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Are OCIO services gaining traction in Asia?

Several players have launched outsourced chief investment officer (OCIO) services in the region, with BNY Mellon IM being the latest to roll out such service.
Doni Shamsuddin, BNY Mellon Investment Management

While several firms have launched OCIO services in Asia-Pacific, the concept remains to be new in the region and clients need more education about it, according to Doni Shamsuddin, head of Asia-Pacific (ex-Japan) at BNY Mellon Investment Management.

“OCIO is very well established in the US and to a certain extent, in Europe. But it is still a foreign concept in Asia-Pacific,” he told FSA in a recent interview.

“The challenge is for people to see why it makes sense to outsource. In Apac, I think the hurdle is around education.”

BNY Mellon IM is one of the latest firms to roll out OCIO services in Asia-Pacific, which the firm calls “Investor Solutions”. Following its launch earlier this month, the firm plans to promote the service by first educating potential clients.

“We are quite keen on investing in the education part by drawing some of the experiences that we have in the US and Europe. Next month, that is what we will be focusing on”, he said.

The OCIO market is slowly picking up in Asia, nevertheless. For example, Oreana Financial Services, which launched its OCIO service in the region in May, believes that there is increasing interest among family offices in the region.

“Initially the target was IFAs and wealth management firms who don’t have the capacity or scale to run the services themselves,” Luke Moore, Oreana Financial’s CEO, told FSA previously.

“But now we are targeting family offices and small institutional clients who feel could benefit from the service,” he said.

Another firm that launched an OCIO service recently is Purple Asset Management.

Not all OCIOs are the same

BNY Mellon IM’s Shamsuddin claims that the firm’s OCIO services will include other capabilities to differentiate itself from its competitors.

For example, he explained that other investment solutions will include “outcome-oriented investments”, which is targeted to investors with retirement needs.

“It should help people to be disciplined with their retirement pot,” he said, adding that most markets in the region, including Taiwan, China and some Southeast Asian countries have increasing ageing populations.

The firm’s service will also include asset allocation, manager selection and account servicing solutions.

Like BNY Mellon IM, Oreana also claimed that its OCIO services are differentiated and that its various services can be offered separately in modules.

“Some clients are coming to us asking for help in building governance frameworks around existing processes, others want help with asset allocation, dynamic or strategic,” Oreana’s Moore said. “At the other end of the spectrum, clients want a fully integrated solution, and we build and manage it on an ongoing basis.”

BNY Mellon’s Shamsuddin noted that the firm also plans to promote the service to virtual banks and other start-up fintech companies. Traditionally, OCIO services are offered to independent wealth managers, family offices, as well as small-sized pension funds and institutional clients.

But he acknowledged that it will be challenging to provide unique solutions for every client.

“There isn’t a one size fit all. Every client will require different things”, he said.

Part of the Mark Allen Group.