How Does the Outsourced CIO (OCIO) Model Work for RIAs?

Outsourcing allows advisors to delegate operational tasks and, in some cases, certain organizational roles. For example, RIAs may opt to handle investment management with the help of an OCIO, or Outsourced Chief Investment Officer. Examining the benefits of an outsourced CIO for RIAs, as well as the potential drawbacks, can help advisory firms determine if this is an appropriate solution for their needs.

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Understanding an Outsourced CIO for RIAs

The role of the chief investment officer, or CIO, centers on directing investment strategy. An RIA’s CIO is responsible for:

• Conducting due diligence and research surrounding investment products
• Determining which research and analysis tools to use
• Establishing the firm’s investment philosophy and strategy
• Managing asset allocation and risk
• Constructing portfolios
• Ensuring that investments are aligned with the needs and goals of both the firm and its clients
• Adhering to all relevant compliance and regulatory guidelines
• Executing trades and rebalancing client portfolios.

At smaller firms, the CIO and the owner may be the same person. Wearing multiple hats as you grow your practice can be stressful, and it may hinder your ability to focus on other tasks, such as prospecting or meeting with clients.

Opting to outsource CIO duties can provide some relief, and it’s an option more firms are exploring. By the end of 2025, U.S. OCIO assets are expected to reach $3 trillion, according to Cerulli ¹ . It’s expected that demand for these services will only continue to rise as advisors (and investors) attempt to navigate volatile markets.

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How an Outsourced CIO for RIAs Works

Outsourcing CIO duties is similar to outsourcing anything else for your business. You work with an outsourcing provider, who assumes responsibility for the tasks that you delegate. Again, that can include directing and crafting investment strategies, constructing portfolios and ensuring that your firm meets all necessary compliance requirements. Your OCIO may also use AI tools to conduct research or analysis, model risk or monitor market trends.

Some providers use a full-service or turnkey approach, in which all of the typical duties of a CIO are handed off. Others allow you to determine how much control you would like the outsourced CIO to have. Either way, it’s the CIO’s responsibility to perform their duties in a way that aligns with your firm’s philosophy and objectives.

Most often, you’re working with a team rather than a single individual. An outsourced CIO team typically consists of professionals who have experience and knowledge in a variety of financial planning areas, including asset allocation and tax management. They may hold professional designations that underscore their credibility. For instance, your team may include chartered financial analysts (CFAs), chartered alternative investment analysts (CAIAs) and certified public accountants (CPAs).

In terms of pricing, outsourced CIO services may charge a flat fee or use a subscription-based model. For example, you might pay $1,500 per month, or a yearly subscription fee equivalent to 0.1% of your firm’s assets under management (AUM). Some providers may charge hourly or a la carte fees instead.

What you pay for an outsourced CIO may hinge on the scope of services you use, the amount of control you give to your team and the size of your firm. The question is whether using outsourced CIO services is worth it for your firm.

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Benefits of Outsourced CIOs for RIAs

Why do asset owners outsource CIO duties? Here are the top reasons, according to Cerulli ² :

• 53% believe it enhances investment performance
• 47% cited a lack of internal resources to manage portfolios
• 43% noted greater access to alternative investments
• 33% believe it could lead to a reduction in investment fees

Another obvious benefit of outsourcing CIO services for RIAs is that it leaves you free to turn your attention to other areas of growing your business. Working with a trusted CIO team enables you to redirect your energy to tasks that move your firm forward, including:

• Meeting with clients
• Developing new service offerings
• Refining your marketing strategy
• Holding client events
• Adding new prospects to the pipeline
• Building engagement and trust

It becomes easier to achieve your broader organizational goals when you have one less set of tasks to manage. For example, if one of your top priorities is attracting more high-net-worth clients to your firm, outsourcing could support that goal. You could also gain back hours in your week to encourage better work-life balance when investment decision-making is streamlined through an OCIO.

An outsourced CIO may also be able to assist with reducing costs by restructuring your firm’s investment strategy toward products that carry lower fees. Outsourcing often costs less than hiring someone in-house. Additionally, an outsourcing firm has access to the technology tools required for investment management, eliminating the need for you to purchase them.

How to Find an Outsourced CIO for Your RIA

Connecting with an outsourced CIO isn’t difficult. A simple internet search turns up results for companies that offer these services to RIAs and financial advisors. You will, however, need to spend some time comparing providers to find the right one to work with.

As you weigh the options, consider these questions:

• What scope of services is provided?
• What size team will you be working with?
• Are team members credentialed? If so, which certifications or designations do they hold?
• How much control does the advisor have in determining which services to use?
• Will the team offer a customized plan of services that are tailored to your firm?
• How does pricing work? Will you pay a flat fee, a subscription, or something else?
• What level of onboarding support is provided?
• Will you need to have any special software to utilize OCIO services?

Tapping your network could also yield valuable insight into the advantages or disadvantages of outsourcing CIO services. If you know an advisor or two who’s using an OCIO, ask if you can pick their brains about what they like (or don’t like) about the experience. That, along with your own research, can help you make an informed decision about whether to move forward with CIO outsourcing.

Bottom Line

Outsourcing can lend numerous benefits to advisors, whether you opt to delegate CIO responsibilities or something else. Comparing the anticipated benefits against the costs can help you determine if it makes sense for your practice.

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• If you opt to work with an OCIO who uses AI tools to perform their tasks, don’t hesitate to ask questions about how they work. AI is reshaping the wealth management landscape, but if you’re a late adopter, you may not be familiar with the variety of options and possibilities. Having this discussion could prompt you to explore some helpful AI additions to your tech stack.

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