So, you’ve taken the plunge and brought on a new outsourced Chief Investment Officer (OCIO) to assist your team. (It’s about time, you may be thinking.) Between the sudden market downturn, concerned clients, and the ways in which we all look to cope with the ongoing COVID-19 crisis, you’re looking forward to the expertise and financial guidance your OCIO partnership will provide.
Bringing on a new C-Suite role can be a challenge at the best of times, however—and these aren’t the best of times. With shaky portfolio performances and rising fees facing us across the industry, you may be concerned about integrating this new role into your firm. Will your team accept them? Will they really be able to deliver on their promises? And, perhaps most importantly, will your clients accept their expertise and listen to their advice?
It’s a lot to think about. Fortunately, this isn’t our first rodeo, and we have some suggestions for smoothing out relationships as you bring on an OCIO. Here are four ways you can ease the process of integrating your new OCIO into your firm’s lean, mean, finance machine:
Understand the OCIO Partnership
The first step to a successful OCIO integration is understanding the nature of the OCIO model. An outsourced OCIO isn’t an internal director, they aren’t full-time, and they certainly aren’t going to sweep in like a knight on a white horse to save the day. The relationship isn’t one-sided—this individual won’t just tell you what to do with your money and then call it a day.
Instead, an OCIO works hand-in-hand with your company to achieve your pre-determined goals. With your best interests in mind, they can provide customized advice to help your firm get where you want it to go. This relationship doesn’t have to end once you’ve hit the goalposts, either, and sometimes becomes a source of tailored financial advice for years to come.
Build a Process for Shifting Investment Authority
Depending on the approach you’ve chosen to adopt, working with an OCIO can involve transferring some amount of investment authority to that role. It may be full discretionary authority, or simply an advisory role, depending on the model you choose. While you may not think that this is necessarily essential to plot out and document carefully—they are, after all, the experts—nothing could be further from the truth.
Process documentation is important for your sake as much as it is for theirs. By documenting how much authority is shifting, when, and where, you set each member of your team up for success. Just because you’re bringing in an expert doesn’t mean they don’t need clear directions and good supporting documentation, so make sure that you meet their needs in the same way you would a member of your current team.
Communicate Hierarchy To Your Team
You might be surprised how many firms can miss this hurdle completely. When bringing on any new team member, make sure that you communicate what the OCIO’s role will be, whatever that is. If they will be taking over certain roles, accounts, or direct responsibility for certain clients, clearly communicate to your team how this transition will take place and why it is occurring. The last thing you want is to send the new leader in blind and let resentment fester among your team.
By communicating these changes upfront, you set the foundation for a good relationship between this high-level outsourced role and your full-time team. It’s important that your staff sees this role as a resource, and not as someone who threatens their own expertise. By communicating the limitations of the OCIO’s role in advance, you can set your team’s minds at ease.
Set Performance Benchmarks
While you know to set performance benchmarks for a new hire at a mid- or entry-level position, it’s just as important to set benchmarks at the c-suite level. Even before you draw up the initial contract, you’ll want to discuss exactly what you’re hoping to achieve by beginning an OCIO partnership and what you expect from them. Include this information in the contract, along with the appropriate legal language regarding liability.
By setting these benchmarks for both success and failure upfront, you’ll know quickly whether this partnership will work or not. One size doesn’t fit all when it comes to executive-level partnerships like this, so setting clear goals and expectations will give you the resources you need to communicate your needs as a firm and push back, redirect, or terminate when necessary.
In all honesty, the decision to outsource your c-suite financial officer needs is actually the hardest part of these relationships. It’s a big decision, and a lot of responsibility to cede to someone else. But when done right, onboarded well, and maintained with open communication and clear hierarchy, it can be a highly beneficial partnership for you, your team, and your clients. So, once you’ve made the decision and chosen the right partner, you can stop holding your breath. It only gets better from here.
Still looking for the right OCIO partnership? We may be able to connect you with the right individual with the same speed and professionalism we bring to all our executive placements. Give us a call today to get started.