Willis Towers Watson’s outsourced chief investment officer business has surpassed $100 billion in assets under management as a growing number of institutions seek to outsource investment functions.
The advisory firm announced Tuesday that it now managed $107 billion in OCIO assets, and is investing in staff and technology to keep up with the growing demand for OCIO services.
“We’re finding that organizations are re-evaluating how they’re managing their money,” said Clint Cary, head of U.S. delegated investment services at Willis Towers Watson.
According to a survey released last month by Natixis Investment Managers, 40 percent of institutional investors already outsource some functions, while 17 percent are interested in doing so over the next 12 months. In 2016, 13 percent of surveyed investors said they were considering outsourcing.
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One notable recent example of this trend is the American Red Cross, which shut down its in-house investing team last year in favor of outsourcing its roughly $4 billion in assets.
Cary said Willis Towers Watson has had strong but steady growth in corporate pension clients, and expects more OCIO business to come from defined contribution plans in the coming years.
“The industry has been rapidly growing over the past few years,” Cary said. “What’s really started to take off is the outsourcing of 401(k) plans.”
According to that Natixis survey, most allocators that move to an OCIO model are looking to access “specialist capabilities” or “expertise.” Others are looking for better investment returns or cost reduction.
According to Cary, large OCIO providers like Willis Towers Watson can leverage their size to be more cost-effective than small institutions might be on their own.
“Our aggregate buying power of $100 billion in the industry is stronger than most of our clients individually,” he said.