OCIO CASE STUDY

ENGAGED OCIO SERVICES

Clearstead’s customized solutions are designed to offer institutions the freedom to focus on institutional objectives.

We have found that some clients have difficulty keeping their organization solvent while fulfilling their mission.

Institutions can tend to focus on a specific long-term investment return target without understanding all of the factors and obstacles that could hold them back.

AS IS THE CASE WITH MANY ORGANIZATIONS, THE CLIENT’S INVESTMENT COMMITTEE  COULD BE COMPRISED OF PEOPLE WITH DIFFERENT LEVELS OF UNDERSTANDING OF BOTH INVESTMENT AND FINANCE. ALSO DECISION MAKING COULD BE A  COMMITTEE’S WEAKNESS.

In some cases, committees can struggle to achieve a quorum at quarterly meetings, even when enough members are present and committees can become paralyzed. Committee members can offer conflicting viewpoints and discuss their ideas offline. As a result, no consensus can be reached, and a change we recommend that could have benefited a portfolio is never implemented.

OUR SOLUTION

To solve this problem, Clearstead recommends moving to our engaged Clearstead Prism OCIO service, which allows us the discretion to make decisions on the organization’s behalf. This move can free up committee members to focus on important strategic initiatives such as fundraising, instead of the day-to-day business of investing, which Clearstead can do for them. 

Committee members can choose to remain engaged in the process, particularly when Clearstead recommends changes to overall asset allocation or tactical changes. Not only are we able to accommodate them, we also can achieve a committee’s other goals: keeping costs low, keeping investments simple, and increasing liquidity. One of our primary goals is to improve the performance of our client’s portfolios.  Another way that the Clearstead Prism OCIO service can help institutions is to help shape the covenants that govern their spending policies.  In many cases, specific spending policy covenants can limit the amount of risk a client can take, because they cannot afford to lose much in a down market.

By leveraging our research team, Clearstead can develop a strategy that is much more conservative than that of a typical OCIO client. We can stress test portfolios to show clients how their portfolio might react in different market scenarios.  And then we can specifically design and implement our strategy based on a client’s specific needs. 

Our approach also includes speaking with the client’s CFOs and directors of finance to get updates on financial health and cash on hand. And then we use this information to drive the optimal strategy to meet a client’s needs. 

Because client covenants can dictate a more specific approach, such as more conservative, we know there will be years in which a client’s investment returns will not match those of their peers. But we educate our clients about the context in which they need to interpret their results and can include forecasts that clearly illustrate the predicted outcomes of more profitable — yet possibly riskier — investments. We are able to back up our decisions with plenty of data. 

In addition, Clearstead never recommends or invests in its own products because we don’t have any. Therefore, we are able to offer objectivity in our guidance. We listen to each client’s needs, in depth, before implementing a strategy. We recognize that all clients are unique, and we strive to clearly understand and establish goals — then adjust as needs change or markets dictate — to make those objectives a reality.

Our proprietary Clearstead Prism OCIO service acts as a powerful extension to institutions, collaborating on a deep level to completely handle day-to-day management of investment portfolios after clearly defining objectives, quantifying risk, and creating benchmarks that continuously explain all results. Research drives our decision making, and we are quantitatively focused — tempered with the qualitative value of decades of experience and practical judgment.

Find Your Clarity

We bring our clients objective financial leadership through our fee-only advisory model, which enables us to remain objective. We do not offer proprietary products and take no commissions from product sales: our only source of revenue is fees we receive for financial advice. True to our founding principles, we do the hard work: the day-to-day investment management integrated with organizational priorities and family aspirations.

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Clearstead is an institutional and private client advisory firm that is relentless in providing solutions so our clients can exceed their aspirations and build stronger legacies for their families, their communities, and themselves.

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