How an Independent Broker-Dealer Can Simplify Reg-BI

How an Independent Broker-Dealer Can Simplify Reg-BI

Navigating the financial landscape has never been more complicated. Reg-BI keeps adding another layer of complexity, requiring broker-dealers to accommodate additional moving parts. Meanwhile, this year’s economy is presenting unprecedented challenges that may make it difficult for even seasoned investors to keep up. 

That’s where Outsourced Chief Investment Officers (OCIOs) come in. OCIOs have extensive experience navigating complex financial regulations. Some are happy to act as a trusted advisor to your clients, as well. Working with the right OCIO can mean both superior investment-related Reg-BI compliance and having a partner to help guide you through even the most challenging economic environments.

This article covers the following topics:

  • This year’s economy isn’t getting simpler
  • What is an outsourced CIO (or OCIO)?
  • How OCIOs help mitigate client confusion
  • Leveraging an investment consulting firm

This Year’s Economy Isn’t Getting Simpler

We all know that the economy is a complex web of interconnected systems, so predicting its future isn’t generally possible. However, many economists and analysts believe that a recession is likely by either the end of this year or in the first quarter of 2024. This prediction is based on a variety of factors, including rising inflation, labor shortages, and supply chain disruptions.

Stubbornly high inflation has been on the decline, yet remains elevated, and many experts expect a potential rebound upward in the fall after bottoming this summer. Labor shortages, meanwhile, are also a major concern for the U.S. economy. Many businesses are struggling to find workers, particularly in industries such as hospitality and retail. 

Unfortunately, these aren’t the only issues. Lingering post-Covid supply chain disruptions also continue causing manufacturing shutdowns. We still see occasional shipping bottlenecks, as well. These factors have led to shortages of many goods and services, which has, in turn, worsened inflation and our other economic problems.

In such a complex and uncertain environment, it is more important than ever for independent broker-dealers to stay informed and adaptable. This can present quite a challenge when some clients are growing increasingly antsy about their investments—and eager to blame their advisor for market downturns. 

Time doesn’t grow on trees. So, especially while your hands are constantly holding clients’ in order to reassure them, how can you make the time to cover additional professional bases?

We believe the answer is an OCIO. 

What Is an Outsourced CIO (or OCIO)?

Many firms are looking for ways to recoup time, if not gain a competitive edge now. One way to do this is by outsourcing the role of chief investment officer (CIO) to a third-party service provider. This is known as an outsourced CIO (or “OCIO”). 

At its core, an OCIO is an executive who joins your team, eliminating the need for hiring an in-house CIO. He or she can, for example, shoulder the responsibility of helping your firm keep within the FINRA’s bounds, possibly helping upgrade your documentation methodologies along the way. 

Better OCIOs typically have well-established documentation processes and procedures in place. This can help ensure that your firm’s investment activities are properly documented and recorded, which can be essential in case of an audit or regulatory review. 

On the other hand, if you’d rather stick to what works for you, Cornerstone’s entire service model allows for streamlining within existing productivity workflows. We’re happy to avoid disorienting your team with unnecessary system changes. That’s why we prefer to use your existing CRM, software tools, and branding.

Another advantage of leveraging an OCIO model is that you never have to provide benefits, bonuses, or even a stapler to accommodate them. Conversely, they still become a member of your team. You can even list their bio on your website, which can help enhance your firm’s credibility and reputation.


You CAN Afford To Add a Competitive Edge Behind the Counter of Your Firm. Here’s How.


How OCIOs Help Mitigate Client Confusion

OCIOs provide a range of benefits for broker-dealer clients and investment managers, including access to extensively experienced insights and ongoing performance monitoring. Perhaps best of all, by outsourcing investment-related compliance to an OCIO, you might free up time to focus on your clients (and, possibly, prospecting for new ones).

Again, despite your best efforts, some investors can become easily swayed by gloomy news forecasts and economic predictions. This can lead to confusion, anxiety, and mistrust of their wealth management. However, as a result of working with your well-selected OCIO, these clients could stay grounded enough to avoid knee-jerk mistakes.

Put another way, they may be more likely to keep focused on their long-term goals, even in the face of short-term market volatility. Bringing the insights of a vetted, seasoned, accredited, and personable executive to your team has a way of doing this. 

Another advantage of working with an OCIO is the upper level of service that they can provide. After all, meeting with them is a premium service (since he or she is your CIO), so, you might want to consider optimizing your fees. 

Ultimately, working with an OCIO can be a win-win situation for both you and your clients: They receive personalized investment advice and guidance, while you can optimize your fees and, potentially, enhance the value of your practice. 

Leveraging an Investment Consulting Firm

outsourced CIO

Especially in a slowing, volatile economy, you don’t have time to devote to investment-related compliance. You could actually lose clients, revenue, or both by trying to wear too many hats. This is where an investment consulting firm comes in. 

One such firm is Cornerstone Portfolio Research, which has a proven history of helping independent broker-dealers compete with larger firms. Hiring an OCIO from us means gaining far more than just Reg-BI help (although we’re happy to assist there, as well): Working with us means you can add a Chartered Financial Analyst® to your roster.

With ever-changing regulations and requirements, keeping current can be a daunting task. This is precisely why we’ve cultivated the experience and knowledge to help you avoid potential pitfalls while freeing you up to do what you do best.

We’re ready to exceed your expectations; not your budget. Contact us to learn more about our products and services. 

10 Ways an OCIO can help financial advisors


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.