Outsourced CIO versus in-house: costs and trade-offs

An outsourced CIO costs a family office an advisory fee that, in the institutional market, now sits in the low tens of basis points, plus underlying manager fees. An in-house team costs a salary bill that falls as a share of assets as the office grows. Published cost data suggests the two converge somewhere between $500m and $2bn, which is also the range where surveyed institutions are most likely to outsource. Most family offices run a hybrid: the allocation decision stays inside, part of the execution goes out.

What an OCIO costs

Institutional Investor reported in June 2024, citing Alpha Capital Management, that OCIO fees for endowment and foundation clients had fallen to 20 to 30 basis points from 40 to 60 basis points a few years earlier, and that only two providers still charged performance fees. These are advisory fees. A worked example published by SEI in 2025 for a $200m public-markets portfolio shows why the headline is incomplete: one provider charged a 20 bps advisory fee but 48 bps of weighted manager fees for a total of 68 bps, while another charged 25 bps advisory and 21 bps manager fees for 46 bps all in. Family office mandates with heavy private markets exposure carry higher underlying fees than either example.

The market is large and growing. Chief Investment Officer reported in 2026 that US OCIO assets reached $2.5tn in 2025, 75% of the global total, after 16% growth in the year.

What an in-house team costs

The best public estimate of in-house cost by size comes from a Strategic Investment Group study cited by search consultant Charles Skorina in 2024.

Source: Strategic Investment Group, via Charles Skorina & Company, 2024. Figures cover staff, systems, data and manager diligence, not underlying manager fees.

The staffing line is dominated by the CIO. Morgan Stanley's 2025 Single Family Office Compensation Report gives a median CIO total cash of $896,000 across all single family offices and $1,000,000 above $1bn. The AlTi and Campden 2025 Family Office Operational Excellence Report quoted Erik Christoffersen estimating that a top-tier CIO could cost $5m to $6m against a typical $1m to $2m. On those numbers a single senior hire at a $300m office can exceed the entire OCIO advisory fee.

Where the break-even sits

Survey data on who outsources matches the cost curve. Chief Investment Officer's 2025 Outsourced Investment Manager Survey found that 46% of institutional asset owners outsource, that the $500m to $1bn band is the sweet spot with 75% outsourcing or planning to, that 63% of those under $500m do so, and that only 31% above $1bn do. The 2025 NACUBO-Commonfund study, as reported by Chief Investment Officer, found OCIO use peaks at 61.3% among endowments of $101m to $250m, falls to 35% at $501m to $1bn and 23.3% at $1bn to $5bn, with no users above $5bn. Cerulli reported in May 2025 that 15% of endowments over $1bn and 20% of foundations over $500m use an OCIO.

Family offices are less likely than endowments to outsource fully. Morgan Stanley's 2025 report found only 7% of investment-focused single family offices outsource investment management entirely, with 56% managing directly in house. J.P. Morgan's 2026 Global Family Office Report found around eight in ten offices outsource some part of the portfolio but only 5% outsource all of it, and that a third outsource less than a quarter.

What offices say about each model

UBS's Global Family Office Report 2025 asked offices why they keep functions in house: expertise (67%), family privacy (63%), operational control (63%), customisation (54%) and cost-effectiveness (52%). Those that outsource cited lack of in-house expertise (64%), lack of technical resources (56%) and cost-effectiveness (56%). That both camps claim cost-effectiveness shows the break-even depends on the office. J.P. Morgan's 2026 report found the top reasons for using external advisers were access to high-quality managers (57%) and track record (51%); cost was not among the top six.

The hybrid model is the practical default. UBS's 2026 report found strategic asset allocation is kept in house by 86% of offices even where execution is outsourced. Cerulli's 2025 release noted that 40% of institutions over $100m using an OCIO previously ran an internal investment office, often after team turnover, which links the decision to the retention problem described elsewhere in this section.

Closing

Below roughly $500m, the published cost data favours outsourcing most of the execution and keeping a small team to own allocation and oversight. Above $2bn, an in-house team is cheaper per basis point and the surveys show most offices build one. Between the two, the decision turns on whether the office invests directly, how much the principal values control, and whether it can hire and keep a CIO at market rates. Fee comparisons for funds sit in fund fees versus direct ownership.