BNY Mellon Bets on Outsourcing (And Advice)

As TIAA gets out of the OCIO business, BNY pivots towards it.

Chris Ratcliffe/Bloomberg

Chris Ratcliffe/Bloomberg

Even as the ultra-competitive outsourced chief investment officer market pushes some providers out, at least one financial giant is going harder into OCIO.

BNY Mellon has reorganized its outsourcing arm under the name BNY Mellon Investor Solutions, the firm is expected to announce Thursday.

BNY has a long history running portfolios for institutions, but in a bid to increase its market share has shaken up its team structure and hired new staffers.

“I would consider it a broadening and deepening of what we already do to meet the requests we’re getting from clients,” said Catherine Keating, chief executive officer of BNY’s wealth management team, by phone. “While the focus before was on outsourced investment management, it is now on the broad capabilities of an investment office.”

The newly formed unit will sell both traditional OCIO services and what it called “customized portfolio strategies.” OCIO services will include asset allocation, portfolio construction advice, manager research and selection, investment analytics, and customized investment strategies, according to the firm’s announcement. BNY will also offer model portfolios, overlay programs, and an alternative investment program.

BNY Mellon made some new hires for the in-house operational due diligence team and in technology and operations, said Jamie Lewin, who will lead the 70-person unit. Lewin previously worked led product strategy and performance management for BNY Investment Management.

Lewin and his team will report to Keating, according to BNY’s announcement. She joined BNY in 2018 after leading OCIO pioneer Commonfund for roughly three years. Keating was hired by BNY Mellon to set the strategic direction for the wealth management unit, according to a 2018 announcement.

[II Deep Dive: Commonfund CEO Leaves for BNY Mellon Wealth Management]

Keating said more clients have been coming to BNY Mellon for broad advice, rather than simply to outsource their money. And, she added, new types of clients like financial firms and registered investment advisors are starting to consider OCIO.

According to Keating, clients don’t always have access to resources like economists, asset class specialists, and fundamental and quantitative analysis. A need for these resources has spurred an interest in OCIO, she said.

“The other thing that’s spurring it along is where we are in the market cycle,” Keating said. “I wouldn’t have guessed when I started my career that we would be sitting here today seeing all the economies aging at the same time. Everybody is sitting in a moment, looking forward and saying, ‘Oh my, it looks like my returns are lower, and I really need help.’”