Enhancing the Outsourced CIO model via boutique fund administration

The model goes by many names: “outsourced chief investment officer,” “CIO in a box,” “implemented consulting,” “OCIO,” and “fiduciary management". Whatever the nomenclature, what is truly notable is how much the Outsourced CIO model increased its popularity in the wealth management industry over the years, ever since its inception in the late ‘80s.

Dedicated third-party portfolio management

Delegating the management of an organization’s portfolio to an independent firm, as opposed to conducting the task in-house, allows the organization to benefit from reliable investment expertise, enhanced risk management, and heightened fiduciary accountability while controlling costs. Despite its attractive overall track record and the growing interest in this particular set-up, however, challenges remain.

Outsourced CIOs and the investors they assist have to navigate issues of cultural fit, transparency, and collaboration in the face of intensified market complexity.  The outsourced CIO’s responsibilities are manifold: investment strategy, economic and capital markets research, and account-level monitoring and reporting among others. Given the weight of these obligations, for outsourced CIO practitioners, having an efficient and comprehensive operations support system is crucial.

A suite of solutions

Asset servicing companies that provide fund administration and middle office services equip the outsourced CIO with the latest cutting-edge technology and processes that allow him or her to monitor their portfolio with ease and convenience. Specifically tailored to their needs, these innovations help the outsourced CIO run their daily operations seamlessly, thus granting them a more insightful focus on their clients.

Customized fund administration resources provided by asset servicing companies include all the aspects of daily account administration, such as cash management, net asset value calculation, and various reporting tools. They also have access to industry-leading, proprietary technologies such as cloud-based reporting portals allowing clients access to their data anywhere, presented in formats encouraging careful decision-making and management. Asset servicing companies’ white-glove client care and innovative solutions ensure that outsourced CIOs stay on top of any market volatility.

The engagement of middle office functions further simplifies the fund management process. Data aggregation and normalization, data warehousing, trade break identification and resolution, and corporate action processing are just some of the services that relieve outsourced CIOs from the assignment of overseeing the day-to-day operations behind the portfolio. Asset servicing companies’ tax professionals also free them from the meticulous effort of preparing paperwork and assuring regulatory compliance.

With this suite of fund administration, middle office, and tax services solutions available, the outsourced CIO can be assured of the best possible support in portfolio management.