The price of ability does not depend on merit but on supply and demand. – George Bernard Shaw

For our summer 2023 OCIO directory we wrote: Despite the Nasdaq losing a third of its value, 33%, the Russell 3000 down by 20.48%, the S&P 500 off 20%, and the Dow shedding 9%, total outsourced assets on our list dipped a tenable 9.5%, or $356 billion to $3.4 trillion.

How quickly time flies.  Today, with global markets hitting record highs, our latest directory flush with providers, and related AUM over five trillion dollars, discretionary outsourcers of every persuasion are charging ahead chasing assets and fees.

But we can’t help but wonder, are there really that many fully-integrated, conflict-free, financially-grounded, independent investment offices – to paraphrase Hirtle Callaghan’s raison d’etre – fit and able to serve the needs of families, foundations, and related nonprofits?

Supply and demand, duh!

There’s torrential demand as waves of new money seek professional advice.  And a supply gusher as stalwarts and wannabes rewire their practices for OCIO prospects.

Every week it seems someone we’ve never heard of with three, four hundred million comes calling.  Their wealth has surged, they’ve funded a foundation – or sit on the board – and it’s all getting out of hand.  Everyone’s after a piece of their pie, they’ve browsed through our directory, and they’re looking for a firm they can trust.

“The US commands an extraordinary 34% of global liquid private wealth and houses 37% of the world’s millionaire population according to the latest Henley & Partners wealth report.  And this wealth dominance extends across all brackets, with 36% of the world’s centi-millionaires (those with USD +100 million) and 33% of its billionaires residing in the US.”

Eying the celestial end of the wealth spectrum, the Wall Street Journal reports: “The net worth held by the top 0.1% of households in the U.S. reached $23.3 trillion in the second quarter this year, from $10.7 trillion a decade earlier, according to the Federal Reserve Bank of St. Louis. The amount held by the bottom 50% increased to $4.2 trillion from $900 billion over that period.”

The big squeeze

Pricing plans are crumbling as cost increases and fee compression undercut margins.  Revenue on managed assets topped $58 billion in 2024 announced Boston Consulting Group, but almost three-fourths of the gain (70%) came from market performance and a move to lower-priced products.

Meanwhile, it takes a small fortune to field a full-service institutional grade practice as compensation, sourcing, due diligence, cyber-security, audits, and compliance expenses continue to climb.

“Shifts in product offerings and approaches to distribution, industry-wide consolidation, and the need for radically leaner cost structures” are behind the squeeze.  To fatten margins, BCG suggests offering actively managed assets such as active ETFs, model portfolios, and separately managed accounts, and offering private assets to retail clients.

But therein lies a dilemma.  To truly serve clients, aren’t discretionary outsourcers obliged to avoid the conflicts and temptations endemic in money management?  Alicia McElhaney, Institutional Investor, describes the quandary:

“A pioneer in the outsourced chief investment officer business says it’s necessary to be both a pure-play provider — with no products to sell — and have scale.  A large asset manager believes disclosing and managing potential conflicts is enough.  A search consultant says no OCIO is truly free of competing interests.”

OCIOs everywhere

What exactly is an outsourced chief investment officer?  To date there’s no industry standard or designated authority to police the usurpers.

We publish our directory to help families and institutions locate, review, and connect with full-service discretionary outsource investment managers.  If a firm says they provide OCIO services, and their website suggests they do, we usually, though not always, add them. But there sure are a lot of them.

[For this issue we removed five firms and added one, Third Lake Partners.]

Institutional grade OCIOs are sophisticated operations.  The crème de la crème have years of experience – time to fully hone systems, service, succession, and investment capabilities.  Hirtle Callaghan and Blackrock opened for business in 1988, McMorgan & Company set up shop in 1969, Brown Brothers Harriman and JPMorgan Chase date back over two centuries.

Adding to the muddle, each OCIO has its own culture, client mix, investment style, and biases.  Some firms focus on indexing and liquid markets, others on alternatives, still others on ESG.  Some customize portfolios for clients, others don’t.

Final thoughts

The outsourced full-discretion investment business is hyper-competitive, hard to differentiate, and expensive to scale, with hundreds of players including RIAs, banks, brokers, and asset managers all competing for nonprofit and UHNW discretionary mandates. It’s hard to cut through the clutter.

To quote an industry veteran: “As more and more thoughtful investors recognize the power and promise of OCIO, it’s time to review its three primary requirements.

• A Conflict-Free Structure: OCIO requires a structure that is conflict-free and truly open architecture with no products or hidden corporate agendas to confound decision making.
• Purchasing Power: OCIO requires sufficient purchasing power to pay for talent and support to fully exploit global complexity, noise, and opportunity.
• An Investment Management Culture: OCIOs require a point-accountable, investment management culture.”

Our advice? When looking for an OCIO, it pays to be thorough. Once a family or foundation (or pension fund, healthcare system, insurance company, etc.) commits to a partner, an OCIO relationship is not easily undone.

Charles Skorina

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(download PDF directory only)

Outsourced Chief Investment Officer

(OCIO) Directory, Fall 2025

OCIO update, fall 2024, what goes up?

Endowment Investing: harder than you think

Leadership Matters

Affluent Family Affairs

Adela Skenderasi, new CIO, Cystic Fibrosis Foundation

x Brown Advisory, xIMF, xGeorgetown, MBA Virginia Tech

Brendon Reay, new MD investments Bush Foundation

xMaine Community Foundation, xCambridge Associates, PhD Stanford, MS Boston U, MA Bryan Mawr, BA Reed