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How Does an Outsourced CIO Price Their Services?

By admin on July 31, 2015

An outsourced CIO should always be transparent with their fees.

The costs associated with an outsourced CIO’s offering can be broken down into five main categories:

  1. Counsel and Advice: Advice on structuring your portfolio so it aligns with your unique objectives and risk tolerances.
  2. Investment Management: Actual money management of your portfolio; involves finding, paying, and overseeing external money managers.
  3. Security Transactions: Buying and selling securities (note: large investment portfolios should pay only the lower-costing “Wholesale/Institutional” pricing, not the “Retail” pricing).
  4. Pool/Investment Funds: If investment funds are utilized, each investment fund has operating costs, and potentially additional costs for advice and management.
  5. Custody: Independent safekeeping of your assets (note: as portfolio size increases, custody costs generally decrease as a percentage of portfolio size).

Investors should ask about each of these fees upfront, before signing any paperwork. This will ensure you aren’t subjected to hidden fees in the future.

Click here to read our in-depth blog on this subject, “Get the Truth about Costs: Top 5 Questions for Investors to Ask Investment Advisors”.

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