What a fractional CIO actually does
The job is the same one a full-time CIO does at a larger carrier, compressed to the hours a smaller balance sheet requires. In practice it comes down to five recurring responsibilities: maintaining an investment policy that reflects the business (lines written, reserve duration, surplus position, rating ambitions, and regulatory limits); overseeing the outside managers against that policy, including performance, guideline compliance, and fees; reporting to the finance committee each quarter in language non-investment professionals can act on; representing the investment program to the rating agency, the auditors, and the regulator; and being available between meetings when a question comes up, which is when most of the value is delivered.
What a fractional CIO does not do, at least in our model, is manage money. The managers manage. The fractional CIO makes sure the right ones are in place, on the right terms, doing what the board approved.
Who it fits
Three kinds of organizations tend to need this and rarely have it. Insurance companies with $50 million to $750 million of invested assets, where the CFO is also the treasurer, the HR lead, and the point person for the auditors, and the portfolio gets attention twice a year. Public-entity risk pools, whose boards of mayors, superintendents, and county officials are responsible for investments they were never trained to oversee, and whose policies were often written years ago by the manager who benefits from them. And captives, which frequently accumulate surplus in a bank money-market account long after an investment policy and a managed portfolio would have paid for themselves.
What it costs compared with the alternatives
| Option | Typical cost | What you get | What you don't |
|---|---|---|---|
| Full-time investment officer | Salary, bonus, benefits, data and systems; usually a mid-six-figure total | Daily attention, in-house knowledge | Hard to attract to a small company; one person's view; key-person risk |
| Discretionary OCIO | Basis points on assets, commonly in the tens once underlying funds are counted | A single accountable firm running everything | Independence; the evaluator is also the evaluated |
| Fractional CIO (non-discretionary) | Fixed annual retainer; on most mid-size portfolios a few basis points | Senior judgment, independent oversight, board-ready reporting | Day-to-day trading, which stays with your managers |
| Nothing (the default) | Zero in fees | Status quo | Any check on fees, allocation, liquidity, or duration beyond the manager's own report |
The governance a board should expect
A fractional arrangement works when it is treated as a role, not a vendor. The adviser should have a written scope, a seat at every finance committee meeting, direct access to the custodian and manager reports, and a standing obligation to tell the board things it may not want to hear. The board should expect a quarterly package that fits in ten pages, an annual policy review, a manager evaluation on a fixed cycle, and a fee review every time a mandate renews. If the adviser's reports look like the manager's marketing deck, something has gone wrong.
How to start. Our engagements begin with a complimentary diagnostic built from your most recent statutory statement. It shows the finance committee how the portfolio compares with peers and where the first conversations should be. There is no obligation beyond that.