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Five Questions to ask an OCIO

Senior Investment Strategist

Over the past decade, fee compression has been a steady trend in the asset management industry, as competing firms seek to win market share and increase scale.1 Outsourced CIO services are no exception. When evaluating a potential OCIO provider, fees are important. At the same time, it’s crucial to consider fees within a broader context when engaging an OCIO provider. An OCIO relationship is not a commodity. While some providers may offer only strategic advice for a base-level fee, OCIO relationships can deliver a significant premium through a wider and deeper range of services with varying levels of discretion. Here are five questions to ask your outsourced investment provider to help ensure that you get the outcomes you need and expect for the fees you pay.

Many providers can take on as much — or as little — discretion as a client wishes to delegate. The level of discretion that the OCIO assumes, and plan-related services provided, are reflected in the advisory fee. When determining the decision-making authority that will be assumed by the OCIO, it is also important to consider the scope of plan services the sponsor is able to offload in addition to delegated decision making. Advisory fees are an explicit contractual arrangement and often increase for greater level of delegated services.

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