Since the release of the Guidance Statement for OCIO Portfolios by the CFA Institute, many firms have been working through practical questions related to implementation, interpretation, and emerging industry best practices. As part of that process, we submitted a series of technical and operational questions to the GIPS Helpdesk regarding OCIO-specific considerations, including discretion, composite inclusion, legacy assets, and retail definitions, among others. The responses provided by CFA Institute offer additional insight into how firms offering OCIO services may approach some of the more nuanced areas of the guidance and may be helpful to others across the industry currently evaluating their own implementation frameworks. Given the breadth of topics addressed, we have organized our observations and takeaways into a two-part article series focused on several of the most significant implementation themes emerging from the guidance to date.

Part 1: OCIO Guidance in Practice

Defining discretion, composite eligibility, and client scope.

The CFA Institute’s new Guidance Statement for OCIO Portfolios is prompting firms to address a key question: what qualifies as an OCIO portfolio under the GIPS standards? While the guidance establishes a formal framework for required OCIO composites, many firms are finding that interpretation is the greater challenge—particularly around discretion, client eligibility, and portfolio inclusion. The CFA Institute responses through the GIPS® StandardsHelpdesk provide practical insight into how firms can apply the guidance while preserving flexibility in defining their OCIO strategies.

The Core Principle: OCIO Is About Services Actually Provided

One of the most useful clarifications addresses whether a portfolio must have an “OCIO contract” to qualify as an OCIO mandate. According to the CFA Institute, it does not. What matters is not the contract label, but whether the firm actually provides both strategic investment advice and investment management services. This interpretation aligns with the guidance statement’s definition of an OCIO portfolio as “a pool of assets of an asset owner for which a firm provides both strategic investment advice and investment management services.” This clarification is especially important for firms that began as institutional managers and gradually evolved into OCIO providers without formally updating legacy advisory contracts.  In practice, many firms already review or recommend strategic asset allocations, help develop or assess IPS language, oversee manager selection, implement tactical positioning, and provide ongoing portfolio management. Under the guidance, these portfolios may already qualify as OCIO portfolios even if the governing agreements never use the term “OCIO.”

Discretion, Governance Oversight, and Constrained Portfolios

One area firms continue to evaluate is how client oversight and IPS constraints affect the determination of discretion under the OCIO guidance. For example, an OCIO provider may make strategic recommendations to aboard or investment committee that retains the authority to approve or reject those recommendations. The guidance itself acknowledges that asset owners may retain approval rights over certain investment decisions while an OCIO portfolio may still be considered discretionary, provided the firm’s recommendations are implemented on a timely basis and substantially in the same manner as they would be under full discretion. The responses provided through the GIPS Helpdesk expand on that concept by reinforcing that discretion is not necessarily eliminated simply because a client retains certain governance rights or imposes portfolio constraints. Instead, the analysis focuses more broadly on whether the firm can still implement and manage the portfolio consistent with its intended OCIO strategy.

This distinction becomes particularly relevant when evaluating portfolios with significant values-based restrictions, ESG or faith-based mandates, prohibited investment lists, liquidity limitations, concentrated legacy holdings, or other custom IPS constraints. Firms questioned whether these types of portfolios must still be included in required OCIO composites if the constraints materially alter implementation relative to the firm’s standard OCIO approach. The clarification provided by CFA Institute suggests that exclusion may be appropriate when client-imposed constraints cause the portfolio to be managed differently from the strategy represented by the composite.

The key principle remains representativeness. If a portfolio no longer reflects the intended OCIO strategy, exclusion may be permissible even for required composites, provided the criteria are documented, consistently applied, and appropriately disclosed.

Minimum Account Sizes

Firms question whether they may apply minimum account sizes to required OCIO composites, particularly when smaller institutional referrals fall outside the firm’s standard OCIO framework. The CFA Institute confirmed that firms may do so if the policy is documented, consistently applied, and tied to whether the portfolio can be managed according to the intended OCIO strategy. This mirrors long-standing GIPS composite principles rather than creating a special OCIO exception for required composites. The clarification also highlights an operational point many firms may overlook: if all portfolios are removed from a composite because of minimum size thresholds or other exclusion policies, the composite record effectively terminates until a qualifying portfolio re-enters the composite.

The Retail vs. Institutional Gray Area

The guidance clearly states that retail portfolios are outside the scope of the OCIO guidance. In practice, however, many firms serve ultra-high-net-worth families, trusts, family offices, and perpetual capital structures that may resemble institutional OCIO relationships more closely than traditional retail accounts. The clarifications provided through the GIPS Helpdesk give firms meaningful flexibility in this area. The CFA Institute indicated that firms may define multi-generational trusts, family entities, personal LLCs, and similar structures as retail or non-retail clients, provided those definitions are reasonable, documented, and consistently applied.

Importantly, the CFA Institute also suggested that perpetuity is a key indicator when evaluating whether a relationship may fall within the scope of an OCIO arrangement. Institutional OCIO relationships are often characterized by long-term strategic oversight, multi-asset allocation management, governance coordination, and investment objectives intended to extend across generations rather than a single investor’s lifetime. As a result, some ultra-high-net-worth relationships may function operationally as OCIO portfolios even without a formal family office structure.

What Firms Should Be Doing Now

The clarifications reinforce a recurring theme throughout the OCIO guidance: Firms have flexibility—but only when it is supported by documented policy and consistent application. Firms should strongly consider documenting OCIO qualification criteria, discretion policies, minimum account thresholds, the treatment of constrained portfolios, retail versus non-retail definitions, and IPS oversight procedures. For many organizations, the operational work needed to support these decisions may prove more challenging than the composite calculations themselves.

Overall, these clarifications suggest that the OCIO guidance may be less prescriptive than many firms initially expected. Rather than imposing a single operational framework, the guidance repeatedly emphasizes principles-based decision making supported by reasonable methodology, consistent application, and robust disclosure. As firms continue implementing the guidance, the focus will likely extend beyond composite construction alone to the governance, documentation, and policy infrastructure supporting those decisions.

In Part 2 of this series, we will explore some of the more operationally complex implementation questions emerging from the guidance, including the treatment of legacy assets, managed versus advised assets, liquidity and asset allocation disclosures, benchmark construction considerations, and the broader challenge of ensuring fair representation within required OCIO composites.

For additional guidance regarding implementation of the OCIO Guidance Statement, please reach out to connect@cascadecompliance.com.