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What is the total cost of partnering with an OCIO?
Considering total fees when evaluating OCIOs
As we talk to investors who are evaluating OCIO, it's clear that many are missing a big part of the picture when it comes to comparing fees.
When the investment model was first introduced, OCIO advisory fees and underlying manager fees were bundled together. As time moved on, the competitive market led to more fee separation and transparency. This shift, however, has also caused investors to rely too much on the OCIO fee without considering the manager fees involved.
As fiduciaries for your investment program, thank you for taking the initiative to conduct additional due diligence on the evaluation of OCIO providers. Today we will discuss the importance of fee transparency and the total cost of partnering with an OCIO.
Decades ago, when the delegated investment management model was first introduced, OCIO advisory fees and underlying manager fees were often bundled together. Over time, a competitive OCIO market and the need for fee transparency has led to a separation of those fees.
The shift to greater transparency was and is a very good thing. However, this had led some investors to over-rely on the standalone OCIO fee, oftentimes ignoring arguably the largest portion of total cost: investment manager fees.
Let’s compare sample fees for two discretionary investment providers.
As a fiduciary for an institutional investment pool, your job can be challenging.
We believe that fee transparency and the importance of accurately comparing all fees are critical decisions to help you achieve your goals and objectives.
Information provided by SEI Investments Management Corporation (SIMC), a registered investment adviser and wholly owned subsidiary of SEI Investments Company.