Outsourced Chief Investment Officer: pros and cons

The philosophy of investing sees reality as a creative environment. Interacting with it by investing in certain projects not only increases one's capital but also forms better conditions for the development of a certain social group, street, city, or even humanity. Comprehension of this philosophy and mastering the tools for the implementation of ambitious projects is a long and laborious process. Therefore, many wealthy families, sophisticated investors, and various organizations prefer to have their investments handled by professionals. 

The Reasons Behind the Spreading of the OCIO Business Model

The development of the Outsourced Chief Investment Officer Institute (OCIO) was a natural consequence of the demand for prudent and economically profitable money management. At the same time, no less important was the desire for socially worthy investments that not only strengthen the reputation and status of OCIO clients but also allow them to realize the important social mission to which they feel the call. Thus, new models of investments built on the basis of public and private partnership detailed in the article by Karen E. Wilson requires constant involvement of investors that can be guaranteed by OCIO services.

Incompetent vs. Competent Way of Managing Investments

The decision to outsource an investment function to an OCIO can be taken for a variety of reasons. But, as a rule, this is preceded by the realization that the placement of investments is a responsible matter that cannot be successful without deep involvement in this process. This is especially true for large capitals, and hence, large risks. Regardless of what assets or projects you are going to invest in, constant monitoring, market analysis, risk management, etc. are critically required. Besides that, to manage large assets, you need to master a variety of disciplines, including economics, finance, politics, geopolitics, etc.

It is much more efficient to hire an OCIO with good track records and positive reviews from other wealthy clients or organizations. For example, such a respectable Outsourced Chief Investment Officer as LLC Certuity has expertise in servicing Ultra High Net Worth Families. Having received recommendations from some of the company's clients, you can be sure of the wise and profitable management of your assets.

How to Choose an OCIO Provider

The choice of an OCIO provider should be balanced not only because you entrust your capital to an external company for deployment. The other side is that this will be a long-term collaboration, so it should be built on trust and be as comfortable as possible. To make the right choice, which will not require revision afterwhile, do not forget to pay attention to the following aspects.

Philosophy of Investment

Be sure to learn about the company's values to see how they align with your ideas and priorities. For example, a particular OCIO may strive for the maximization of profits for its client, regardless of how socially significant or, conversely, speculative those projects are. And if your priorities are ESG investing (Environmental, Social, and Governance), which does not always allow you to get the maximum return on invested resources, then the investment philosophy of such an OCIO will diverge from your values and generate disharmony in relations.

Psychology of Investing

In the same way that individual investors are divided into aggressive and conservative, different OCIOs have varied approaches to the deployment of client capital. And if you expect intensive activity from your OCIO, but the company prefers cautious passive investment strategies, this will generate controversy. The opposite is also true: if you do not like to take big risks, but the OCIO offers unpredictable projects, this can feed your fears about the fate of your capital. Learn the main strategies for managing an investment portfolio and be sure to ask a potential OCIO what practices it follows.

Technical Questions

It is also essential to consider the following features of the OCIO work:

• Staff size and composition;
• Number of clients;
• Volumes of capital already managed by this OCIO;
• Possibility of direct access to Chief Investment Officers;
• Control procedures;
• Peculiarities of performance reporting, etc.

The best companies providing OCIO services, such as high net worth family office LLC Certuity, adhere to the principle of building an investment portfolio together with the client. Investment placement is tailored to the values and preferences of each client. You can choose multi-asset class solutions and get not only a high return on your investment but also moral satisfaction from participating in socially significant projects. By managing your wealth with LLC Certuity,