OCIO (Outsourced Chief Investment Officer) discussion

No longer in the industry, but my previous shop was top notch in their OCIO practice and I was heavily involved in that side of the business.

1. Obviously depends on your fund's size and the affect of a flat vs laddered fee, but the fees/costs are designed to be long-term cost-savers to your endowment/pension/family office, etc. Take into account the fact that a lot of the operational work now is burdened on the advisor, not the client. These types of activities are not efficiently done by those funds simply because, especially for foundations, investment decisions are kept on the back burner constantly, except for when the market takes a deuce.
2. Compliance/governance - your investment allocation, policy, and even rebalance cadence now fall on the OCIO provider. From my experience, just from a director/board member perspective, the OCIO committee, unlike the endowment/fund, has numerous check's and compliance measures to adhere to on top of the fund's rules. What does this mean?

• [Type A personality board member] cannot steamroll the investment process or make stupid decisions like "let's just allocate all our HF/PE to my buddies's funds."

• Entire board committee with 10-15 years investment experience combined cannot do the same diligence as an OCIO committee with 10-15+ years of experience...each.

3. As OCIO rates (speaking from experience) are more expensive but offer much more oversight, the clients' can still be heavily involved in the process if needed, which means, assuming the advisors are good, a lot more underlying services can be requested by the OCIO (again operational, but even our research arms did much more heavy lifting when it came to OCIO clients)

Capital Allocators has done a few episodes with OCIO managers, highly recommend you chekc that podcast out