In recent years, investment management has been less of a differentiator among advisors, leading to the increasing use of outsourced investment services. That seems poised to continue, based on findings from FUSE Research’s latest Advisor Trend Monitor. More than nine in 10 advisors plan to maintain or increase their usage of outsourced chief investment officer services, the report found.
Overall, 54% of advisors said they expected no change, 29% said they were “somewhat likely” to increase usage, and 11% said they were “very likely” to increase. Only 6% said they were “somewhat” (4%) or “very likely” (2%) to decrease usage of OCIO services.
By advisor type, wirehouses said they were more likely to expand usage. Overall, 18% of wirehouse advisors said they were “very likely,” and 29% said they were “somewhat likely” to increase usage. For RIAs, meanwhile, 65% said they planned no change, while 25% said they were somewhat likely and 7% said they’re “very likely.”
According to FUSE, surveyed advisors currently outsource one-quarter of their client assets to third-party or home office models, turnkey asset management programs, outsourced chief investment officer services, or other investment solutions.
Wirehouse (31%) and independent broker/dealer (30%) advisors outsource a larger portion of their client assets versus the overall audience, while RIAs outsource the lowest percentage (18%) across all advisor demographics.
Regarding advisors’ plans to change outsourcing for investment management, 40% of overall advisors are likely to increase their client allocations, but the majority (54%) have no plans to make changes.
“Many teams have built their own investment functions through in-house due diligence, and many high-end wealth teams have a chief investment officer,” FUSE wrote in the report. “Outsourcing investment management doesn’t mean a one-size-fits-all approach. Many providers offer customized solutions that align with an advisor’s investment philosophy and client needs, as well as specialized expertise such as alternative investments.”
In all, 512 advisors participated in the survey across distribution channels.