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OCIO at an Inflection Point: Strong Growth Ahead, but Institutions Are Demanding More

March 4, 2019

This is Cerulli’s first dedicated research initiative covering asset owners using the support of an OCIO provider.


After a decade of robust growth, the OCIO industry is at an inflection point. Our research shows that satisfaction levels are high, but client expectations have risen and replacement searches are on the rise. Cerulli predicts continued strong growth—from approximately $1.1 trillion in U.S. assets under management currently to nearly $1.7 trillion by 2023—but recent market volatility and increased client demands will test the industry and raise the bar for providers.

Our Key Findings

  • Investors are broadly satisfied with the OCIO model. Investor satisfaction levels are high across all aspects of their OCIO relationships.

  • Boards remain engaged after ceding investment responsibilities. Investment committees and boards are comfortable with shared responsibility and remain engaged. The decision to outsource allows boards and committees to focus on priorities that are core to the organization.

  • As the OCIO market evolves, investors are seeking expanded services and conducting replacement searches. The OCIO market is at an inflection point and investors want more from their OCIO. More than half of survey participants have initiated a replacement search since hiring their OCIO, as organizations seek greater flexibility, stronger investment capabilities, proactive client service, and better fit with their OCIO.

  • Alternatives and environmental, social, and governance (ESG) expertise are key for endowments and foundations, while pensions are focused on risk management and preparing for the end-game. Investment performance remains a top priority, with preferences for specialty capabilities varying by client type. Nonprofits seek access to top alternatives managers and are increasingly looking for help with ESG. Corporate defined benefit (DB) plans most value pension risk management and help preparing for the end-game.

  • Operational and administrative capabilities are strong, but institutions want improved technology. While virtually all (96%) organizations are satisfied with their OCIO provider’s operational and administrative capabilities, many are looking for improved technology. Nearly half (42%) of institutions say they will need additional technology services in the future.

  • Board and stakeholder education is key. Across all client types, institutions highly value OCIOs sharing their intellectual capital to educate stakeholders and decision-makers.

  • We expect strong growth in OCIO, but shifting financial markets present challenges. Institutions are highly likely to recommend the OCIO model, but growth has occurred in an extended bull market. As markets move into a more challenging stage, institutions are increasingly likely to seek OCIO services, providers will face a new series of tests, and existing OCIO clients will continue to conduct replacement searches.

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