Frontier Advisors is set to bring its outsourced investment service to market following the appointment of Northern Trust as its custodian following an “extensive and competitive selection process”.

Frontier launched the new service – which it has dubbed “independent CIO” (ICIO), to broaden its offering at a time when funds are increasingly taking investment functions in-house and to keep pace with other asset consulting firms that long ago made a move to implemented consulting. It believes the natural client base is sub-$2 billion asset owners, such as super funds, insurers, endowments  and wealth managers that are finding it increasingly difficult to access both custodians and merger partners.

Frontier says the ICIO monicker stems from the fact that the service has no product conflict, with asset owners able to invest in products from other managers rather than take what is built into an implemented portfolio.

“We’ve had great feedback since we announced our ICIO plans in late 2025 and that has come both from our existing clients and a range of groups we haven’t had the chance to work with previously because we could not fully meet their requirements, despite their interest in Frontier,” Frontier CEO Andrew Polson said in a media statement.

“A major part of what these investors are looking for is getting access to custodian services. Having an organisation like Northern Trust providing a consistent, scalable servicing and data framework is powerful and their reputation and record adds to the capability and confidence the Frontier brand provides as part of ICIO.”

State Super’s assets are set to stay with J.P. Morgan, which holds them alongside those of NSW TCorp. While Frontier said that structure is relatively complex and so presents an obstacle to unifying all the assets of its solution under one provider, it understood from the outset that State Super would stay with J.P. Morgan. 

While several global custody banks were interested, some balked at providing their services to a new market entrant with a structure that was quite different compared to that of their usual Australian asset owner client base.

The big custodians have in the last few years almost exclusively pursued similarly large superannuation fund clients (custody fees are typically charged as a percentage of assets under management, though the biggest part of their margin comes from other transactional services like cash management and FX) which has resulted in a significant number of smaller asset owners scrambling for a custodian – the situation Frontier is looking to exploit to bulk up its assets under management.

“Australia is a key growth market for Northern Trust, and we continue to build upon our support for institutional investors as they modernise their operating models,” Leon Stavrou, Northern Trust head of Australia and New Zealand, said in a media statement.

“Our commitment to client service, technology, governance and advanced data delivery are central to Frontier Advisors’ ICIO proposition and a key reason we were selected for this mandate. Importantly, our scalable data support model can evolve to meet the requirements of the ICIO platform’s continuing development.”

Frontier has identified “north of 20 targets” ranging from $250 million to $2 billion it wants to shop its ICIO solution to, with Polson telling Investment Magazine in January that it has a “five-year window” to make it work.

“We don’t think that’s an unreasonable framework to work within and I think that gives us an enormous amount of flexibility in terms of what we’ve got to do,” Polson said. “The work we’ve done prior to entering the market and the prospects we’ve seen has given us a significant amount of comfort that this sort of service would be highly desirable to a range of players out there.