Outsourced Chief Investment Officer

A decade and a half ago, the world looked a lot different than it does now—the Internet wasn’t part of our daily lives, no one had ever heard of smartphones, and double-digit equity market returns meant many defined benefit (DB) plan sponsors in Canada could enjoy surpluses and contribution holidays. But after two major market meltdowns in the space of a decade, the world has changed drastically. In 2008, plan sponsors faced epic losses (16.8% in that year alone according to Benefits Canada) and plan trustees have since faced tough strategic choices in the journey back from underfunding. That has many fiduciaries feeling the pressure—after all, there’s only so much the average trustee can do in the space of a quarterly meeting. Faced with decisions about which managers to hire and fire and, at the far end of the spectrum, big-picture planning around the strategic direction of the plan, it’s hardly surprising that fiduciary fatigue is on the rise.

Which is a key reason why outsourced chief investment officer (OCIO) solutions are undergoing exponential growth: according to 2013 data from Cerulli Associates, consultants expect the OCIO business to account for 18.5% of total assets by 2016.

Outsourcing solutions like these are compelling options for plan trustees who increasingly feel the pressure to focus strategically on the needs of the plan—not just the hiring and firing of managers.

In this special report, we look at the rise of OCIO solutions and how they’re helping Canadian plan sponsors manage the growing challenges in the DB pension space. From better governance to a new focus on strategy, OCIO solutions are giving trustees in Canada the support they need to properly manage their plans.

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