How To Choose The Right OCIO
So, you're a registered investment advisor (RIA). Your task? Find the perfect Outsourced Chief Investment Officer (OCIO). The problem? You're not entirely sure where to start.
With so much on the line, selecting the right investment professional is a make-or-break decision. The ideal candidate shouldn’t just fill the role—but also help you become more focused, unlock new growth avenues, streamline business operations, and leverage new markets.
But how do you even begin the screening process for qualified individuals? What qualities, skills, and experiences should you look for? And which OCIO services should you prioritize?
Worry not. This guide will show you how to choose the right OCIO for the job.
What Makes A Good OCIO?
A quality OCIO will bring a plethora of qualifications to the table. From a 10,000-foot view, a good OCIO is someone who can not only step in to manage an array of investment portfolios, but also someone who your RIA can rely on as effectively as an internal team member.
Key Features Of A Skilled OCIO Solution
What is the role of an OCIO?
Not every registered investment advisor (RIA) or wealth manager will hire an OCIO for the same reasons. Even the OCIO definition, which outlines the essential qualities of a qualified professional, can vary depending on your specific needs.
Some might be looking for an OCIO capable of simply overseeing and guiding the investment process, ensuring that the financial ship maintains a steady course and bearing. Others, however, may seek a professional who is capable of more—someone with the skills not only to guide but also to steer the investment strategies, akin to an in-house Chief Investment Officer.
An OCIO can have a major impact on any business or firm. So, this is a decision that can’t be made lightly. Obviously, their skill set should align with your specific needs. But, beyond that, the right person should also share your company’s culture, goals, and strategic vision.
How can you separate the pros from the pretenders?
While countless qualities go into the making of a top OCIO candidate, here are some of the more important qualities they should check off the list:
Experience, Expertise, and Performance History
Experience and expertise are key, no doubt. But it's not just about a dazzling client portfolio, and decades of service. It's about producing tangible results and gathering valuable lessons from both the triumphs and tribulations.
An exceptional OCIO can illustrate their successful management of RIA portfolios, highlighting their strategic wins and even the not-so-successful ventures. They should be eager to share how each experience has refined their approach and strategy.
Past performance may not be a guarantee of future results—but it sure is a good place to start your due diligence. So, when evaluating their experience against your needs, consider probing deeper with questions like:
What markets or sectors do you specialize in?
How much money do you currently have under management?
Do your policy designs integrate elements beyond mere investment like risk management? If so, please elaborate.
What investment technologies or methodologies do you leverage to gain an edge?
How do you keep up with market trends and shifts?
Benefits of Working with an OCIO: Improving Processes and Growth
Last year Markin Asset Management helped transform five RIAs into more scalable businesses with a sharper focus on high-value clients. In each case this was accomplished in partnership with a visionary advisor, deploying our investment services across those firms, with dedicated support from our OCIO team. This included weekly one-to-one touchpoints and access to more than 125 original research notes that Markin publishes annually for our RIA clients.
Investment Philosophy and Approach
How does the OCIO approach investing from a macro perspective? Is it a discretionary based process or a quantitative process?
An OCIO’s investment philosophy will act as the backbone of all investment activities going forward. Their answer should reflect their beliefs about the markets, their strategies for risk allocation, and their overall tactics for portfolio construction and management.
While there’s no perfect philosophy, a qualified candidate should display the following qualities:
A clear understanding of markets
Detailed research and due diligence processes
Evident risk allocation strategies
Consistent investment processes
Willingness to be agile and adapt as necessary
For instance, at Markin Asset Management, our investment philosophy is built on seven principles that we implement through a quantitative, fact-based investment process that has been continually refined over more than a decade:
Markets tend to go up
Multi-asset portfolios earn positive returns from various asset classes
Appropriate diversification mitigates risk
The best way to compound capital is to avoid large losses
Dynamic exposures capture opportunities and hedge undesirable risks better than static exposures
Intelligent portfolio construction and trading reduce exposure to taxable gains
There are many advantages to liquid markets
Transparency and Reporting
In a world as complex, dynamic, and heavily regulated as investment management, your OCIO
should help you and your clients stay out of hot water, not land you in it. They should be a safeguard during times of high market volatility and uncertainty.
A qualified OCIO will display a staunch commitment to transparency and robust reporting. Their approach should include:
Frequent detailed portfolio updates
Meticulous records of decision-making processes
Forthright explanation of their risk management strategies and due diligence processes
Consideration of any relevant regulatory factors
Consideration of each of your clients’ investment objectives
Having this kind of clarity can help bring smoother business operations, fewer headaches, an ability to quickly respond to client needs, and expand your client with fewer surprises.
Finding an OCIO For Your Firm
For RIAs who may lack the necessary expertise, knowledge, resources, or simply the time to manage complex portfolios effectively, partnering with an OCIO can be an invaluable strategic decision that enhances your capabilities, optimizes operations, and ultimately, drives growth.
But, identifying the right OCIO isn’t a one-size-fits-all process. You must understand your firm's specific needs and desired outcomes and then find a qualified candidate who aligns with your strategic vision.
At Markin Asset Management, we offer OCIO services capable of elevating your financial processes to new heights. With core team members who have decades of research and portfolio- and systematic risk-management expertise, as well as experience managing over $2BN of individual, high-net-worth individual, family office, trust, and endowment assets, our team is ideally positioned to support you firm, small or large.