Despite Fidelity dominating the defined contribution recordkeeping space and ranking among the biggest asset managers, its outsourced chief investment officer business is still a little-known blip on the industry radar. But as the OCIO sector sees rapid growth, the firm is working to change that.

Chris Pariseault, the Fidelity veteran who took on the newly created role of head of OCIO and institutional portfolio managers in July, has been building the firm’s outsourcing business, with the goal of doubling its roughly $23 billion in assets in five years by leveraging the firm’s multiple services from its broad platform.

“We’re seeing significant growth,” Pariseault told Institutional Investor, noting that Fidelity’s OCIO business has already grown from six endowment and foundation clients in 2022 to more than 70 in just three years. Fidelity also manages assets for more than 100 corporate defined benefit plans, including liability-driven investments.

Fidelity is ramping up these efforts at a time when OCIO is expected to reach $5.6 trillion by 2029, with endowments and foundations set to drive that growth. Cerulli Associates estimates nearly $1.3 trillion to flow into the OCIO industry over the next five years from institutions adopting the model for the first time or clients in sleeve portfolios expanding their relationships.

Though Fidelity has been in the OCIO business for years, it has never made it a priority, which Chestnut Advisory Group’s co-owner and partner Ravi Venkataraman finds “a bit surprising,” since it “has had all the requisite capabilities” for the business to thrive — “a vast research platform, proprietary and nonproprietary investment capabilities, operations and service infrastructure and the scale.”

Fidelity made its OCIO business a priority about three years ago, when it saw nonprofits migrating to OCIO at an accelerating rate.

“This part of the market continues to grow,” said Pariseault, a nearly 30-year Fidelity veteran, adding that the firm could bring its unique expertise and breadth of services to serve this growing segment of the market. “We’re really good at that, so let’s focus on it.”

This led to the team hiring a portfolio manager to build out its endowments and foundations offering and appointing Dan Tremblay to lead pension solutions before Pariseault took on the head role over the summer.

In his first 90 days as head of Fidelity’s OCIO business, Pariseault focused on getting under the hood of the platform to ensure its foundation could support ambitious growth. He explained that when considering any feature or product for the OCIO business, the team asks three key questions: Why are they doing this, does it work, and can it scale?

The review has led Fidelity to focus on strengthening its client relationships and making fuller use of its existing capabilities. For endowment and foundation clients, that includes access to the firm’s three-person philanthropic consulting team; DB plans have access to roughly 100 actuaries from its workplace investing division; and all clients have the scale of the largest defined contribution recordkeeping business in the U.S.

“There are parts of Fidelity that have not been tapped yet to help our clients grow,” he said. “There’s a lot of services we can provide.”

In entering the OCIO business in earnest, Chestnut’s Venkataraman noted that Fidelity will need to deliver customized solutions for individual clients, which is a prerequisite for the OCIO market. But “the growth of the OCIO market is large enough to capture Fidelity's interest and move the needle for them.”

Looking ahead, Pariseault is also excited about offering its new Fidelity Foundation Services to its OCIO clients late next year. “We’re building a one-stop shop to address administration, recordkeeping reporting, grants management, tax, legal, and audit services for foundations and nonprofits,” he said.

Pariseault added: “there are untapped resources we are exploring across multiple divisions across Fidelity which can expand the services menu available to our clients. We are in early days here, but the opportunities are exciting.”