Embarking on an OCIO program for your institution is not to be taken lightly. Too often, advisory firms have used OCIO services as a conduit for investment products, delivering unclear and unproven results while losing context and the alignment of investment strategy with organizational priorities. Trustees and staff can become disconnected with the investment portfolio, which gets worse with natural trustee turnover. The outsourced chief investment officer becomes less of a partner, and more of a salesman. In the meantime, the institution’s fiduciary risk has not been delegated effectively, and staff and trustees understand less about the investments — a potentially difficult combination.
Yet there are solid reasons to consider an OCIO approach. Investment issues can tax staff and resources, siphoning time from other issues that arise each day. Often investment decisions must occur quickly and require a depth of expertise many institutions may not have. Delegating discretion to an outsourced chief investment officer can save meaningful time, result in more efficient execution of investment programs, and effectively realign responsibilities between trustees, staff, and financial advisors.