due diligence

Why Is Technology so Important to OCIO Companies?

Technology is crucial for OCIO companies in today's competitive market. Investing in the right technology tools can enhance client services, reduce costs, and optimize business processes.

Outsourced chief investment manager (OCIO), discretionary CIO, delegated CIO – all these terms are used to define the same service – hiring an external expert to manage and get the most out of the investments.

The OCIO model enables an asset owner to delegate responsibility for managing part or entire investment portfolio, including making decisions around dynamic and strategic asset allocation, as well as manager selection and replacement. The OCIO portfolio management is undertaken on a discretionary basis, following the agreement of an investment strategy and risk tolerance.

These actions, previously under the domain of the investor´s fiduciary committee and boards, now get entrusted to OCIO with the aim to enable asset owner to benefit from expert support in an increasingly complex market environment and to focus on priorities that are core to the organization.

Why is the OCIO market growing?

The OCIO sector is witnessing rapid expansion, with a notable surge propelled by private wealth contributions. The quest for investments of institutional caliber, especially in alternative assets, alongside the demand for streamlined portfolio management, is leading investors to seek out the advanced solutions provided by OCIOs.

According to Cerulli, OCIO assets grew to $2.4 trillion by the end of 2021 and are expected to grow to more than $3.0 trillion by the end of 2026, an overall growth rate of 5.6%, driven by both new adoption and expected capital markets movements.

Market volatility, low interest rates, and regulatory challenges, among other issues post-global financial crisis, hindered consistent financial returns. The complexity of modern markets demanded investment strategies and expertise beyond many funds and investor organizations' reach.

The shift towards specialized help transformed the OCIO model from a niche solution for managing defined benefit pension plans into a mainstream option for asset owners, including endowments and institutional investors.

Now, endowments, foundations, and health systems are the fastest to adopt OCIO services, with their growth expected to surpass institutional asset growth. This is largely due to increased interest and adoption by these groups, as highlighted in the Cerulli Edge - U.S. Institutional Edition, 3Q 2023 Issue.

How do institutional investors choose their OCIOs?

There are numerous criteria that institutional investors consider in the OCIO research process, and some questions simply cannot be omitted.

Those questions tackle the OCIO´s infrastructure capacity to capitalize on competencies and investment experts, the capability to access various investment classes and allocate the investments across a range of risks, and potential financial motives to include or exclude particular asset manager. Fee structure and pricing process, as well as history of generating returns and meeting clients´ expectations also play a significant role in the decision process.

One more field to which institutional investors give significant weight in evaluating OCIOs is the use of improved technology to support their operational and administrative capabilities.

Why is technology more and more important for OCIOs?

Indeed, many OCIOs invest in technology solutions to meet increased clients´ demands in a highly competitive market – according to Cerulli´s survey, no less than 91% of examined OCIOs have made recent investments in technology. And while 41% state that they are building capabilities internally, 50% are investing in external technology.

Apart from providing clients with better service, OCIOs are turning towards technology solutions to differentiate themselves on the market, reduce operational costs, and finally – to optimize their business processes.

To be more specific – implementing technology solutions to support OCIO business means benefits such as:

  • Providing a client with stronger monitoring capabilities and enabling maximal transparency into the investment portfolio
  • An easily accessible overview of the context around manager changes and how these changes impact the entire portfolio
  • Better performance analysis options
  • Instant insight into real-time risk management
  • Facilitated insight into positioning and performance estimates
  • The improved investment onboarding process
  • Eased access and overview over manager databases and phases of manager due diligence process
  • Timely response to the client´s requests related to portfolio, reporting, due diligence process, etc.

Which solution is the right one to support OCIO business?

There are solutions and solutions… Pure fact of implementing a technology solution won´t mean any advancement unless the right choice is made.

OCIO companies compile a vast amount of information from external managers, and to be properly managed, all this information should be gathered and available in a centralized system.

The process of sending DDQs, tracking the status of responses and compiling information for the reporting purpose is a resource and time-consuming activity unless digitized.

Managing communication with both managers and clients, as well as keeping track of information flow is virtually impossible without a system which enables keeping all the interactions and details at the same place.

Further on, having up-to-date information on what´s going on and what has been done across the team is essential in the fast-changing environment, such as investment business.

Dealing with a significant number of managers and an increasing number of clients, a tremendous amount of information, requests for fast turn-over, and necessity for highest level of data security require a thoroughly developed industry-specific technology solution.


The investment market is getting more and more complex, and the urge to successfully sail the turbulent investment seas induces many funds and investors to hire an external expert to manage and get the most out of their investments.

Consequently, the OCIO market is facing strong growth, but at the same time, the competition is on the rise, and asset owners are becoming ever more demanding. Investing in technology tools is an obligatory way to provide clients with better services, to reduce operational costs and optimize business processes. However, not every technology solution can fully satisfy the needs of complex OCIO activities. That´s why it is crucial to choose a dedicated technology solution, which can provide quality support for OCIO´s activities and comply with all specific requirements of the business.


Dasseti is an industry-specific solution with the capability to fully support OCIO business processes. If you would like to know more about how Dasseti can improve the OCIO performance, please contact us.

Similar posts

Get notified on new Dasseti insights

Be the first to know when we publish a new article or insight