Top 5 Considerations for Hiring an OCIO – Take the “T” Test

June 2nd, 2017

The term “Outsourced Chief Investment Officer” (OCIO) has gained popularity in the investment industry as investment consultants, banks and small wealth management firms are now offering OCIO services to foundations, endowments and nonprofits. You may be considering this model instead of the self-managed or consultant model used in the past. Below, we include the “T” test to help your organization evaluate potential OCIO providers.

1. Time Tested: Does the OCIO have an investment philosophy and process that is time-tested, disciplined and proven?

Your OCIO should have an investment philosophy that is well-articulated, research-driven, and time-tested as well as an investment process that is explainable, repeatable, and disciplined. The strongest OCIO firms can clearly explain where ideas are generated, who evaluates ideas, and how portfolios are constructed. The philosophy and process should prove consistent over the long term, not wavering or chasing the latest fad.

2. Team: Does the OCIO have a team of experts solely dedicated to serving organizations that are similar to yours—in size, scope, mission, goals, objectives and time-horizon? 

OCIOs that lack depth of team, show high levels of instability and turnover, or have a retail focus should raise flags during your evaluation. It is important to find a partner who has deep understanding of the unique challenges faced by charitable organizations and is able to leverage a multitude of resources to help you meet those challenges.

3. Transparency: Is the OCIO transparent about the services offered to your organization and the fees associated with those services?

During your evaluation the OCIO should be clear and transparent about fees; it should be easy to understand account-level fees, underlying manager fees, and any additional fees that may be assessed based on the services provided.

4. True Value: Does the OCIO offer value-added services to enhance your client experience and help your organization fulfill its mission?

As competition within the investment management industry increases, it is important that your OCIO offers services that complement their investment process. A firm that understands how to enhance your organization’s existing efforts in areas like board education and governance, transition and leadership succession planning, grantmaking, donor development, or planned giving and stewardship will bring significant value to the relationship and make the lives of your Board and Staff easier.

5. Track Record: Does the OCIO have a history of helping clients meet their goals and objectives?

The organizations you evaluate should show a history of meeting client goals and objectives. Beyond performance, OCIOs should demonstrate their ability to preserve principal, achieve capital appreciation, and generate a total return to meet distribution/spending requirements over the long-term

If your organization is interested in learning more about the benefit of partnering with an OCIO, please do not hesitate to contact our Endowment and Foundation Management Team at efsolutions@glenmede.com or 215-419-6990.

Glenmede’s Top 5 is intended to be an unconstrained review of matters of possible interest to Glenmede Trust Company clients and friends and is not intended as personalized investment, estate planning, tax or legal advice. Investment and wealth advice depends on many individual facts and circumstances we cannot account for here. For legal and tax advice, consult your lawyer or accountant. Opinions or projections herein are based on information available at the time of publication and may change thereafter. Information gathered from other sources is assumed to be reliable, but accuracy is not guaranteed. Outcomes (including performance) may differ materially from expectations herein due to various risks and uncertainties. Any reference to risk management or risk control does not imply that risk can be eliminated. All investments have risk. Please contact your Glenmede representative to discuss the applicability of any matter discussed herein.