Our latest Outsourced Chief Investment Officer (OCIO) report below features one-hundred-four firms managing industry assets of $3.27 trillion as of March 31, 2021, an increase of 15% over the prior six months. By comparison, last year we reported 15.8% growth for the entire twelve-months ending September 30, 2020. All things equity – public markets, private equity, venture capital — produced a year for the ages and our herd of OCIO providers kept pace with the bulls. Overall OCIO growth matched Alpha’s broad market index and slightly trailed Alpha’s moderate endowment and foundation diversified style index. Alpha Nasdaq OCIO Indexes One-year Performance ending 3-31-21 Broad Market 30.69 Endowment & Foundations 35.77 Aggressive Asset Allocation 46.34 Moderate Asset Allocation 33.17 Conservative Asset Allocation 7.71 MSCI ACWI 55.31 S&P 500 56.35 Bloomberg Barclays US Aggregate 0.71 60% MSCI ACWI / 40% Bloomberg Barclays US Agg 31.12 The OCIO Story Our friend Jon Hirtle, of Hirtle, Callaghan & Co, officially launched the OCIO service model in 1988 (with fellow Goldman Sachs vet Don Callaghan) and it’s been full steam ahead ever since. (See Jon Hirtle’s iconoclastic guest commentary below –– and his full article OCIO My Foot! here. We welcome all points of view) The core idea was to offer a diversified and full-discretion money management function to family offices and institutions who could no longer effectively or affordably manage the money in-house. OCIO firms offer the proven performance of the best endowment and foundation investment managers at a reasonable price. And they can replicate the entire investment office with the process and structure to cope with the complexity of modern portfolios and mounting operational and regulatory burdens. We’ve been charting the growth of the OCIO industry for well over a decade in our annual OCIO reports and the heirs of…
Outsource Chief Investment Officer (OCIO) Company Guide 2020
Outsource Chief Investment Officer (OCIO) Company Guide 2020 Charles Skorina & Company https://www.charlesskorina.com/ (AUM as of June 30, 2020 unless otherwise noted) 1. Abbot Downing, Minneapolis, MN Douglas W. Evans, Head of Portfolio Managers $39.2bn Discretionary assets $44.4bn total douglas.evans@abbotdowning.com (415) 222-1490 ———————————————————— 2. Agility, Denver, CO Chris Bittman, Partner $10.4bn Discretionary assets cbittman@agilitycio.com (303) 813-7910 ———————————————————— 3. Alan Biller and Associates, Menlo Park, CA Alan D. Biller, Chairman John Skjervem, CEO $51.1bn Discretionary assets $102.2.bn total info@alanbiller.com (650) 328-7283 ———————————————————— 4. Alesco Advisors, Pittsford, NY Todd D. Green, Principal, Business Development & Client Service $4.1bn Discretionary assets (12-31-20) $4.9bn total TGreen@alescoadvisors.com (585) 749-0357 ———————————————————— 5. Angeles Investment Advisors, Santa Monica, CA Michael A. Rosen, CIO & Managing Partner Chaunice A. Peebles, Director $5.6bn Discretionary assets $28.4bn advisory mrosen@angelesadvisors.com chaunice@angelesinvestments.com (310) 393-6300 ———————————————————— 6. AON, Chicago, IL Ed Bardowski, Partner, Sales Leader & Registered Principal $162.7bn Discretionary assets $3.1trillion advisory ed.bardowski@aon.com (484) 941-1409 ———————————————————— 7. Appomattox Advisory, New York, NY Susan Webb, Founder, President, CIO Oscar Gil, Founder, CEO Drianne Benner, Managing Director Sales $1.7bn Discretionary assets dbenner@ainvadvisors.com (212) 895-3012 ———————————————————— 8. Arnerich Massena, Portland, OR Ryland Moore, Principal, Director of Business Development $1.07bn Discretionary assets (9-30-20) $7.45bn total rmoore@am-a.com (503) 595-0247 ———————————————————— 9. Artemis Wealth Advisors, New York, NY Peter M. Rup, Founder & CIO Ron Zdrojeski, Director Business Development $862mm discretion $1.4bn total prup@artemiswa.com (212) 838-9000 ———————————————————— 10. Arthur J. Gallagher & Co., Washington, DC Michael W. Johnson, Area President Institutional Investment & Fiduciary Services $5.84bn discretion (3-31-20) $52.68bn advisory michael_w_johnson@ajg.com (202) 898-2270 ———————————————————— 11. Asset Strategy Consultants, Baltimore, MD Alfred J. Morrison, Managing Principal Andrew W. Conner, CIO $1.5bn discretion morrison@assetstrategyconsultants.com conner@assetstrategyconsultants.com (410) 528-8282 x1043 (410) 528-8282 x1043 ———————————————————— 12. Ballentine Partners, Waltham, MA Jayson DeAngelis, Partner $7.5bn discretion $15bn…
Building the Next OCIO Powerhouse
Growing a discretionary asset management or investment advisor business is tough. We have yet to see an independent Outsourced Chief Investment Officer firm reach $100 Billion AUM through organic growth. Most of them will never even reach $20 Billion. Of the thirteen firms managing $50 billion or more on our annual OCIO list, only one – Alan Biller and Associates – launched as a pure-play OCIO and consulting start-up. And they’re just over the $50 Billion line. OCIO Over $100bn AUM AUM (as of 6-30-20) Mercer $305.9 Russell Investments $234.7 BlackRock $228.0 SEI $181.0 Goldman Sachs $168.0 AON Hewitt $162.7 Willis Towers Watson $148.0 State Street Global Advisors $145.6 $1,573.9 OCIO $50bn to $100bn AUM AUM (as of 6-30-20) Northern Trust $88.7 Wilshire Associates $73.4 JP Morgan Asset Mgmt $63.3 Vanguard $57.0 Alan Biller and Associates $51.1 $333.5 Most except Biller began as financial mega-firms long before OCIOs were even invented. Several have roots stretching far back into the nineteenth century. JPM goes all the way back to the 1800s! Independent OCIOs and RIAs have not been able to grow their way into this select company, and probably never will. Why is this? Total OCIO assets have been growing briskly, at more than 15 percent annually (In the 12 months July 2019 to June 2020). But it’s scattered among dozens of relatively small firms. The solution seems obvious: Do it the old-fashioned way. Grow by acquisition and aggregation. Buy, sell, and merge firms. That’s how the mega-financials have done it. It’s a well-understood historical process. Railways, utilities, steelmakers, banks, brewers, hotels, airlines all grew like this. The boffins at Harvard Business School call it the Industry Consolidation Lifecycle. (See: https://hbr.org/2002/12/the-consolidation-curve) It’s easy to see after the fact, but much harder when we’re all floundering through it…
Jon Hirtle and the OCIO Juggernaut
OCIO Growth Tops 15.8 Percent in 2020 Our latest Outsourced Chief Investment Officer report features a list of 104 OCIO firms, each with updated contact information and AUM numbers. It’s the most comprehensive and accurate available. We also have a deep-dive interview with Jon Hirtle, a pivotal leader in the industry he helped create. We invite both institutions and high-net-worth families to check out our list – below and on our website – and call a few of the firms if you’re in the market for money-management help. It may not be as exciting as Tinder, but it could still be the start of a beautiful new relationship! Observations on a Plague Year 2020 was a strange and tumultuous year. But, after trudging through a cruel pandemic, rancorous politics, and vertiginous markets, there still seems to be some hope left in the world. In the OCIO industry, for example, managers have amassed an additional $431 billion AUM over the last twelve months, topping out at a record $2.812 Trillion as of 30 June 2020. That’s a year-over-year growth of 15.8 percent! And yet, as we’ve noted in past reports, the same big six – Aon, Blackrock, Goldman Sachs, Mercer, Russell, and Willis Towers Watson – still manage almost half (45%) the OCIO money. A few firms sold themselves to larger players in 2020. Athena Capital Advisors joined Franklin Templeton, Focus Financial Partners acquired CornerStone Partners, and private equity investors CC Capital and Motive Partners teamed up to buy Wilshire Associates. We’ve been charting the growth of the OCIO industry for over a decade in our annual OCIO reports and the heirs of Hirtle, big and small, seem (mostly) to have flourished. Jon Hirtle of Hirtle Callaghan hatched the concept of an “independent investment office” managing family and institutional money over…
The OCIO Dilemma: Buy, Sell, or Merge
Active management is feeling more love these days. With the surge in institutions looking for investment help, there is new-found affection for the experience, judgement, and human touch provided by outsourced CIO firms. But with opportunity pounding on the door, why do so few OCIOs hunger for growth? Where’s that entrepreneurial drive, that vision, passion, and focus on becoming the biggest and the best? We have been tracking the industry for decades and have yet to see a single independent OCIO provider break through the one-hundred billion AUM level. Not one. Most will never reach twenty billion. The OCIO business, as defined by Commonfund is…the practice of delegating a significant portion of the investment office function to a third-party provider, typically an investment management or consulting firm. The industry, with $2.38 trillion in assets as of our latest report, is bifurcated, highly diverse, intensely competitive, and the largest six providers on our annual OCIO list – Aon, Blackrock, Goldman Sachs, Mercer, Russell and Willis Towers Watson – with their size and resources dominate the largest segment, corporate pensions. In this segment, reality bites. There are only about three-hundred remaining internally managed corporate pensions over a billion AUM and those that outsource will chose one of the big six mentioned above or a major insurance company. Boutique OCIOs have no chance for the business. Most new prospects dwell in the sub-$1 billion realm – endowments, foundations, health systems, charities, and associations – and smaller sub-$200 million customers including ultra-high-net-worth families and nonprofits. The good news is that there are about fifteen hundred colleges and universities in the US (about one-hundred-fifty endowments over $1 billion and another one-hundred-fifty in the $500 million to $1 billion bracket) and several thousand foundations, health systems, charities, and associations. The bad news is that most of…