An OCIO Can Support Your Move to Independence – Learn How!
by Chad Tischer, CFP®, Partner
Considering Breaking-Away?
Are you an advisor considering leaving a broker-dealer, institution or large firm? Advisors make this decision for a variety of reasons, including:
Superior Economics: There are hidden costs and product “haircuts” from wire houses / independent brokers that go into the payout percentages. By moving to an independent company, advisors can pass on these savings to their clients.
Act as Fiduciary: A Registered Investment Advisor (RIA) can act in a fiduciary capacity, providing clients with advice that strives to avoid conflicts and allows them to compete on price and services.
Well-Vetted Solutions: Advisors can access competitive and difficult to access products and service on an open architecture platform. They become a buyer’s advocate for their clients.
Technology Choice: Independent companies can choose the technology they use, leveraging the most appropriate platforms and technologies without being beholden to legacy systems.
Maximize Enterprise Value: The multiples that independent companies garner in the open market may be higher than those of a constrained institution, such as a wire house.
Launch a New Firm: Advisors that want to have complete control of their business, their client relationships, their investment strategies and their product selections may choose to open their own independent firm. Whether you are just entering or have been in the Registered Investment Advisor space for some time, there will be challenges.
Challenges and Solutions
The primary reason advisors leave a large company is the absence of support in terms of manpower and resources. Advisors at larger firms are used to centralized resources assisting them with marketing, compliance, back-office operation, investment support and other aspects of the business. The comprehensive system of support allows advisors to concentrate on client relations and financial planning.
Independent means you are a new business owner, and this ecosystem of support must be rebuilt. Some advisors, depending on their resources available, may be able hire internal staff for these duties. In most cases though, hiring a group of experts from outside is the more efficient and cost-effective solution. Although advisors have the knowledge and expertise to run a company, they are limited by time. They can prioritize important tasks by outsourcing certain services. Advisors who build their own firms with the help of outsourced experts can depend on professionals that understand their needs and create a new eco-system.
Advisors can look to outside resources to help with asset allocation and investment research and selection. Outsourcing the role of Chief Investment Officer (CIO) is a crucial decision. Outsourced CIOs (OCIOs) take on investment related responsibilities and free up time for advisors to be business owners. An OCIO, as a neutral party, provides professional advice and support on all facets of the investment program. An OCIO is a valuable resource for newly independent advisors. They can identify possible pitfalls and opportunities.
Relationships with OCIOs can be tailored to the preferences of advisors. The OCIO can either take on the role of a front-office representative or offer back-office assistance, like research. It is important to make sure that the OCIO’s approach and strategy aligns with your advisor’s philosophy of investing when selecting one. It’s crucial to choose an OCIO who shares the same philosophy as your firm.
Working with Fiducient Advisors
Working as an advisor with an OCIO has many benefits including:
• The advisors maintain ownership and decision-making power of their businesses.
• The advisor has the final word, even though an OCIO may offer suggestions based upon their experience. This arrangement gives newly independent advisors peace of mind knowing that they retain control of their business while still benefitting from an OCIO’s support and expertise.
• As your OCIO, Fiducient will provide you with ongoing guidance and support as you build and grow your firm.
Fiducient Advisors can help you explore OCIO services and how your firm could benefit from outsourcing. With our firm on your side, you will have the insights, resources and potential cost savings to help your clients prosper.
Click here for additional information on our Financial Institution OCIO services.
Interested In Other Outsourcing & OCIO Related Content?
- Why Hire an OCIO
- Don’t Get Left Behind – More Advisors are Outsourcing Investment Research
- Unlocking Success with Financial Institutions Outsourcing
About the Author
Chad Tischer, CFP®
Partner, Head of Private Consulting, The Wealth Office®
Chad joined Fiducient Advisors in 2003. As a Partner and Head of Private Consulting for The Wealth Office, he is responsible for the oversight of the firm’s Wealth Office® consultants and setting the strategic direction for the group’s consulting business. Chad also counsels wealthy families, nonprofit organizations and financial advisory firms on their investment strategies. As a Certified Financial Planner (CFP®), Chad is well versed on comprehensive wealth management solutions such as managing estate planning, tax, insurance, and lending strategies. Additionally, as a Partner of the firm, Chad has business development responsibilities and participates in firm management, which translates into his work with financial advisory leaders in managing their practice.
Chad has spoken at numerous events on topics including wealth management, investments, and industry best practices. Outside of the office, Chad is a Board Member of Minnesota State University Mankato Foundation, a state university his father and grandmother attended. He is also a member of The Chicago Council on Global Affairs Emerging Leaders Program. He has prior been on numerous other philanthropic boards including Chicago Lights, Midtown Educational Foundation and Chicago Foundation for Women. Chad was honored as a national finalist for the Invest in Others Community Leadership Award for his 10 years of tutoring underprivileged kids in Chicago. Chad enjoys coaching his twins’ baseball / softball teams, spending summer weekends at the family lake house and traveling with his wife.
This report is intended for the exclusive use of clients or prospective clients (the “recipient”) of Fiducient Advisors and the information contained herein is confidential and the dissemination or distribution to any other person without the prior approval of Fiducient Advisors is strictly prohibited. Information has been obtained from sources believed to be reliable, though not independently verified. Any forecasts are hypothetical and represent future expectations and not actual return volatilities and correlations will differ from forecasts. This report does not represent a specific investment recommendation. The opinions and analysis expressed herein are based on Fiducient Advisor research and professional experience and are expressed as of the date of this report. Please consult with your advisor, attorney and accountant, as appropriate, regarding specific advice. Past performance does not indicate future performance and there is risk of loss.
