OCIO customization is easy to promise. Here are four ways to know it’s real.

Key takeaways

• Customization has moved from preference to expectation in OCIO relationships.
• Institutional strategy must reflect each asset owner’s liabilities, spending needs, and governance constraints.
• A provider’s business model often determines how flexible portfolios can really be.
• True customization requires a broad internal toolkit and implementation capabilities.

Outsourced chief investment officer (OCIO) relationships have evolved dramatically. What once teed up primarily as a solution for smaller institutions seeking a roadmap to improving their governance, strategy and execution is now being adopted by much larger asset owners. Think tens of billions of dollars in assets overseen by teams with years of institutional experience

With this shift has come an even greater expectation for customization. Asset owners are looking to harness the promises of OCIO but adapt it to their existing governance cadence and their enterprise’s specific risk tolerance. And this is true for plans of all sizes. Institutions up and down the size spectrum are no longer looking for a generic portfolio wrapped in a service package. They’re looking for partners with the flexibility and breadth to deliver investment programs that reflect their liabilities, governance structures, and organizational realities.

For asset owners evaluating OCIO providers, the real question is not whether customization is promised. It is whether the provider is actually built to deliver it. Following are four considerations for asset owners seeking truly customized OCIO.

Every institutional portfolio exists for a specific purpose.

Pension plans must meet future benefit obligations. Endowments must sustain spending across generations. Defined contribution programs support workforce outcomes and retirement readiness. Each operates within a distinct financial and organizational context. Those realities shape how portfolios must be built.

Strategic decisions such as asset allocation, range of asset classes and liquidity planning, should reflect the institution behind the portfolio. The asset owner’s mission, governance constraints, and risk tolerance all have an effect on reaching the right strategy

Once the OCIO understands these client-specific contours, the asset owner expects the risk systems of their OCIO to provide enterprise-level analytics. These analytics should span the full range of public and private assets classes, including forward-looking stress testing that prepares them for real-world uncertainty. 

The analytic-informed strategic framework ultimately determines how portfolios balance growth assets, diversifiers, and liquidity to meet long-term obligations. And a good strategy that is tailored and specific should naturally lead to a portfolio that is customized. 

One of the most important—and least discussed—drivers of customization is the provider’s business model.

OCIO firms typically fall along a spectrum. At one end are providers whose portfolios rely heavily on proprietary investment products. Even if they incorporate some external managers, internal strategies often remain central to portfolio construction. At the other end are providers that operate under a purer open-architecture approach, selecting managers and strategies from across the global investment universe.

Both approaches can produce portfolios. But they start from very different solutions. When internal products dominate, portfolio allocations may naturally tilt toward those strategies. When open architecture is the guiding philosophy, portfolio construction begins with the full opportunity set available in the market.

That difference matters. After all, investing is about bringing the best combination of intellectual capital and implementation to generate enterprise returns. Why would it be in an asset owner’s best interest to limit that exercise? We believe that the broader the toolkit, the easier it becomes to design portfolios around client needs rather than product availability or profitability.

Customization is often framed as a portfolio design question. In practice, it is often a cultural one.

Organizations with strong advisory traditions often emphasize ongoing dialogue with investment committees and governance bodies. These organizations approach OCIO as a service built around solving client problems. Portfolio strategy evolves through discussion and collaboration rather than through some predefined template. In these environments, customization becomes part of the process rather than a marketing promise.

In my former role as CIO for one of the largest energy utilities in the U.S., I highly valued these challenging, collaborative dialogues. It helped me understand that customization starts with lots of listening. OCIOs should dedicate ample time early and often to posing questions that will ensure enterprise nuances and preferences are well understood early and often in the relationship. Meaningful customization and the solutions that come with that approach depend, in my opinion, on that consultative culture.

Designing a customized strategy to fit an individual asset owner’s needs seems pretty uncontroversial. But the reality is the breadth of an OCIO’s strategies can be limited by the toolkit they have at their disposal. For example, a futures overlay can be a powerful lever to deploy in designing an LDI strategy. While this capability can always be outsourced by the OCIO, we find that firms with this internal capability are much more likely to robustly include it in the solutions they design.(Side note: We also think there’s some pretty bullet-proof appeal to prospects preferring this in their internal skillset rather than outsourcers who propose outsourcing the outsourcing.) More and more asset owners are demanding OCIOs with enterprise-level risk management and execution capabilities.

These capabilities, including portfolio transitions, trading, risk monitoring, performance analytics, and operational oversight, are the less visible but essential components of investment management.

These capabilities determine whether strategic ideas actually translate into real portfolio outcomes. Without them, even the best portfolio design can break down in implementation. Strong OCIO providers combine strategic insight with robust infrastructure—ensuring allocation changes, manager transitions, and new strategies can be implemented efficiently and monitored continuously.

In other words, customization depends not only on what a provider recommends, but on what it can execute reliably.

For institutions evaluating OCIO providers, the most revealing question may also be the simplest:

How does customization actually show up in the investment process?

The answer typically lies in the intersection of two areas:

• Culture: the provider’s philosophy toward solving client problems
• Capabilities: the breadth of its investment toolkit

I believe it is a small-but-exceptional set of OCIO providers that operate at this intersection. The combination of true open architecture and ongoing implementation capabilities, a consultative heritage and approach, and a culture that is bred out of solving client problems…well, that’s a rare thing.