Guest Post: You Don’t Have to be an Investment Guru to be a GREAT Financial Planner

By Eric Stein, CFA, and Mario Nardone, CFA:

Advisors are busier than ever. Between running a business, attracting new clients, and retaining current clients, not to mention that elusive work-life balance, advisors have a lot on their plates. Add to that growing compliance needs, ever-changing technology solutions, rising client expectations, and more competition, and it’s no wonder that advisory firms of all sizes are outsourcing various aspects of their business more than ever. Advisors who want to spend more time with clients, finding new clients, and working on their business often hire outsourced chief investment officer (OCIO) providers because they want to delegate a portion (or all) of their investment process to a third party.

In the early days of the investment advisory business, and in certain corners of it today, there was a perception that the key value-add of an advisor was investment performance. As comprehensive financial planning continues to gain wider acceptance, the notion that investments are a role-player, rather than the star of the show, has also gained momentum.

That’s not to say it isn’t important; advisors are still on the hook for making sure investments are prudently sourced, structured, and continuously monitored, and that all of it is thoroughly documented. The important revelation for many financial planners is that they don’t actually have to be the ones DOING the work. Instead, they can work with an independent firm whose sole focus is to support them and other like-minded advisors on the investment side.

To receive the greatest benefit from an OCIO, find one that’s a good fit with your firm. First and foremost, make sure your philosophies match. For example, if you are a strategic investor who makes few allocation changes, check to see how often the provider changes their recommendations. Similarly, will the OCIO be flexible and responsive enough to meet your needs, or will they expect you to adapt to their off-the-shelf approach? This is often the difference between an independent OCIO provider and an asset manager with products to sell.

OCIOs can provide tangible benefits, such as cost-effective support with daily investment issues, completing portfolio reviews for prospects, performing manager due diligence, answering client questions, or simply keeping the advisor abreast of the constantly changing landscape. There are also intangible benefits, such as when the OCIO provider allows advisors to include them as an extension of their team in marketing materials, again highlighting additional capabilities, which can be especially meaningful for smaller practices. Advisors’ clients are smart; they realize their advisor cannot be a business owner, business developer, compliance expert, client server, financial planner, and investment professional all at once. By hiring an OCIO, clients will appreciate that their advisor is investing—no pun intended—in their best interest.

This is just the tip of the iceberg when it comes to thinking about how advisors can leverage OCIO providers in their practices.

 

Eric Stein, CFA, and Mario Nardone, CFA, are Partners of East Bay Investment Solutions, the Outsourced Investment Strategist for Equita Financial Network.

Subscribe To Our newsletter

Privacy Notice

We recognize the importance of protecting our clients’ privacy. We have policies to maintain the confidentiality and security of your nonpublic personal information. The following is designed to help you understand what information we collect from you and how we use that information to serve your account.

Categories of Information We May Collect

In the normal course of business, we may collect the following types of information:

  • Information you provide in the subscription documents and other forms (including name, address, social security number, date of birth, income and other financial-related information); and
  • Data about your transactions with us (such as the types of investments you have made and your account status).

 
How We Use Your Information That We Collect

Any and all nonpublic personal information that we receive with respect to our clients who are natural persons is not shared with nonaffiliated third parties which are not service providers to us without prior notice to, and consent of, such clients, unless otherwise required by law. In the normal course of business, we may disclose the kinds of nonpublic personal information listed above to nonaffiliated third-party service providers involved in servicing and administering products and services on our behalf. Our service providers include, but are not limited to, our administrator, our auditors and our legal advisor. Additionally, we may disclose such nonpublic personal information as required by law (such as to respond to a subpoena) or to satisfy a request from a regulator and/or to prevent fraud. Without limiting the foregoing, we may disclose nonpublic personal information about you to governmental entities and others in connection with meeting our obligations to prevent money laundering including, without limitation, the disclosure that may be required by the Uniting and Strengthening America Act by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001 and the regulations promulgated thereunder. In addition, if we choose to dispose of our clients’ nonpublic personal information that we are not legally bound to maintain, we will do so in a manner that reasonably protects such information from unauthorized access. The same privacy policy also applies to former clients who are natural persons.

Confidentiality and Security

We restrict access to nonpublic personal information about our clients to those employees and agents who need to know that information to provide products and services to our clients. We maintain physical, electronic and procedural safeguards to protect our clients’ nonpublic personal information. We respect and value that you have entrusted us with your private financial information, and we will work diligently to maintain that trust. We are committed to preserving that trust by respecting your privacy as provided herein.