However beautiful the strategy, you should occasionally look at the results – No attribution As luck would have it, we’re currently managing an OCIO (outsourced chief investment officer) search for a notable east coast organization and thought we’d share some of what we’ve learned over the years. A few tips for our board and family readers. Why this “noblesse oblige?” If you believe the pundits, investment advisors are about to enter a new golden age of wealth management. According to UBS and a flurry of broadsheets, “over the next 20 years, the world will experience the greatest transfer of wealth in history with $84 trillion expected to pass down to younger generations in the US alone.” At the celestial end of the wealth spectrum, we find a little over half the world’s wealthiest living in the United States. UBS counts 123,870 ultra-high-net-worth individuals with investable assets of $50 million or more on our shores, and the bank expects that number to top 180,00 in five years. Add in another 3,300 foundations with assets over $50 million and no wonder both Cerulli Associates and Capgemini forecast voracious demand for OCIO services for years to come. But with over one hundred firms on our latest OCIO provider list, how’s a family or institution to choose among discretionary investment managers? Managing money ain’t cheap As we wrote a few weeks ago in our OCIO summer update, it’s expensive to support an institutional grade full-service asset management platform. Costs are climbing for infrastructure, cyber-security, audits, and compliance. 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%).” In a related wealth report, BCG highlights the impact…
OCIO update, Summer 2023: Holding On
The best way to predict the future is to create it. ― Unknown Our summer 2023 Outsourced Chief Investment Officer (OCIO) update features 101 firms, each with a designated contact individual and helpful hints to reach them: name, title, email, and phone number. It’s the most comprehensive, accurate, and accessible available. Our goal is to help families and institutions locate, review, and connect with full-service discretionary outsource investment managers. As Henry Kissinger supposedly quipped when pondering a question on European leadership, “If you want to speak with Europe who do you call?” The companies on our list care deeply about their customers. Our directory makes it easy for prospective clients to reach them. Holding On For the year ending December 31st, 2022, OCIO providers managed to hold the line against volatile financial markets and investment headwinds, our new era of uncertainty to quote McKinsey. Despite the Nasdaq losing a third of its value, 33%, the Russell 3000 down by 20.48%, the S&P 500 off 20%, and the Dow shedding 9%, total outsourced assets on our list dipped a tenable 9.5%, or $356 billion to $3.4 trillion. It’s not all Strum und Drang, however, both Cerulli Associates’ OCIO Survey 2022 and Capgemini’s Wealth Management Top Trends 2023 expect healthy demand for OCIO services in the years to come. According to Capgemini, “The growing complexity of assets, the necessity to adjust to volatile markets and uncertainties, access to experts, and shrinking investment management costs will heighten the profile of OCIOs.” This is a common refrain from clients and contacts. It’s expensive to support an institutional grade full-service asset management platform and it will only get worse. Costs are climbing for infrastructure, cyber-security, regulatory audits and compliance, and access to liquid and alternative products and managers. Given these challenges, there are only three ways…
OCIO update: new firms, more AUM
We added HighGround Advisors, Pivotal Advisors, Principal Global Advisors, and Harpswell Capital Advisors to our OCIO Spring 2022 Directory. Outsourced AUM now totals $3.74 trillion, a new record. You will find our full report here and updated directory below. Principal Global Advisors, a subsidiary of the Principal Financial Group, acquired the OCIO assets of Wells Fargo and some of the staff. AUM totals $29.7bn under full discretion. HighGround Advisors, founded in 1930 to manage the Baptist Congregation pension and endowment assets, now serves over four-hundred nonprofit organizations with total AUM of $2.5bn and $1.5bn under full discretion. Harpswell Capital Advisors founded by Jack Moore, manages $455 million in discretionary assets. Pivotal Advisors and Ms. Tiffany McGhee, African-American founder and CIO, currently manage about $400 million with full discretion. This now means we have two African-American owned OCIO firms in our directory of one-hundred-five outsourcing managers. Disciplina, founded by Matthew Wright, president and CIO (former Vanderbilt CIO) is our second African-American owned OCIO firm. That works out to less than two percent, consistent with the handful of African-American stalwarts we found in our reference database of nonprofit chief investment officers and highlighted two years ago. AFRICAN-AMERICAN CIOs at US NONPROFITS ————————————————– Endowments Kim Y. Lew, CEO, Columbia University IMC Brooke Jones, CIO, Bryn Mawr College Charmel Maynard, CIO & Treasurer, University of Miami Frank Bello, CIO Howard University ————————————————– Foundations Joseph Boateng, CIO, Casey Family Programs Rukaiyah Adams, CIO, Meyer Memorial Trust (departs 8/31/22) Nickol Hackett, CIO, Joyce Foundation Bola Olusanya, CIO, The Nature Conservancy ————————————————– Corporate Pensions Dekia M. Scott, CIO, Southern Company Bryan Lewis, CIO, US Steel ————————————————– Public Pensions Mansco Perry III, ExecDir/CIO, Minnesota SBI (retire 10-31-22) Angela Miller-May, CIO, Illinois Municipal Retirement Fund Cheryl Alston, CIO, Employees Retirement Fund City of Dallas Edward “Ted” Wright, CIO, Connecticut…
OCIO Update Spring 2022: Last Man Standing
Pioneers take the arrows, settlers take the land – Anonymous Our latest Outsourced Chief Investment Officer report features a list of 107 OCIO firms, each with updated contact information and AUM numbers. It’s the most comprehensive and accurate available. For the nine months ending December 31st, 2021, the managers on our list added $472 billion (a 14.4% gain) in AUM, totaling a record $3.74 trillion dollars in discretionary outsourced assets. But after years of steady growth, it’s apparent there’s a shakeout underway. As we noted in our February 2021 OCIO update, discretionary asset managers without products to sell are notoriously hard to scale. Brilliant, original strategies lose their potency when they are widely copycatted. Or, a strategy works in one season, in one kind of market, but not in another. That’s why so many OCIOs and RIAs now have private equity partners or reside within much larger financial or consulting organizations. As Jon Hirtle, executive chairman of OCIO provider Hirtle Callaghan, remarked to Alicia McElhaney in a recent Institutional Investor article, “In business school, they teach you there’s a group of pioneers. If it works, there’s a flurry of copycat activity. And then there’s a shakeout and a consolidation.” From our vantagepoint, it looks like the industry is entering the consolidation phase. Wealth management M&A activity reached an all-time high in 2021, with an announced 307 transactions according to Echelon Partners’ 2021 RIA M&A Deal Report. Over the last sixteen months, CapTrust acquired Ellwood Associates, iM Global Partners bought Litman Gregory, New Providence joined The Colony Group, Focus Financial bought CornerStone, and US Bank swallowed PFM – five firms on our last OCIO list. And from what we hear there is plenty of dry powder and amenable prospects waiting in the wings. Barron’s reported last November that “KKR is taking…