Financial Advisors: Add an OCIO? Your Guide to a Smooth Transition

Financial Advisors: Add an OCIO? Your Guide to a Smooth Transition

Switching to an OCIO (Outsourced Chief Investment Officer) is important to establish your wealth management firm as a serious player in the financial advisor marketplace.  

The rise of the OCIO business model is becoming more attractive to many independent RIAs and IARs who have to compete with bigger firms. However, many are still contemplating this decision because they are concerned about the OCIO’s impact on their firms and clients.

This is a reasonable concern because several OCIOs are based on their business practices. It is in the advisors’ best interests to select the right OCIO type.

Transitioning to an OCIO is more than just outsourcing your investment research and management; it’s about adopting a partner who can impact your growth, performance, and client retention rates. The right OCIO also lets you focus on what you do best – add new clients and retain current ones.

It’s important to understand that not all OCIOs are created equal. Some may necessitate substantial changes on your part, while others offer a smooth transition that benefits you and your clients. 

Our team at Cornerstone Portfolio Research has developed an OCIO model that makes your transition to our services a seamless process, which we are happy to describe in this blog article. 

Define Your Reasons for Switching to an OCIO

Before discussing how to transition your investment management services to an OCIO, let’s discuss your rationale for determining if this model is right for you and your RIA.  

One way to think about partnering with an OCIO is that it is more than outsourcing your investment research and investment management; it’s about restructuring how you run your RIA.  It’s an opportunity to reallocate your internal resources and improve your results.  Your firm will also be more competitive when knowledgeable investors ask: “Who will manage my money?”

At Cornerstone, our process includes spending a lot of time talking to your firm’s principals to understand better how you expect to benefit when adding an OCIO to your team of professionals.

You may want to offload specific investment tasks or add expertise that makes your firm more competitive. Regardless of your reasoning, an OCIO can be a game-changer for you and your firm.  Visualize a situation where you produce financial plans, and your OCIO manages your clients’ money.

As part of your due diligence for this partnership, you should ask the OCIO firm about its track record, investment philosophy, risk management strategy, and compatibility with your current business practices.  Once you understand the OCIO’s process, you can determine how well it meshes your philosophy, investment practices, and risk management disciplines.

Assess Integration Requirements

As mentioned earlier, not all OCIO transitions are identical. Some OCIOs may require you to change your processes significantly, while others, like Cornerstone Portfolio Research, offer a seamless integration process. Cornerstone assesses your current practices, then it adapts its processes to your practices – not the other way around. This makes for a seamless transition that is barely noticeable to clients. 

You’re not just another client on a spreadsheet at Cornerstone Portfolio Research. You get your own dedicated CFA® Charterholder who’s in your corner every step of the way. Cornerstone provides tailor-made services to fit your unique needs, allowing you to grow without all the challenges of a typical outsourcing solution.

The best part? You can keep your current operations and maintain your current client custodian as is. We seamlessly integrate with your current operations rather than the other way around. We know the importance of continuity so your clients know what to expect from your firm.

In short, we take care of the details so you can zero in on what you do best: producing retirement plans and communicating with prospects and clients. 

Risk Management

Another component of transitioning to an OCIO involves the degree of risk your clients are exposed to when they invest in the securities markets. Evaluate the risk factors associated with the chosen OCIO, including potential changes in investment strategies, operational disruptions, and regulatory compliance. Mitigate these risks by establishing clear communication channels between your team, the OCIO, and your clients.  

Simplified Transition Services for You, Your Team, and Your Clients

When we formed Cornerstone, we saw a gap in the market that impacted small to mid-sized advisory firms needing help to run their businesses efficiently.

We take a hands-on, tailored approach to portfolio research. This means your clients get investment advice that meshes well with your firm’s business practices.  

Frequent communication with you is on our to-do list, and collaboration is our key to success.

So, What Makes Us Different From Other OCIO Providers?

  • Our system plugs right into what you’re already doing. There’s no need to switch your daily routines; we’ll fit right in with your existing tech stack, like CRM, reporting software, etc.
  • Do you need us to participate in your key client or prospect meetings? We are there. We can be the extra dimension that helps you win and retain more clients.
  • We offer an easy-to-integrate white-label investment process. Your clients will see your brand in everything, avoiding any mix-ups.
  • No need to change custodians or re-do client paperwork. We minimize disruptions to your existing investment operations.

If you want to grow or take investment research and portfolio management off your plate, connect with us. Let’s see how we can improve your life and your client’s results.

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.