4400 registered foals, and only 16 or 18 of them make it to the Derby ― John Sosby, Claiborne Farm Our spring 2024 Outsourced Chief Investment Officer (OCIO) update features one-hundred-two service providers with pertinent particulars on each. We include names, numbers, emails, titles, and at least one client service professional ready to take your call. What could be easier? Our goal is to help families and institutions locate, review, and connect with full-service discretionary outsource investment managers. These firms care deeply about their customers. Our directory makes it easy for prospective clients to reach them. What a year For the year ending December 31st, 2023, total OCIO AUM hit a record $4.1 trillion dollars on $686 billion in new business, a whopping twenty percent gain. In Derby lingo, a few entrants dropped off the board and others jockeyed for position, but the favorites finished in the money, and the payouts were impressive. Our latest OCIO directory hosts a crowded field so we created this chart to provide some context, grouping the firms by size, number, and growth-per-group in dollars and percentage. OCIOs No. of firms AUM % increase $ increase % of total $4.1tn Over $100bn 12 $2.616bn 24.44% $514bn 64% $50 – $100bn 11 809 12.72 91 20 $20 – $50bn 10 250 12.16 27 6 $10 – $20bn 15 223 16.82 32 5 $5 – $10bn 20 145 12.64 16 3 $1 – $5bn 24 57 15.07 7.5 1 Under $1bn 10 5.9 4.74 14mm 1 – 102 $4.1tn – $686bn – * See complete company listings by group in the appendix below Winner takes all Here’s what caught our attention. Twenty-three firms on our list manage most of the money, about eighty-four percent – the twelve largest control sixty-four percent – while the remaining seventy-nine providers…
The OCIO Mirage & Investment Office Costs
The outlook wasn’t brilliant for the Mudville nine that day: The score stood four to two, with but one inning more to play … Casey at the Bat, Ernest Lawrence Thayer Hope springs eternal in the OCIO space. Each year confident investment officers and ardent marketeers announce their brand-new best-in-class discretionary outsourced solution. But for most of these eager rookies, few customers will come or care. Looking back over the last four decades, the best time to pitch an outsourced chief investment officer (OCIO) proposition was probably about thirty years ago when prospects were plentiful, competitors few, and margins were healthy. In today’s hyper-competitive wealth management arena, fielding a full-service institutional grade asset management team is expensive and costs are soaring for compensation, cyber-security, audits, and compliance, to say nothing of rampant regulatory hurdles and those nasty unknown unknowns. (See our charts below for detailed office cost breakdowns.) We recently completed an OCIO search and selection engagement for a sizable east coast nonprofit and found all the responding providers to be consummate professionals and serious competitors. Firms such as Hirtle Callaghan, Blackrock, J.P. Morgan, and Brown Brothers Harriman, among the stalwarts in our directory, have had years to hone their systems, service, succession, and investment capabilities. But it’s never easy. In an interview with Jon Hirtle for our 2020 OCIO review he reminisced on the firm’s early efforts to win clients. Debby [Jon’s wife] and I often talk about the financial low point when our checking account had dropped to $17. What kept us going was that everyone loved the OCIO concept. The idea of powerful, informed, energetic advocacy without the conflicts of interest that define the traditional investment industry. This Cold Cruel World It’s tough for newbies and niche players to keep up with the veterans. This year kicked…
OCIOs: Your New Best Friends
However beautiful the strategy, you should occasionally look at the results – No attribution As luck would have it, we’re currently managing an OCIO (outsourced chief investment officer) search for a notable east coast organization and thought we’d share some of what we’ve learned over the years. A few tips for our board and family readers. Why this “noblesse oblige?” If you believe the pundits, investment advisors are about to enter a new golden age of wealth management. According to UBS and a flurry of broadsheets, “over the next 20 years, the world will experience the greatest transfer of wealth in history with $84 trillion expected to pass down to younger generations in the US alone.” At the celestial end of the wealth spectrum, we find a little over half the world’s wealthiest living in the United States. UBS counts 123,870 ultra-high-net-worth individuals with investable assets of $50 million or more on our shores, and the bank expects that number to top 180,00 in five years. Add in another 3,300 foundations with assets over $50 million and no wonder both Cerulli Associates and Capgemini forecast voracious demand for OCIO services for years to come. But with over one hundred firms on our latest OCIO provider list, how’s a family or institution to choose among discretionary investment managers? Managing money ain’t cheap As we wrote a few weeks ago in our OCIO summer update, it’s expensive to support an institutional grade full-service asset management platform. Costs are climbing for infrastructure, cyber-security, audits, and compliance. Boston Consulting Group, in their Global Asset Management 2023 review, estimates that – due to rising costs – the industry’s compound annual growth rate in profits “will be approximately half the average of recent years (5% versus 10%).” In a related wealth report, BCG highlights the impact…
OCIO update, Summer 2023: Holding On
The best way to predict the future is to create it. ― Unknown Our summer 2023 Outsourced Chief Investment Officer (OCIO) update features 101 firms, each with a designated contact individual and helpful hints to reach them: name, title, email, and phone number. It’s the most comprehensive, accurate, and accessible available. Our goal is to help families and institutions locate, review, and connect with full-service discretionary outsource investment managers. As Henry Kissinger supposedly quipped when pondering a question on European leadership, “If you want to speak with Europe who do you call?” The companies on our list care deeply about their customers. Our directory makes it easy for prospective clients to reach them. Holding On For the year ending December 31st, 2022, OCIO providers managed to hold the line against volatile financial markets and investment headwinds, our new era of uncertainty to quote McKinsey. 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. It’s not all Strum und Drang, however, both Cerulli Associates’ OCIO Survey 2022 and Capgemini’s Wealth Management Top Trends 2023 expect healthy demand for OCIO services in the years to come. According to Capgemini, “The growing complexity of assets, the necessity to adjust to volatile markets and uncertainties, access to experts, and shrinking investment management costs will heighten the profile of OCIOs.” This is a common refrain from clients and contacts. It’s expensive to support an institutional grade full-service asset management platform and it will only get worse. Costs are climbing for infrastructure, cyber-security, regulatory audits and compliance, and access to liquid and alternative products and managers. Given these challenges, there are only three ways…
OCIO update: new firms, more AUM
We added HighGround Advisors, Pivotal Advisors, Principal Global Advisors, and Harpswell Capital Advisors to our OCIO Spring 2022 Directory. Outsourced AUM now totals $3.74 trillion, a new record. You will find our full report here and updated directory below. Principal Global Advisors, a subsidiary of the Principal Financial Group, acquired the OCIO assets of Wells Fargo and some of the staff. AUM totals $29.7bn under full discretion. HighGround Advisors, founded in 1930 to manage the Baptist Congregation pension and endowment assets, now serves over four-hundred nonprofit organizations with total AUM of $2.5bn and $1.5bn under full discretion. Harpswell Capital Advisors founded by Jack Moore, manages $455 million in discretionary assets. Pivotal Advisors and Ms. Tiffany McGhee, African-American founder and CIO, currently manage about $400 million with full discretion. This now means we have two African-American owned OCIO firms in our directory of one-hundred-five outsourcing managers. Disciplina, founded by Matthew Wright, president and CIO (former Vanderbilt CIO) is our second African-American owned OCIO firm. That works out to less than two percent, consistent with the handful of African-American stalwarts we found in our reference database of nonprofit chief investment officers and highlighted two years ago. AFRICAN-AMERICAN CIOs at US NONPROFITS ————————————————– Endowments Kim Y. Lew, CEO, Columbia University IMC Brooke Jones, CIO, Bryn Mawr College Charmel Maynard, CIO & Treasurer, University of Miami Frank Bello, CIO Howard University ————————————————– Foundations Joseph Boateng, CIO, Casey Family Programs Rukaiyah Adams, CIO, Meyer Memorial Trust (departs 8/31/22) Nickol Hackett, CIO, Joyce Foundation Bola Olusanya, CIO, The Nature Conservancy ————————————————– Corporate Pensions Dekia M. Scott, CIO, Southern Company Bryan Lewis, CIO, US Steel ————————————————– Public Pensions Mansco Perry III, ExecDir/CIO, Minnesota SBI (retire 10-31-22) Angela Miller-May, CIO, Illinois Municipal Retirement Fund Cheryl Alston, CIO, Employees Retirement Fund City of Dallas Edward “Ted” Wright, CIO, Connecticut…