Weighing quantitative and qualitative factors in OCIO fees

- As we explored in our previous video, the OCIO fee is one component of the total cost charged to institutional investors for the discretionary management of their assets. It often makes up a small portion of the overall cost as compared to investment manager fees. Full transparency of total fees is crucial. However, it is still very important to understand why the OCIO fee differs from one provider to the next, and just as important, what services are you getting for that fee?

Let's look at the quantitative and qualitative factors behind investment oversight fees to help with assessing providers. To start, ask providers these key questions to help determine whether their profile and pedigree are a good fit. How long has the provider been offering OCIO services? You may be surprised at how many providers are relatively new to the industry and lack decision-making experience during volatile times.

SEI has been an OCIO provider for 30 years, managing clients through numerous market cycles. 153 clients have been with us since before 2008, which is many years before some of our competitors started offering OCIO services.

Next, what's their total assets under management? Remember, that can be important when it comes to investment manager fee savings. How many clients have similar size and type? And what's the average tenure of those partnerships? Knowing the provider has vast experience with clients just like you, can help with goal setting and effective strategy development. Now, let's consider some of the qualitative factors.

Does the provider use an open architecture approach to develop customized portfolios with your goals and values in mind? Or do they offer a pre-packaged solution? Who will be responsible for managing the relationship and will they be dedicated to client service? Or do they also have day-to-day investment management responsibilities to juggle? Establishing a solid relationship with your client service team is invaluable to the success of the partnership.

Do they offer ancillary services beyond investment management that can contribute to the success and support your critical missions? Taking all these factors into consideration, it is clear, not all OCIO providers offer the same services for their fee. Providers with longstanding, proven track records have the experience, resources, and expertise to better support your investment goals, risk tolerances, and client service needs. New entrants will make the claim that they do too, which is why exercising proper due diligence is a very important step in the review process. Thank you.