Running an enterprise often takes many hands to keep the ship afloat. However, this necessary splitting of responsibilities can lead to confusion about who does what.
This isn’t helped by our obsession with acronyms to further compound the problem.
To help demystify the familiar roles found on a board of directors we have decided to break down two that can seem to overlap. The chief investment officer and chief financial officer.
Who are they, and what differences are there when comparing a chief investment officer vs. chief financial officer? Read on to find out.
What Is a Chief Investment Officer?
The chief investment officer in a company is the main point of contact for investors. They also look after any investment interests a company may have.
The chief investment officer reports directly to the CEO and is a vital part of the leadership team. They’ll likely have staff that reports to them, managing their investment portfolios. However, they are responsible for maintaining relationships with any investors.
Their presence is also necessary when the financial decisions of an entire company are being reviewed. This is because they will be able to assess how much of a company’s operating funds can be used for investment purposes.
Dependent on the size of the company, many of the responsibilities of a chief investment officer may be covered by a chief financial officer instead.
What Is a Chief Financial Officer?
The chief financial officer is one of the most senior positions in a company. They oversee everything to do with the financial health of a company. They will also directly report to the CEO and they usually have a wide range of departments reporting to them.
A chief financial officer has as a principal priority the financial growth of a company. Therefore anything that can stimulate or inhibit this is under their watch. This includes financial planning, risk management, reporting, record keeping, forecasting, and negotiation.
It’s also essential that they’re familiar with all relevant regulations as it’ll be on their head if the company is found to not be compliant.
Chief Investment Officer vs. Chief Financial Officer: How Are They Different?
While both cover similar areas, there are some marked differences between a chief investment officer vs. a chief financial officer.
The first can be seen in the focus of the responsibilities.
The chief financial officer will be more concerned with the day-to-day running of the business. This means that small accounting issues that escalate will go up the chain and end up on their desk. They also can oversee the budgets of various departments within a company.
The chief investment officer on the other hand will have little to do with the operations of a company. Their concerns are more outward than inward, looking to make sure that there is an optimum return on any capital investments.
Often, only specific companies will need a dedicated chief investment officer. These include colleges, banks, companies with pension funds, and nonprofit organizations.
However, it is also common for small and medium businesses to not have an assigned chief financial officer. For this reason, companies like this fractional CFO service are leveling the playing field for enterprises that are interested in taking their business to the next level.
Safeguarding the Financial Health of Your Company
As we have seen in our assessment of a chief investment officer vs. chief financial officer both roles are vital to an organization. Which one do you need in your company?
We hope you enjoyed our rundown of these important positions. Check out the rest of our blog for more great business content.