Top 5 Tips Why OCIOs Make Independent RIAs More Marketable

Top 5 Tips Why OCIOs Make Independent RIAs More Marketable

Let’s assume you have two choices when it comes to the management of your clients’ assets. Your firm can manage the money or you can outsource this responsibility to an external third party.

When you outsource money management you are positioning your firm as an advisor, planner, consultant, or asset gatherer, but not a money manager. For example, you pick the manager(s), but you are not responsible for the selection of the securities that make up your clients’ investments.

In this article, we will make a case for positioning your independent RIA as the money manager by partnering with an Outsourced Chief Investment Officer (OCIO) who is engaged directly by your firm. When you adopt this strategy you will work with one or more professionals who specialize in the management of client portfolios. 

Do you hire this professional and make him or her an employee or are you better off using the services of an OCIO (Outsourced Chief Investment Officer)? We believe the OCIO is a superior solution for smaller RIAs (less than $1 billion of AUM) and this article will give you five reasons why we think this is true.

The Full-Service Firm

 What type of financial advisor delivers the greatest amount of value to investors? We believe it is a firm that provides investment management services as well as sophisticated planning services.

Every investor needs a financial plan that acts as a roadmap for his or her financial future. A comprehensive plan will include financial decisions that impact them during working, transition, and retirement years. More comprehensive plans also include provisions for future generations.

A key element of every plan is also the accumulation and preservation of assets that provide financial security during working years and comfortable, secure lifestyles during retirement years. The question is who makes the investment management decisions for your clients?

Are investors and the RIAs better off when there is a professional or a team of professionals focused on the investment and performance of client assets?

Tip: We believe that Every independent RIA should have an OCIO who is focused on the delivery of high-quality investment management services. 

What About the Bigger Firms?

If you want to be a big firm, for example, one billion dollars plus of client assets, then it is imperative you look and act like a big firm as soon as possible.

It stands to reason when investors go to the brand name firms all of the services, they are seeking are provided under one umbrella. They are not talking to a planning firm or asset gatherer that outsources needs for investment management to a variety of third parties they never meet or talk to.

There is an old saying about too many cooks in the kitchen. This is certainly applicable when multiple managers who do not interact with each other are managing assets for the same clients.

Tip: One feature of bigger RIAs is often a Chief Investment Officer. 

Your Credibility

It stands to reason that very few professionals are actual experts in all of the disciplines that make-up financial services. Consequently, most knowledgeable investors are predisposed to select teams of specialized professionals who work together so they get one coordinated solution.

This same logic applies when they select doctors, lawyers, and other professionals. They believe specialists produce better results than generalists.

One of the more important members of a financial service team (RIA) is the Chief Investment Officer who is responsible for the management of client assets. In fact, there is a good chance the CIO may be a pivotal professional who impacts the selection decisions of investors when they choose financial advisors for their assets.

Tip: We believe that you are more credible when your RIA has an OCIO.

What About The Digital Marketing Sales Funnel?

Investors often use a four step process when they select financial advisors:

  • They find financial advisors they want to interview
  • They screen the advisors to determine if they are the right fit
  • They interview advisors multiple times
  • They select who they believe are the best financial advisors

It doesn’t matter how they find RIAs (Internet, a referral from a friend, etc.). There is an 82% probability they will visit advisor websites to learn more about them. Then, there is a 64% chance they will Google search the advisors’ names to find information that is not controlled by the advisors.

One of the most visited pages on most independent RIA websites is the Our Team page. Investors want to see the backgrounds of the professionals who will be providing financial advice and services. We believe that the stronger the credentials (education, experience, certifications) of the professionals the higher the probability they will select their firms for interviews.

The most researched Bio on the Our Team page is the Chief Investment Officer. That is because this professional has the greatest impact on the performance of client assets.

Tip: We believe that adding the profile of a Chief Investment Officer with a CFA will create a substantial competitive advantage. 

What About Expenses?

We believe that the Outsourced CIO solution has a much lower cost for RIAs compared to the employee alternative that may require a high six figure salary, benefits, taxes, and stock in the company. Financial advisors may have to raise their fees to offset the cost of these CIO-related expenses, which in turn could make the firms less competitive.

We believe prudent investors will select the financial firms that deliver the greatest amount of value for the lowest amount of fees. In fact, the more experienced the investors the greater their sensitivity to layers of fees.

Tip: We believe that firms have a competitive advantage when they deliver planning and investment services for one asset-based fee.  


This article contains five compelling reasons why you should outsource your independent RIA’s need for a CIO to a qualified investment professional with the right stuff (experience, education, certifications).

Your challenge is to make sure you outsource research and investment management to the right CIO. When you do that your RIA is in the enviable competitive position of delivering the same comprehensive services as much bigger firms for one asset-based fee.

CPS eBook Reasons to Outsource

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.