What’s an OCIO? (and other commonly asked questions about outsourcing investment management)

Q: What is an OCIO?

A: An Outsourced Chief Investment Officer (OCIO) is a service provider that takes on the responsibilities of managing an organization’s investment portfolio, including making investment decisions and handling asset allocation on behalf of the client, usually based on a predefined set of goals and risk tolerance parameters. 

The OCIO model is designed to offer a comprehensive suite of investment management services: 

• Strategic asset allocation
• Manager selection
• Risk management
• Performance reporting. 

By outsourcing these functions, advisors not only benefit from the expertise and resources of dedicated investment management professionals, but they also free up significant time to spend building client relationships without incurring the costs or risks of hiring an in-house investment team.

Q: What are the benefits of using an OCIO?

A: Primarily, the key benefit of using an OCIO is enabling access to a higher level of investment expertise and resources than the firm can procure on its own, including more sophisticated investment strategies, advanced risk management techniques, and market insights that both enhance portfolio performance and stability while helping advisors improve communication with clients, particularly during periods of market volatility.

Outsourcing investment management is typically more cost effective, more scalable, and less risky than hiring an in-house CIO or investment management team, and it enables advisors to focus on their core competencies rather than trying to master and manage investments.

Q: What are some drawbacks or challenges of using an OCIO?

A: In spite of the benefits of using an OCIO, there are also challenges to consider. One of the primary concerns is loss of control over investment decisions. By outsourcing investment management, firms have to rely heavily on the OCIO’s judgment, expertise and investment philosophy. 

also the risk of misalignment between the firm’s goals and the OCIO’s strategic approach, particularly if the discovery period is simply transactional and ongoing communication isn’t prioritized.

And while outsourcing investment management does give firms the ability to spend more time with clients, it can actually create a sub-par client experience depending on the OCIO. Most OCIOs offer general market research and the same investment models to all clients, meaning advisors have no ability to differentiate their investment management experience or provide the customization today’s investors demand.

That’s where an insourced Chief Investment Officer comes in.

Q: What’s an insourced Chief Investment Officer (ICIO)?

A: The traditional Outsourced Chief Investment Officer label and offerings didn’t effectively communicate the partnership and business impact Helios provides to advisors – so we coined a new term: Insourced Chief Investment Officer, or ICIO.

What’s the difference? Instead of cookie-cutter model portfolios and broad market research, Helios empowers advisors to deliver world-class asset management experiences that are whitelabeled and fully customized, offering:

• Personalized investment models
• Portfolio analysis and design
• Holdings selection and monitoring for mutual funds, ETFs, and individual stocks
• Weekly client-facing communication, content and graphics 
• Automated compliance documentation
• Training and ongoing support

Q: What are the benefits of using an ICIO?

A: As your ICIO, Helios acts as a true partner – not just a model provider. What does that look like in practice?

An end-to-end solution: There are plenty of places you can easily buy models and access simple market commentary, but you’ll still be responsible for the work of monitoring holdings, building portfolios, creating compliance documentation, and keeping your team trained and informed. Helios takes care of all that for you.

Cutting-edge quant research: Helios constantly seeks new data, techniques, and technology to derive better outcomes from investment models and portfolios, including machine learning and neural networks, putting differentiating investment power at your fingertips.

Reinforcing your value: With Helios, you get a complete model ecosystem and portfolio design strategy that enables you to create institutional-grade portfolios for your clients, harnessing mathematically diverse models designed to “work together” and empowering you to tell a clear, differentiated investment story to your clients.

Lower costs: In-house investment management and many model marketplaces come with high price tags. Helios offers flat-fee and basis point pricing solutions that substantially reduce costs while creating opportunities to drive new revenue. 

 Learn more about how partnering with Helios can help you scale your firm, increase value to clients, and drive greater profitability. Take a closer look at our ICIO model here.