Building and maintaining an in-house investment team is costly and resource-intensive. Competitive salaries, tech upgrades, and rising compliance demands add up quickly, while overhead for internal portfolio management has surged in recent years.
Meanwhile, clients expect personalized service, institutional-quality investment oversight, and frequent communication—all without higher fees. Balancing these demands while staying profitable adds pressure on RIAs, highlighting the importance of cost-effective strategies.
One increasingly popular solution is outsourcing CIO responsibilities to an experienced third-party partner.
This blog from Cornerstone Portfolio Research explores how OCIO services help cut costs, where outsourcing saves the most, and how to turn those savings into firm-wide benefits.
The High Costs of In-House Investment Management
At first glance, managing investments internally may seem like the most straightforward approach. After all, it gives you control over strategy, asset selection, and implementation. But that control comes at a price—especially for firms with large AUM.
Staffing costs often top the list. Recruiting and retaining a Chief Investment Officer, analysts, and research staff means high salaries, benefits, and bonus structures. A seasoned CIO alone may command a six-figure base salary, not including incentive compensation.
Beyond staffing, there’s the technology expense. Portfolio management software, data subscriptions, research platforms, and trading tools represent an ongoing financial commitment. As the markets evolve, staying competitive requires frequent upgrades or vendor changes.
Then there’s the burden of compliance and regulatory oversight. In-house teams must devote time and resources to meet SEC requirements, conduct internal audits, and prepare documentation—tasks that can drain time and capital.
In comparison, outsourcing to an Outsourced Chief Investment Officer offers a leaner alternative. An experienced OCIO partner brings institutional tools, talent, and oversight—without the overhead. The benefits of outsourcing Chief Investment Officer responsibilities extend beyond cost-cutting; they create space for your firm to focus on clients, scale smarter, and grow more strategically.
Cost Savings From Outsourcing to an OCIO
When comparing in-house investment management to working with an OCIO, the cost differential becomes increasingly difficult to ignore—especially as your firm grows. Outsourcing can significantly reduce spending in several key areas while gaining access to sophisticated investment management services that rival larger institutions.
Eliminating Redundant Staffing Needs
One of the most immediate savings comes from staffing. A complete in-house team includes not only a CIO but also analysts, traders, and compliance personnel tied to portfolio management solutions. Replacing that with a flat basis point fee from a trusted OCIO reduces salary obligations, benefits packages, and recruitment costs. The savings alone can translate into six figures annually—money that can be redirected toward growth-oriented initiatives.
Reducing Technology and Infrastructure Costs
Outsourcing eliminates the need to license and maintain costly portfolio modeling tools, trading systems, and data feeds. A seasoned OCIO already operates with institutional-level software and can provide your firm access to those tools without requiring you to purchase or manage them directly. These savings often extend to back-office systems, such as performance reporting platforms and compliance automation tools.
Lowering the Cost of Compliance and Research
Outsourced CIOs specialize in building and maintaining portfolios that meet fiduciary standards, which helps reduce internal compliance efforts. They handle documentation, audit trails, and client-ready reporting—removing the need for internal staff to manage these functions. OCIOs also absorb the cost of economic research and manager due diligence, freeing up even more capital and time.
Real-World Savings in Action
Consider an independent firm with $800 million in assets under management, of which $600 million is actively managed in-house. Maintaining an internal investment team might include:
- Chief Investment Officer: $250,000/year (plus benefits)
- Two analysts: $100,000/year each
- Compliance and technology expenses: $100,000–$150,000 annually
- Portfolio management software and research tools: $50,000/year
That brings total investment-related expenses to approximately $600,000–$650,000 annually.
Now, compare that to outsourcing. Many OCIO providers — including Cornerstone Portfolio Research — offer tiered pricing between 5 and 20 basis points, most falling in the 5 to 10 bps range. At seven basis points on $600 million, total OCIO costs would come to $420,000 annually — a potential savings of $180,000 to $230,000 yearly. And that’s before factoring in the value of enhanced trading, research, reporting, and compliance support included in the OCIO relationship.
When you add it up, outsourcing CIO functions isn’t just about saving money—it’s about increasing efficiency without compromising quality. It’s also a logical answer to the question of how OCIOs help RIAs grow—by freeing up resources and expanding capabilities in a cost-effective way.
Reinvesting Savings into Client Services and Growth
Redirecting savings from internal investment operations can help your firm grow more efficiently and deliver greater long-term value. With reduced overhead, you can use that capital to:
- Expand marketing efforts – Increase visibility, attract new clients, and build brand awareness.
- Introduce new services – Add offerings like estate planning, tax strategy, or philanthropic advising to broaden your value proposition.
- Pursue mergers and acquisitions – Allocate capital and resources toward acquiring smaller RIAs to accelerate growth and expand into new geographic or niche markets.
- Strengthen existing client relationships – Spend more time delivering personalized financial planning and proactive support.
- Improve work-life balance for advisors – Free up time previously spent on investment management tasks.
- Focus on long-term strategic planning – Build a stronger foundation for firm growth, succession, and scalability.
Outsourcing CIO responsibilities gives you room to think bigger—whether it’s growing your client base, expanding your service model, or increasing your firm’s market footprint.
Why Consider Cornerstone for Your OCIO Services
At Cornerstone, we specialize in OCIO services that help RIAs streamline operations, lower costs, and elevate the investment experience for clients. Our team has over 70 years of combined experience delivering customized solutions that match your investment philosophy—without disrupting existing workflows.
When you work with us, your firm gets a dedicated CIO and CFA® Charterholder—without the cost of hiring in-house or giving up equity. As contractors, we help you avoid the expense of a full-time CIO’s salary, taxes, and benefits. We also offer succession planning support if needed.
We don’t disrupt your investment strategy—we enhance it. Our recommendations are tax-sensitive, and adjustments are implemented gradually to avoid unnecessary turnover. With flexible support options and customized services, we tailor our solutions to meet your firm’s unique needs and budgets.
Interested in learning more? Schedule a consultation today.
