Margin pressure, elevated capital needs, constrained liquidity, and regulatory scrutiny are reshaping expectations for investment programs and the advisors that support them. As healthcare organizations manage growing financial complexity, the role of investment advisors, investment consultants, and outsourced chief investment officer (OCIO) partners has evolved significantly over the past decade. What was once viewed primarily as an investment management relationship now intersects with broader enterprise priorities including liquidity management, capital planning, governance, enterprise risk management, and long-term strategic positioning.
Increasingly, healthcare organizations are evaluating investment portfolios and retirement assets not simply as standalone pools of capital, but as strategic balance sheet resources that support the overall mission and long-term resiliency of the organization. This is particularly important for health systems managing multiple asset pools with differing mandates, liquidity needs, time horizons, and governance structures.
Against this backdrop, many healthcare organizations eventually arrive at an important question:
Does our current advisor relationship still align with the organization we are today, and the one we are becoming?
In our experience, the following seven signals typically indicate a need to reconsider relationships and explore a structured search.
1. Sustained underperformance: investment results or client service
The most visible catalyst for reassessing an advisory relationship is often underperformance. While investment results remain important, organizations have begun evaluating advisors more holistically. Reporting quality, responsiveness, strategic insight, governance support, and the ability to provide actionable recommendations now carry meaningful weight alongside portfolio returns.
2. A reactive rather than proactive relationship
Today, healthcare organizations expect advisors to do more than explain historical results. Investment committees and management teams want advisors who can proactively help navigate liquidity needs, capital priorities, market risks, and enterprise considerations. In many organizations, dissatisfaction builds slowly. Committee meetings become heavily retrospective and strategic discussions around liquidity or capital priorities begin happening outside the investment review process. When conversations become primarily retrospective rather than forward-looking, it often signals a growing misalignment in expectations.
Healthcare organizations value advisors who can:
- Align investment strategy with broader balance sheet priorities
- Anticipate changing liquidity and risk considerations
- Support strategic decision-making among governance stakeholders
- Connect portfolio strategy to broader operating and balance sheet realities
3. The organization has outgrown the advisor
As health systems scale through expansion, acquisitions, and growing operational complexity, investment programs often become materially more sophisticated. Unlike many institutional investors operating under a single mandate, healthcare organizations frequently oversee multiple pools with differing objectives, liquidity needs, and governance structures.
For example, we often see evolving organizations increase allocations to alternatives and less liquid investment strategies in pursuit of greater long-term return potential and diversification. These structures can create additional complexity around liquidity planning, pacing, valuations, and access to top-tier managers. As a result, organizations increasingly value advisors who can provide more nuanced strategic guidance, stronger operational infrastructure, and enhanced education opportunities for investment committees.
In this environment, organizations often reassess whether their advisor has the depth, healthcare experience, and platform capabilities necessary to support a more complex investment program.
4. The scope and management model have evolved
Another common catalyst is a shift in how the organization wants to oversee its investment program. As governance structures and internal resources evolve, organizations often reassess how responsibilities should be allocated between internal stakeholders and external advisors.
Common responsibility shifts include:
- Transitioning from advisory relationships toward OCIO structures
- Moving from OCIO models toward hybrid or internally directed approaches
- Increasing internal treasury or investment oversight capabilities
- Coordinating oversight across operating pools, pension assets, and retirement plan committees
These changes are less about replacing an advisor and more about ensuring the relationship can remain aligned with the organization’s evolving governance and operational priorities.
5. Key person risk
Many longstanding advisory relationships are built around strong personal relationships and continuity of service. While this can be a meaningful strength, it can also create concentration risk over time.
In instances with a longstanding incumbent advisory relationship, we have observed organizations reevaluating whether strategic guidance and institutional knowledge are dependent on a small number of individuals or supported by a broader, durable advisory platform with sufficient team depth and succession planning.
6. Organizational transformation
Major organizational events such as mergers, acquisitions, restructurings, or strategic partnerships can fundamentally alter an institution’s financial profile and investment program.
These events frequently introduce:
- Additional asset pools and governance complexity
- New credit, global financial targets, and capital deployment realities
- Increased scrutiny from boards, auditors, investors, and rating agencies
- Often duplicative or overlapping advisory, custody, or other third-party relationships
In this context, organizations often revisit whether the advisor relationship(s) remains aligned with the institution’s evolving scale, structure, and strategic direction. Post-merger scenarios also often provide an opportunity to streamline overlapping advisory support and related fees.
7. Market check and fiduciary discipline
Many healthcare organizations periodically evaluate the marketplace as part of sound governance and fiduciary discipline rather than dissatisfaction. The process itself creates value by clarifying expectations, strengthening governance practices, and reaffirming confidence in the advisor relationship.
Even when the existing relationship remains strong, organizations often use a market review process to better understand fee competitiveness, service and staffing models, reporting and technology capabilities, healthcare-specific expertise, as well as governance and OCIO best practices.
The value of a structured search process
Determining whether to run an investment advisor or OCIO search is not simply about selecting a new firm. It is an opportunity to reassess whether the organization’s investment structure, governance model, and advisor relationship remain aligned with broader enterprise priorities and market best practices.
When thoughtfully executed, a structured search or market evaluation process can help organizations:
- Reassess investment objectives and organizational resiliency
- Align stakeholders around governance expectations
- Determine the optimal level of discretion provided to the advisor
- Evaluate how the investment program supports balance sheet strength and organizational resiliency
- Evaluate advisory capabilities beyond historical performance alone
- Benchmark fees, reporting, and service models against peers
A disciplined and well-coordinated process can also help organizations maintain momentum, establish clear evaluation criteria, and support a more objective decision-making framework across multiple stakeholders and governance bodies. For organizations managing multiple asset pools, the process also provides an opportunity to evaluate whether the advisor can support a coordinated investment approach across portfolios with differing mandates and enterprise objectives.
Looking ahead
We believe strong advisory relationships can and should endure over time. While not every situation warrants a search, the most effective healthcare organizations see the advisor relationship as dynamic, evolving to meet the pace of the organization. As organizational priorities, governance structures, and financial needs evolve, they periodically reassess whether the current model continues to serve the institution effectively. In an increasingly complex operating environment, periodic reassessment is an important component of sound governance, enterprise risk management, and long-term institutional stewardship.
Kaufman Hall Investment Management, LLC (“KHIM”) is an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Additional information is available at https://adviserinfo.sec.gov/.
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