. Outsourcing your investment management means hiring an OCIO; an Outsourced Chief Investment Officer. 

When outsourced CIOs join your team, they join your team: You can list them on the meet-our-team page of your site, if you wish. 

From that point onward, it’s like you have dropped an engine with a lot more kick under the hood of your car. They facilitate much more than just expansive horsepower, though. 

Before we look at what they can bring to your investment program, let’s consider some of their other advantages. For instance, outsourcing your CIO may include an almost instant prestige boost for your firm. 

Consider what adding a CFA Charterholder to your team could do. Your marketing, alone, may have just gotten a little easier. We believe that can affect your profitability. 

As long as you keep bringing maximum value on your end, these measures will pay off. The more asset maintenance you give an OCIO, the freer you are to work on expanding your client base.

This isn’t the only benefit, though. Outsourcing your investment management can also increase your profitability by lowering your expenses.

There’s no salary or bonuses to pay, insurance to provide, tax considerations, et cetera. Compensation is paid in basis points (at competitive rates). 

How Does OIM Help Investment Programs?

Quality outsourced CIOs bring a level of frequently-updated investment research. Every decision you assign to them is informed by it. The last thing you want to worry about during a client meeting is whether or not your other portfolios are in good hands and a quality OCIO can potentially help you avoid that worry.

Any reputable OCIO can be verified, too. So, we recommend making sure before choosing someone. Do your homework to be certain your candidates actually are who they say that they are. 

It’s 100% your show. So, whatever structure you’ve selected for your investment program gets honored to the letter. 

Trustworthiness and integrity go with the territory (so accept no substitutes). If they have both, it should be evident. 

You can delegate as little or as much of the workload as you see fit. Outsourcing your investment management can mean handing off investment strategizing, market analysis, asset allocation, buying/selling decision-making, and more. 

In order to maximize your own personal benefit, we recommend offloading your whole investment process. This is how you may be able to realize the freedom to grow your RIA, hybrid, or independent advisory firm.

If you prefer, they can meet with clients or prospects electronically, too. It all depends upon what you designate in pursuit of your firm’s maximum efficiency. 

However, if you opt to have an OCIO interface with the public, we’d suggest adjusting your rates accordingly. Anytime someone confers with your CIO, that’s a premium service. 

What’s in the Research?

Do you remember the part above about how the OIM route is like dropping a superior engine into a vehicle? Let’s lift the hood—so you can see what that means. 

In a sense, analytics is the fuel keeping an advisory firm running: The better the quality of the data, the smoother day-to-day operations proceed. 

Like fuel, data doesn’t age like wine, either. The older it gets, the more likely it is to be useless. So, if yours isn’t kept current, you’re wasting time on it. 

An outsourced CIO keeps an eye on the markets regularly. Their decisions are always grounded in a combination of your best practices and that constantly-upgrading research. 

Their analytics can include profiling companies and vetting funds for investors, determining the valuation of a private company, profiling hedge funds, accurately determining a company’s stock price, and more.

Pardon us for being blunt, but in our opinion some turnkey solutions sometimes lack this, even with humans making their investment calls. To an OCIO, your clients are individuals with portfolios deserving careful consideration—just like they are to you.

However, in our opinion many TAMPs don’t share this view. We think some turnkeys take an assembly line approach, dumping whole portfolios’ contents and replacing them arbitrarily. 

We believe that outsourcing your investment management is putting your AUM in far more focused, attentive hands. It’s an investment in consistent value for clients that can actually cost less than the other options.

Can We Prove it to You?

The benefits—which include regaining whole segments of your schedule—can even improve things for you, personally: The freedom that comes from offloading time-consuming tasks is probably like nothing you’ve known for a long time.

We’ve put together an in-depth article on OCIOs here and an eBook that’s yours to keep, free of charge. 

There’s no substitute for firsthand experience. So, whenever you’re ready to see how next-level things can get, please reach out and contact us. 

CPS eBook Reasons to Outsource

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.               

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.