Enhance Client Confidence in Uncertain Times With an OCIO Partner

Enhance Client Confidence in Uncertain Times With an OCIO Partner

Investor confidence often takes a hit when uncertain economic conditions and market volatility spikes. This can then drive them to contact you with questions, concerns, and reassurances. 

As investment professionals, you have to consume a great deal of information quickly, process it, and decide whether it should lead to a change for your clients or not. It’s challenging to juggle all your responsibilities while also managing client concerns.

A strong partnership with an Outsourced Chief Investment Officer (OCIO) can be a powerful anchor during these turbulent times. You gain access to expertise, resources, and personalized attention that can be invaluable during uncertain economic times and when markets are thriving.

At Cornerstone Portfolio Research, we help independent financial advisors outsource their investment management and research. This includes creating highly customized portfolios for your clients. Cornerstone is an independent investment research and portfolio management firm.

This article explores how partnering with an OCIO can increase your clients’ confidence while outlining proactive strategies that your RIA/IAR can benefit from 

How an OCIO Partnership Can Boost Client Confidence

In an unpredictable world, confidence is a currency of great value. 

For example, the constant barrage of negative news during the pandemic could have easily spooked clients, causing them to make poor investment decisions. The importance of good research and a commitment to professional, informed investment management became abundantly clear. 

Here are some specific ways an OCIO can build client confidence:

Expertise: OCIOs bring a wealth of experience and knowledge to the table. Their focus on investment strategy allows them to remain objective and make informed decisions, even when emotions run high. Often, you have access to a team of CFA ® professionals when you hire an OCIO firm.

Communication is vital: Open and transparent communication is the cornerstone of any successful partnership. In uncertain times, it’s even more critical for your OCIO to communicate clearly and consistently. Regular discussions about risk tolerance, investment goals, and concerns help promote alignment of your client portfolios with their overall financial objectives.

A customized approach: Investing isn’t a one-size-fits-all proposition anymore. For example, ESG investing is a rapidly growing field that allows investors to align their portfolios with their values, focusing on companies committed to environmental sustainability, social responsibility, and strong governance. Your OCIO can craft a personalized ESG strategy that reflects your client’s risk tolerance, long-term goals, and specific priorities within these areas.

Using an OCIO’s expertise, open communication, and tailored approaches can enhance client confidence and help your firm navigate financial uncertainties more confidently.

The OCIO Advantage: Proactive Strategies in Times of Distress

OCIOs are prepared to deal with turbulent times by implementing strategies before, during, and after such periods. They remain calm and communicate market trends, their perspectives, and potential future market directions. Here are two effective strategies.

Risk Management  

One of the most powerful advantages of an OCIO partnership is managing risk proactively before it manifests into a crisis. In investing, being reactive can often mean being too late. Anticipating market volatility and having strategies in place to mitigate its impact can help safeguard client portfolios from severe downturns. 

An effective OCIO forecasts, prepares, and implements risk management strategies in advance. This may include diversification strategies, stress testing, and downside protection measures. These forward-looking strategies highlight the importance of professional investment management.

Your OCIO partner will work with your firm to assess and manage potential risks in your client’s portfolio.

Active Management 

Market downturns may require proactive action and strategies. OCIOs, such as Cornerstone Portfolio Research, offer insight and flexibility to maneuver through market challenges effectively. Here are some examples:

  • Continuous monitoring: Sophisticated tools allow your OCIO to monitor your portfolios, identifying potential risks and opportunities as market conditions evolve.
  • Dynamic asset allocation: Unlike passive investing, active management allows your OCIO to adapt portfolios based on changing market conditions. They can adjust the allocation of different asset classes (stocks, bonds, cash, alternative investments, etc.) to capitalize on market movements and economic shifts. This flexibility can capture gains and minimize losses with effective risk mitigation.
  • Hedging strategies: Using options, futures, and other derivatives, your OCIO can help protect your client investments from significant losses. 

Active management isn’t a guarantee against losses but can help reduce risks and improve returns in some situations.

The Value of an OCIO Partnership for Your RIA/IAR Firm

Managing time, controlling expenses, refining investment strategies, and streamlining operational procedures become increasingly important during market uncertainty. Partnering with an OCIO offers your RIA firm many benefits. 

Here are a few important ones to consider:

  • Scalability and efficiency: An OCIO can handle many time-consuming tasks associated with investment management, such as portfolio construction, risk management, compliance, and ongoing monitoring. This frees up your time and resources to focus on client relationships, wealth and financial planning, and growing your practice.
  • Cost-effectiveness: Outsourcing functions to an OCIO helps manage costs efficiently, giving you access to advanced investment tools and research at a lower cost than doing it in-house.
  • Holistic investment solution: An OCIO provider can help develop a comprehensive investment solution, broadening your investment choices, fine-tuning portfolio alignment, and providing in-depth insights into global financial markets.
  • Streamlined processes: An OCIO streamlines reporting and processes to enhance communication. Using advanced technology and deep industry knowledge, they offer real-time data, detailed reports, and predictive analytics. This enables your firm to make quick, informed decisions, saving time. 

Partner With Cornerstone Portfolio Research

An OCIO doesn’t just manage investments; it acts as a trusted advisor, providing a level of expertise, objectivity, and focus that you may not currently have in-house. 

At Cornerstone Portfolio Research, we understand how precious your time is and strive to integrate smoothly into your workflow, ensuring minimal interruption. With over 70 years of combined experience, we deliver high-quality investment research and portfolio management solutions to RIAs and IARs of all sizes.

Reach out to us today to discover how our experienced team can guide your firm through the complexities of a volatile market, leading to long-term success and stability. 

An OCIO Can Help Your RIA

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.