One of the most notable trends in our industry has been the emergence and growth of the outsourcing of pension investment management – often referred to as the OCIO (“outsourced CIO”) model. The most recent annual survey by Pensions & Investments indicates the number of OCIO providers increased from 32 in 2011 to 71 in 2014. Further, institutional assets well in excess of $1 trillion are now managed on either a fully or a partially discretionary basis worldwide.1

There are three main categories of issues to be addressed by any pension plan committee considering outsourcing:

  1. Fiduciary duty – how to ensure the plan’s participants are protected
  2. Role – deciding if the OCIO provider should be an investment advisor, an investment manager, or both
  3. Evaluation – criteria for evaluating the OCIO providers

This note summarizes Russell’s views in each of these areas and includes a “who does what” worksheet. Also included is a set of sample interview/RFP questions.

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1Pensions & Investments, “Outsourced assets top $1.2 trillion after a 26% increase in a year,” July 7, 2014.