An Existing Relationship Isn’t Enough for Asset Managers to Win OCIO Mandates


An Existing Relationship Isn’t Enough for Asset Managers to Win OCIO Mandates

More capabilities are required to establish a beachhead in the OCIO arena

November 2019, BOSTON—As outsourced chief investment officer (OCIO) assets under management (AUM) continue to grow, asset managers are paying more attention to winning mandates from OCIO providers. Many OCIO providers have roots in investment consulting, and therefore have long-standing relationships with asset managers as part of their advisory business. As a result, they may believe that they are natural candidates for winning OCIO mandates. However, research from Cerulli Associates finds that winning business for an OCIO mandate requires an extended relationship-building approach that accounts for the more involved partnership between the asset manager and the OCIO provider.

While the process of establishing an institutional relationship with consultants and OCIO providers is similar, there are nuances that should inform the sales approach. “OCIO providers require far more than a sales pitch from the sales team and often involve efforts from relationship managers, marketing, product specialists, and even portfolio managers,” says Laura Levesque, senior analyst at Cerulli. In addition, a clear, concise, consistent message about an asset manager’s investment process is a top priority when considering which products end up on an investment consultant’s list of recommended strategies.

While the heavy lifting of establishing and strengthening a relationship with an investment consultant has already taken place, more complex requirements must be addressed in an OCIO relationship. “OCIO providers place high importance on finding asset management partners that fully understand their client base and how any investment solutions they provide will benefit a portfolio for these clients,” Levesque adds. “It is also expected that the asset manager have a grasp on general investment goals, asset allocation preferences, ancillary services, and client support.”

Investment consultants will also spend more time evaluating how the asset manager’s operational capabilities function in conjunction with its own. Cerulli often hears OCIO providers comparing the OCIO relationship with asset managers to a marriage. Not only are they looking for capabilities compatible with their own, they seek partners that they can trust to understand their clients and support them consistently over time.

Levesque suggests that managers who seek to win OCIO mandates understand and highlight points of compatibility, and build a trusted, engaging relationship.

These findings and more are from the November 2019 issue of The Cerulli Edge—U.S. Asset and Wealth Management Edition, which explores factors involved in selling to OCIO providers, and reviews why request for proposal (RFP) teams are experiencing increased volumes and complexity.

These findings and more are from: The Cerulli Edge—U.S. Asset and Wealth Management Edition, November 2019 Issue.


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