A conversation with Jonathan Hirtle, Executive Chairman at Hirtle, Callaghan & Co.
The industry legend shares a glimpse of life back-in-the-day at Goldman Sachs, his early leap to independence, plus his prescription for the incredible organic growth at Hirtle, Callahan & Co., the impact of the OCIO model, and much more.
NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.
About this episode…
When it comes to innovations that fundamentally altered the wealth management world, many pundits will cite the OCIO or Outsourced Chief Investment Officer model.
The concept of outsourcing investment management changed the way that investment decisions were made and implemented for institutional investors and high-net-worth families—moving the decisions from product-driven sales folks to a fiduciary-minded comprehensive investment office.
It was a game-changer for the industry, creating a more streamlined and cohesive approach for clients while driving growth for firms that adopted this methodology.
Yet the OCIO model’s impact was most transformative to the firm co-founded by a pioneer of the model, Jonathan Hirtle.
This former Marine started in the wealth management industry in the trainee program at Goldman Sachs in the early 80s. Through that experience, he was immersed in a culture unlike any other—yet he ultimately felt “philosophically cornered” in a transactional-based role at the firm.
That is, Jon was conflicted: He saw an opportunity to serve clients’ investment needs in a more comprehensive manner—in a way that he could not at Goldman.
So in 1988, Jon co-founded RIA Hirtle, Callaghan & Co. with Donald Callaghan, another Goldman Sachs vice president, to serve solely as an outsourced Chief Investment Officer and investment department to family groups and institutions that chose not to develop and pay for a full-staffed internal investment department.
And they made the leap to independence at a time when few would consider it—and when the resources to do so didn’t exist. That is, they did it from the ground up, without a blueprint or the support that is available to present-day prospective independent business owners.
Today, Hirtle Callaghan is a $20B RIA—growth solely driven by organic means and without the aid of outside capital.
In this interview with Louis Diamond, Jon talks about his journey and path to growth, including:
- Life as an advisor at Goldman in the 80s—and what motivated him to consider leaving the firm.
- The choice to launch an RIA at a time when few made the leap—and what it was like without the support and resources that breakaways have access to today.
- The now popular Outsourced Chief Investment Officer (OCIO) model—and how it changed the way institutions and large families handled their investments before its inception.
- The OCIO model today—and how it evolved over time.
- Hirtle Callaghan’s growth over the years—and how their focus on organic growth fostered such incredible success.
- The jump from $1B in AUM to $5B and now over $20B—and what challenges they encountered at each breakpoint.
- Remaining 100% independent—and why they have chosen not to take on any outside capital.
Jon paints an amazing picture of how innovation drove change not just for Hirtle Callaghan’s clients but for the wealth management industry at large. From recognizing the limitations in the brokerage environment, to making an early leap to independence, and on to the value of delivering a comprehensive investment model, Jon paved a new path that now serves as the backbone of the institutional consulting space as it stands today while sparking a flow of independent firms as a result.
Jon is a true legend with extensive experience that he explains in practical terms—making this a “can’t miss” episode for employee advisors and business owners alike.
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Jon Hirtle has been an active investor for over 40 years. Starting his career at Goldman Sachs as a young idealist fresh out of the Marine Corps, he has successfully invested five separate decades.
- The 1982 bull market and the 1987 crash
- The 1990s run-up and bursting of the dot-com bubble
- 9/11, the buildup and bursting of the mortgage market, and the Great Financial Crisis
- Quantitative Easing throughout the 2010s
- And now, in the 2020s, the ripple effects of Covid, interest rate shock, and inflation
Over 35 years ago, his idealism and insight led him to recognize that serious investors are far better represented by a sophisticated, independent investment office rather than a traditional bank, broker or other product-driven firm. That conviction, in turn, led him to create the first independent investment office for hire and pioneer the concept of the outsourced chief investment officer (OCIO). In 2011 Pensions and Investments named him the “Oracle of Outsource.” Today, Hirtle Callaghan manages $20 billion in complete, global investment programs for over 200 philanthropic families and the mission-driven nonprofits that inspire them, while OCIO, the industry he created, has grown to more than a trillion dollars in assets under management.
Through decades of investing, innovation and leadership, Jon has developed a clear view about the difference between serious investing, trading and the outright gambling that has become so common in today’s world. He urges serious investors to think differently, to understand the value of market inefficiencies when they exist, to focus more on the trend and less on the cycle and to appreciate the difference between random luck, that is unlikely to be repeated, and skill that may persist – all in service of achieving success with certainty. He is a frequent contributor to Bloomberg and CNBC.