Why An OCIO Appeals to HNW Investors

Why An OCIO Appeals to HNW Investors

High-net-worth investors have unique needs. If you want to be the one securing their assets, you must be able to meet those needs. However, in today’s crowded wealth management space, accommodating clients, alone, is not enough. You have to stand out from the lookalikes. 

That can be a steep challenge at times. However, an outsourced chief investment officer (or OCIO) can help you cater to your ideal clients and potentially outshine your competitors, as well.

This article explores the following topics:

  1. How are HNW investors’ needs unique?
  2. Why is it important to stand out as an RIA now?
  3. What is an outsourced chief investment officer (OCIO)?
  4. Could the right OCIO help you outshine the competition?
  5. How can an outsourced CIO benefit your clients?
  6. Why could an OCIO’s tactical investing be your secret weapon?

High-Net-Worth Investors Have Unique Needs

A high-net-worth (HNW) investor is defined as someone whose net worth is at least $1 million. Alternately, they can be described as people whose annual income exceeds $200,000 per year with a minimum of $20,000 in investable assets. 

HNW individuals are often more likely than other investors to have complex financial situations—because they have greater amounts of assets available to invest. Additionally, they are more likely to have a long investment horizon: They don’t need money immediately, so their ideal strategies may not necessarily include immediate liquidity or short-term gains.

You Have To Stand Out

The number of registered investment advisors has increased dramatically in recent years. According to a report by Statista, there were almost 13,500 advisors employed in the United States in 2020. With more firms entering the market every year, it is vital to avoid blending in.

Fortunately, an outsourced chief investment officer (OCIO) can help you do just that. The role of an OCIO is to oversee all aspects of the firm’s investments, including strategies, performance, and asset allocation. 

Outsourced CIOs are trained in everything from investment research and technology to client education and risk management. They serve as an adviser to your board of directors and your executive management team

At the same time, they provide advising on portfolio construction, risk management, and investment opportunities. 

In other words, they are equipped with specialized knowledge about how RIAs operate as a business. They join your team (and you can list them on the meet-our-team page of your website), but—unlike a full-time employee—they receive a fee. So, there are no bonuses, insurance, salary, parking, or other extra expenses required.

What Is an OCIO?

An OCIO is an executive officer who oversees the investment management function of your firm. They can be responsible for developing innovative structures and strategies that increase efficiency while reducing costs. Ultimately, they seek to grow your AUM by increasing profitability via increased net revenue per client relationship.

We are convinced that a trustworthy outsourced CIO is the best of both worlds: Someone who can be there for you and your clients, as needed. Yet, since most interactions are online, you do not even have to share a box of donuts with them.

How Does an OCIO Benefit Your Clients?

  • An outsourced CIO can assist with portfolios, including developing and implementing an appropriate asset allocation strategy matching your client’s goals and risk tolerance.
  • A good OCIO also reviews existing investments, evaluating whether or not they are still appropriate for a given client.
  • They help clients manage their risk.
  • They can help manage clients’ taxes and optimize liability-reducing strategies.
  • They can provide cash management services, should a client desire them.

Relationship Management

High-net-worth investors can find uncertain economic times concerning, just like everyone else. In some cases, having more money to lose can mean greater levels of anxiety. As a result, accommodating both their financial and their communications needs is essential to providing maximum value.

An OCIO can help you serve HNW investors efficiently in a number of ways. The first and most obvious is by helping you build deeper relationships, which tends to benefit a firm’s retention. By providing an opportunity for clients to have their questions answered more quickly, a good outsourced CIO can help them to get back to work sooner. 

That, in turn, can make them feel more appreciated. Streamlining communication between you and your clients this way can make it much easier for you to fulfill your responsibilities in a professional manner. 

Additionally, an OCIO can allow both you and your clients access to all relevant information associated with a particular project or assignment. This helps to ensure that no important details are overlooked in discussions with other team members or stakeholders. It can also equate to peace of mind for your clients.

Tactical Thinking

Investment management. Portfolio diversification.

Especially during times of market volatility, tactical investing has become one of the most popular strategies with high-net-worth investors. Rather than simply “staying invested” per a broad asset allocation, overweighting certain sectors, styles, or factors can take advantage of market dislocations. Put another way, instead of having to tell the client to “stay the course,” advisors with an OCIO can talk about recent tactical adjustments made to the portfolio. Even small adjustments can become major talking points—and big peace of mind for clients who see their advisor “doing something.”

Since RIAs have tended to focus on long-term, low-risk portfolios, many firms lack the experience and expertise to help their clients with tactical opportunities. However, an outsourced chief investment officer can help you change all that by meeting HNWs where they are, needs-wise.

Clearly, fiduciary outsourced chief investment officers are a valuable resource. These experts can help your firm nurture client relationships while helping you stand apart from competitors in a crowded marketplace. An OCIO may also help you gain and retain clients, increase revenue, and grow your business.

We’ve only scratched the surface of the many benefits an outsourced chief investment officer can bring to your firm. As you can see, HNW investors are highly sought after right now as more and more RIA firms enter the market every day. This makes it vital that you stand out from the crowd. 

At Cornerstone Portfolio Research, we believe that an OCIO is the best way to do just that. Would you like to learn more? Contact us today. 


Download Our Free eBook, “12 Reasons To Outsource Your Portfolio Management,” Here.

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Cornerstone Portfolio Research (“Cornerstone”) is an SEC-registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training.  This publication should not be construed by any consumer or prospective client as Cornerstone’s solicitation or attempt to effect transactions in securities or the rendering of personalized investment advice over the Internet. 
The statements in this publication are the opinion of Cornerstone regarding Outsourced Chief Investment Officer (“OCIO”) services. These are not personalized recommendations and you should consider your own criteria when choosing an OCIO. 
A copy of Cornerstone’s current written disclosure statement as set forth on Form ADV, discussing Cornerstone’s business operations, services, and fees is available from Cornerstone upon written request.  You should not assume that any discussion or information contained herein serves as the receipt of, or as a substitute for, personalized investment advice from Cornerstone or the professional advisors of your choosing.    


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.