As a financial professional, you’re aware of the OCIO buzz in the marketplace. Increased popularity in OCIO or discretionary investment models has led to additional competition among providers. Finding the best match for your organization can be challenging.

Whether you solicit the help of a consultant or evaluate providers by issuing an RFP, it’s easy to miss some important criteria. Here are 10 questions you won’t want to skip:

  1. What is the focus area of the provider? Because of the increased OCIO trend, many investment providers are dipping their toes into the OCIO waters. But do they solely offer discretionary investment outsourcing service? Or do they specialize in investment consulting and have recently expanded to include OCIO?
  2. How long have they been delivering discretionary services? A long-term track record is important. An experienced provider that has offered OCIO services for decades can bring the latest technology, resources and methodologies to the investment outsourcing model. A well-tested program can help bring lasting success to your organization.
  3. How many institutional clients similar to your size and scope are part of the client base? You want to be in good company. Knowing that other organizations like yours have selected the same provider is comforting. It lets you know that the provider understands your business, challenges and goals. And on top of that, they’re good at it.
  4. Does the provider create a custom approach based on each client’s needs? Every organization has different goals. Whether your goal is maintaining full funded status, achieving spending needs or minimizing volatility, it is important. That’s why a one-size-fits-all approach to OCIO often can’t address the intimate needs of each client. A custom approach with flexibility in investment styles, implementation and portfolio composition allows for more opportunity to meet each client’s needs.
  5. Are flexible levels of discretion offered? Choosing to delegate your portfolio is a big step. An OCIO that offers flexible levels of discretion can make the transition smoother. While all clients start with delegating manager-level discretion, as their needs change, many decided to delegate more discretion at the asset allocation level.
  6. Does the provider have the scale to allow for access to industry-leading products and managers? Regardless of the size of your portfolio, gaining access to top-tier managers can be challenging. But with the right OCIO, you leverage experience, relationships and resources to incorporate some of the best established and emerging managers at the same weight regardless of size or time of funding.
  7. How much do they invest in research, technology and talented professionals? Investing back in a program shows support to the client and openness to evolve and keep pace with industry changes. Access to a variety of data sources coupled with a competitive technology platform enables the provider to bring the most leading edge solutions to clients. In order to remain at the forefront of the industry, an OCIO should dedicate significant expenditures to enhancements in technology, new products/services and resources.
  8. Do they perform modeling to better understand the impact of changes to the portfolio on the overall organization? Understanding how the portfolio might behave in the best and the worst market scenarios is critical. Portfolio modeling can help understand the impact of asset allocation changes on portfolio values, liabilities and key financial metrics. A provider that uses robust modeling and risk management systems can provide invaluable insight and decision-making support.
  9. Does the provider have a clear governance process that allows for timely decision-making and due diligence? A good governance process helps to reduce risk and streamline the decision-making process. The right OCIO can bring nimbleness, efficiency, strategic focus and uniform philosophy through established processes and monitoring. Ensure that the investment decisions and portfolio execution meet the fiduciary obligations of the committee with an established governance process.
  10. Does it offer comprehensive reporting that tracks progress against goals and monitors the level of risks across the entire portfolio? Would a real-time review of your portfolio’s progress towards goals help your strategic planning? Look for an OCIO with frequent monitoring and pre-determined trigger/de-risking points that send notifications when met so that action can quickly be taken as changes occur. Receive custom reports that show key portfolio metrics and a clear snap-shot of your portfolio.
Knowledge Center Starting an OCIO Search? Ask This First Your answer will form the basis of your governance structure

Next steps

Deciding whether the OCIO model is right for your organization is a difficult task. We want to make investigating the growing OCIO trend and evaluating providers easier. Check out our evaluation tools.

Legal Note

Information provided by SEI Investments Management Corporation (SIMC), a registered investment adviser and wholly owned subsidiary of SEI Investments Company.

Get the right help from the right provider

Not all OCIOs are alike – experience and infrastructure matter.

You need an OCIO with a unique investment background and the ability to monitor the market to make timely changes.

A proven OCIO