Keys to Choosing the Right OCIO


An Outsourced Chief Investment Officer (OCIO) can help many organizations successfully navigate the markets by providing the same independent, objective structure that minimizes conflicts of interest. An OCIO serves a similar role to that of an in-house investment department but without the operational commitment and high cost of managing an internal staff. The current economic and geopolitical environment casts a cloud of uncertainty over the financial stability of many non-profit institutions. As non-profits navigate a world where revenues have faltered, they are even more dependent on their investment portfolios to provide a safety net for their operations and missions. Thus, the importance of prudent management and oversight for their investable assets cannot be understated.

What is an OCIO?

An OCIO is a third-party, discretionary investment advisor who shares fiduciary responsibility with an organization’s staff and board. Institutions often choose to delegate a portion or all of the management of their investment portfolios to these third-party firms. While there are a variety of OCIO firms with differing models, the goal of each model is the same – a transfer of investment management responsibility from an organization’s staff and board to a third-party firm. You can find more information on the OCIO model in our article, Understanding the Outsourced Chief Investment Officer Model.

What types of organizations can benefit from an OCIO?

Most non-profits can benefit from an OCIO. Small organizations benefit from an OCIO because they can provide access to a turnkey, diversified portfolio not typically available to smaller investors. Mid-sized and large institutions can rely on OCIOs to design customized solutions based on return targets, risk tolerance, and other organization-specific variables. Even the largest pools of capital may benefit from an outsourced provider who has the flexibility to be a part of a larger overall investment program.

What are the benefits of outsourcing investment management?

Some of the prime benefits of an OCIO include:


An OCIO can provide a team of experts that will provide continual oversight and ongoing monitoring of your organization’s investment related needs. A team dedicated to providing portfolio management, asset allocation, an understanding of operational and business needs specific to your organization today and over the long term is an important benefit of an OCIO.

Cost Reduction

An OCIO can effectively cut staffing and technology costs while delivering a standardized, trusted investment process. Additionally, many OCIOs provide access to managers and portfolios that a non-profit may not have access to on their own and often at lower fee schedules enabled by the economies of scale and relationships nurtured by the OCIO firm.

Enhanced Efficiency

An OCIO solution adds efficiency by contributing key deliverables that are generally left to the organization’s staff or board. Instead of allocating resources to the time-consuming work of investment management, board and staff members can devote more of their time to projects that support the organization’s mission. Further, organizations can simplify their decision-making process by giving discretion for all ongoing investment management functions to the OCIO service provider.

Full-Time Fiduciary Oversight

Opportunities and risks can emerge in the investment markets at a moment’s notice, so non-profits need an advisor who is prepared to act quickly with the institution’s best interests in mind. The OCIO model provides clients with full-time accountability and oversight of your investment portfolio by a true fiduciary partner.

Choosing the Right OCIO

Determining which OCIO firm is the right fit for your organization is an important decision with a multitude of qualitative and quantitative variables. While no two organizations are exactly alike, four key considerations listed below are likely to assist any institution exploring the OCIO market.

Transparent Fee Structure

You should always be aware of the total cost of your investment program, so fee transparency is critical for institutions seeking to outsource the management of their investment portfolio to an OCIO firm. Additionally, clients should understand how their OCIO provider is compensated. OCIO firms have different fee structures and revenue sources that may create conflicts of interest. It is typical for different OCIO providers to present fees differently, so organizations should be prepared to ask questions to assure they understand the structure and can appropriately compare it to others, as necessary.

Independent Advice

One characteristic that distinguishes true OCIO firms from other outsourced investment solutions is a structure that reduces the potential for conflicts of interests. There are benefits to selecting a firm that focuses solely on OCIO services and sources managers through an open architecture structure. Potential conflicts of interest are minimized, as these firms typically have no additional lines of business that may compete for the staff’s attention, and there is little opportunity for the firm to earn additional revenue from in-house investment products or as a result of allocating capital to managers who share revenues with the OCIO. This means the OCIO will focus on what matters most: building and managing a portfolio that mitigates risk and provides the returns your organization needs to carry out its mission.

Understanding of Your Organization

There are a multitude of OCIO firms from which to choose, so it is imperative to find a firm aligned with your institution’s values, mission, and goals. Not only should any potential OCIO candidate be knowledgeable about the fact patterns of your institution, but so should you be aware of those specific characteristics which are most important to your institution in seeking an investment partner.

Knowledge of Your Team

The OCIO provider your firm selects is responsible for some or all investment-related decisions, so it is critical that they have experience in and a good reputation for successfully managing diverse investments for non-profit organizations. It is also critical for an organization to know the team that they will be working with throughout the relationship. Consistent access to an experienced team can help your organization from the onset of the relationship and support a successful relationship over time.


Non-profit organizations need investment experts who can help them manage risk and generate returns. An outsourced chief investment officer may be the solution your organization needs to carry out its critical work forward. Contact the Verger team if you would like to better understand the benefits of our OCIO solution.


Disclosure: All investment strategies have the potential for profit or loss involve varying degrees of risk.

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