Charles Skorina & Company
● RETAINED EXECUTIVE SEARCH ●
Our clients: visionary families, transformative nonprofits, Wall Street trailblazers
Our vision: build investment preeminence, create opportunity, enrich lives
Our work: provide talent, access, relationships, and insights
LATEST NEWSLETTER
The outlook wasn’t brilliant for the Mudville nine that day: The score stood four to two, with but one inning more to play … Casey at the Bat, Ernest Lawrence Thayer
Hope springs eternal in the OCIO space. Each year confident investment officers and ardent marketeers announce their brand-new best-in-class discretionary outsourced solution. But for most of these eager rookies, few customers will come or care.
Looking back over the last four decades, the best time to pitch an outsourced chief investment officer (OCIO) proposition was probably about thirty years ago when prospects were plentiful, competitors few, and margins were healthy.
In today’s hyper-competitive wealth management arena, fielding a full-service institutional grade asset management team is expensive and costs are soaring for compensation, cyber-security, audits, and compliance, to say nothing of rampant regulatory hurdles and those nasty unknown unknowns.
(See our charts below for detailed office cost breakdowns.)
We recently completed an OCIO search and selection engagement for a sizable east coast nonprofit and found all the responding providers to be consummate professionals and serious competitors.
Firms such as Hirtle Callaghan, Blackrock, J.P. Morgan, and Brown Brothers Harriman, among the stalwarts in our directory, have had years to hone their systems, service, succession, and investment capabilities. But it’s never easy.
In an interview with Jon Hirtle for our 2020 OCIO review he reminisced on the firm’s early efforts to win clients.
Debby [Jon’s wife] and I often talk about the financial low point when our checking account had dropped to $17. What kept us going was that everyone loved the OCIO concept. The idea of powerful, informed, energetic advocacy without the conflicts of interest that define the traditional investment industry.
This Cold Cruel World
It’s tough for newbies and niche players to keep up with the veterans. This year kicked off with Edgehill calling it quits, Agility selling to Cerity Partners, and Vanguard’s OCIO team decamping en masse for Mercer.
They’re in good company. The past few years have seen a steady stream of outsourcing hopefuls merge with better-resourced patrons including Truvvo, Ellwood Associates, New Providence, CornerStone, PFM, and Permit Capital. There will certainly be more.
Boston Consulting Group, in their Global Asset Management 2023 review, estimates that – due to rising costs – the industry’s compound annual growth rate in profits “will be approximately half the average of recent years (5% versus 10%).”
Most nonprofits and family offices, basically anyone under $500 million in investable assets, don’t have the time or resources to build competitive and secure internal investment capabilities.
Investment Office Costs: you pay to play
Strategic Investment Group published an investment office cost study recently, Building Blocks and Costs of an Internal Investment Office, that’s worth a read.
Read More »NEWS AND COMMENTARY
ABOUT
Aoifinn Devitt, new CIO at London LGPS CIV Ltd.
Vincent Tuohey, next president PRINCO
13yrs MITMCo, 2yrs Littlejohn & Co. 4yrs US Army Captain (Iraq), BA & MBA Harvard, MA Cambridge U
Mark L. Baumgartner, new CIO Ray Dalio family office
Edgar Smith, first CIO at Directors Guild of America, Los Angeles
10yrs USC, 3yrs Archstone, 5yrs PAAMCO, 3yrs JPM, MBA, Columbia, BA, Yale
SKORINA IN THE NEWS
9-2-21 Forbes: Insiders say Yale missed an opportunity to add diversity to its iconic $31bn endowment.
9-1-21 Institutional Investor: How to Reach the Allocator C-Suite.
5-7-21 BloombergNews: Yale Names Alex Banker Interim Endowment Chief, Plans Search
5-6-21 The New York Times: David Swensen, Who Revolutionized Endowment Investing, Dies at 67
5-6-21 Forbes: Yale Endowment Chief David Swensen Leaves Legacy of Top College Investment Leaders
CHARLES A. SKORINA & COMPANY works with leaders of Endowments, Foundations, and Institutional Asset Managers to recruit Board Members, Executives Officers, Chief Investment Officers and Fund Managers.
Mr. Skorina also publishes THE SKORINA LETTER, a widely-read professional publication providing news, research and analysis on institutional asset managers and tax-exempt funds.
Our Practice:
• We recruit Board Members and Executive Officers, Chief Investment Officers and Senior Asset Managers.
• Our research and analytics are backed by over thirty years of hands-on recruiting experience and an unrivaled personal network.
• We collect performance, compensation, and background data on most senior institutional investment professionals in the U.S. and the funds they manage. We analyze that data to construct profiles of those managers and their funds, identify best-in-class people, and map their career trajectories.
• We share our research and insights in a widely-read professional newsletter – THE SKORINA LETTER – and website – www.charlesskorina.com.
• The New York Times, Wall Street Journal, Bloomberg, Thompson Reuters, Financial Times (Fundfire), Institutional Investor, Pensions & Investments, Private Equity International, and the institutional investment community use our research and analysis. Skorina has been interviewed on chief investment officer compensation issues on Bloomberg TV.
• Our work is regularly re-printed in Allaboutalpha.com and other industry magazines, blogs, and third- party web postings.
• We focus specifically and effectively on the world we know: Board members and Executive Officers, Chief Investment Officers, and Senior Asset Managers at institutional investment firms and funds – including sovereign wealth funds, endowments, foundations, pension funds, banks, investment banks, outsourced chief investment officer firms (OCIO), and sell-side money managers.
Prior to founding CASCo, Mr. Skorina worked for JP MorganChase in New York City and Chicago and for Ernst & Young in Washington, D.C.
Mr. Skorina graduated from Culver Academies, attended Michigan State University and The Middlebury Institute of International Studies at Monterey where he graduated with a BA, and earned a MBA in Finance from the University of Chicago. He served in the US Army as a Russian Linguist stationed in Japan.
Charles A. Skorina & Co. is based in Tucson, Arizona.
Chief Investment Officer Pay at Private Foundations
Price is what you pay. Value is what you get. — Warren Buffett
What do chief investment officers earn at nonprofit institutions? We recruit these executives for a living, so we avidly track their pay and performance. In this letter, we highlight the compensation of fifty chief investment officers and investment heads at private US foundations.
Many nonprofits, family offices, and Wall Street firms employ top investment professionals, but it’s difficult to extract meaningful data on compensation from reluctant sources. Ergo, we go with what we can get.
In this comp report we’re going with a revealing data set from our good friend John Seitz, CEO of FoundationMark. We wrote about Mr. Seitz in last month’s newsletter on “Foundation Investment Performance,” and we think his research and rankings are useful companions to our endowment studies, of interest to asset owners and all purveyors of investment products and services.
The Bigger the Better
Nonprofit investors wear many hats but have essentially one metric by which they are judged, long-term performance. However, that does not seem to be the metric for how they are paid. When it comes to compensation, size matters.
A few years ago, we ran some correlations using our archival datasets to see how pay correlated to AUM, tenure, and performance at endowments.
The coefficient for AUM to comp was 0.69, which is moderately high. But tenure and performance did not appear to have much impact on CIO pay. In most cases, size trumps all other metrics.
Our correlations
Comp-vs- AUM: 0.69
Comp-vs-Tenure: 0.31
Comp-vs-5yr Returns: 0.27
Kevin Hallock, President, University of Richmond, an expert in the field of executive compensation, and author of “Pay: Why People Earn What They Earn and What You Can Do Now to Make More,” puts it this way:
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