Evaluating Benefits of Outsourced Chief Investment Officers (OCIOs)

An increasing number of endowments and foundations are using outsourced chief investment officers (OCIOs) for investment management, according to a May 2025 report by Cerulli Associates.¹ While an OCIO certainly has benefits for smaller organizations, it’s less often understood how it can provide advantages for larger institutions.

If you’re leading an endowment or nonprofit with less than $500 million assets under management (AUM), for instance, outsourcing to a third-party may seem to make more sense, if only for having access to the expertise of investment professionals.

On the other hand, if you’re leading a foundation or endowment with more than $1 billion AUM, you may have an internal investment team or consultant that is overseeing the institution’s portfolio. In which case, the value of outsourcing might not seem as apparent.

In both cases, the benefits of utilizing an OCIO for investment management may be worth considering, as they go deeper and broader than it can seem on the surface.

Here are five key benefits of an OCIO, regardless of the size of your nonprofit, endowment, or foundation:

Key benefits of an OCIO

1. Time and resource efficiency

OCIOs free up internal staff and board members by taking over day-to-day investment responsibilities. This allows organizations to focus on their core mission rather than operational investment tasks.

There may also be cost savings with trimming internal investment resources or shifting responsibilities. If preferred, an OCIO could supplement or extend the capabilities of an internal investment management team, providing additional outside resources for effectiveness and efficiency.

An OCIO typically has a team of professionals including investment analysts, accountants, portfolio managers, and compliance or legal specialists. With a broader scope of specialists working together, they have the ability to provide comprehensive solutions including manager selection, asset allocation, and ongoing portfolio monitoring.

2. Institutional-grade investment access

Mid-sized institutions and nonprofits often lack access to institutional-grade investment strategies which comes with benefits afforded to large institutions that have buying and trading power.

OCIOs bridge this gap by offering investment options typically reserved for larger institutions such as customized portfolios, direct indexing, separately managed accounts (SMAs), global markets, and private markets.

3. Improved governance and fiduciary oversight

OCIOs help strengthen governance by implementing disciplined investment processes and providing fiduciary support. The OCIO will assume the fiduciary role and a higher level of accountability for investment decisions and outcomes such as complying with Uniform Management of Institutional Funds Act (UMIFA). This is especially valuable for boards that meet infrequently and may lack deep investment expertise.

An Investment Policy Statement (IPS) helps with establishing governing and oversight policies. The IPS is a strategic framework and roadmap that helps leaders maintain the consistency of their investment goals, objectives, and risk tolerance.

4. Cost efficiency and risk management

By leveraging scale and expertise, OCIOs can reduce investment costs and portfolio volatility.

For example, Mercer Advisors has assets that can match the buying power of the country’s largest university endowment. versus Harvard University which had $51 billion.² As a result, we are able to drive down investment costs on ETFs and mutual funds significantly.  We can also secure access to some of the top quartile managers in the world, typically at lower fees and minimums.

An OCIO also brings risk management tools and real-time monitoring that many internal teams cannot match, often taking on the management of risk.

5. Integrated advisory services

Some OCIO providers go beyond portfolio management to offer support in areas like board education, fundraising and planned giving strategies, and donor engagement — often at no additional cost.

A true, well-rounded partner can help impact the communities you serve with more than investing advice, to help secure the future of the organization.

Learn more about OCIOs

An OCIO provides organizations with a comprehensive investment management solution that enhances efficiency, governance, and performance. By delegating day-to-day investment responsibilities, internal teams can focus on mission-critical work while benefiting from institutional-grade strategies, cost-effective portfolio construction, and robust risk management.

At Mercer Advisors, the professionals who make up our Endowment and Foundation Services team currently serve on a wide variety of nonprofit boards and also as board leaders. We’ve had to make many of the same decisions as you and understand the intricacies of discharging your fiduciary duties as a volunteer nonprofit leader.

If you’d like to learn more about how the Mercer Advisors Endowment and Foundation team can add value to your organization, let’s talk.

¹ “The Americas Asset And Wealth Management.” Advisor Magazine, May 24, 2025.

² National Association of University Business Officers (NCUBO) and Mercer Advisors as of Sept. 30, 2024. Mercer Advisors buying power refers to total client assets, client assets includes client assets under management (AUM) and client assets under advisement (AUA) as well as assets gained from recent acquisitions where the advisory agreements have been properly assigned to Mercer Global Advisors, but the custodial accounts have yet to be transferred and/or the accounts have yet to be migrated to Mercer Global Advisors’ portfolio management system.

Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.