Pretty much, every business needs some finance admin, especially for big companies. They help in the strategic planning that helps influence the future direction and growth of the organization. Both Chief Investment Officer and Chief Financial Officer play a crucial role in this capacity.
Both the chief investment officer and chief finance officer provide support in the financial stability of the business. The only difference is that the chief investment officer focuses more on the investment side of the business. Whereas, chief finance officer oversees the company’s finances, including financial planning, management of financial risks, record-keeping, and financial reporting.
What is the difference between Chief Investment Officer and Chief Financial Officer?
Both Chief Investment Officer and Chief Financial Officer are board-level executives. They work in the same department in an organization. Both are responsible for generating strategic plans to sustain the financial stability of the company as well as the financial growth of the business.
The primary function of the Chief Financial Officer is to do the planning, implementation, management of all the financial ventures of the organization. CFO does business planning, budgeting, liquidation, forecasting, and negotiations. On the other hand, the Chief Investment Officer has a more specific role in the financial aspect of the business. CIO is the head of managing and monitoring investments. It also includes interfacing with the investors and maintaining a good relationship with them. Essentially, both the CIO and CFO have a major role in a business but not all companies require a CIO. The role of a CIO is much more needed on companies that require assets portfolio management such as:
- Colleges and Universities
- Non-profit organizations
- Corporations with pension funds
- Banks with investment portfolios
- Insurance companies needing portfolio management
Which position is higher between Chief Investment Officer and Chief Financial Officer?
Although the CFO job description is vast and more complex than CIO, they are equal in terms of position in the business. They both belong to the C-suite leadership positions. Both Chief Investment Officer and Chief Financial Officer report to the CEO. In fact, they usually work together in the organization in terms of planning and strategizing in the financial direction of a company. Both provide regular updates on the status of the company’s investment ventures.
What’s the difference between CIO and CFO roles and responsibilities?
We know that both CFO and CIO work on the same aspect of the business- finance. Both are part of the C-suite team, and both report to the CEO. But what are the differences in their respective roles? Here are the specific roles and responsibilities of a CFO and a CIO:
Chief Investment Officer
A chief investment officer or CIO is the head of investments of a company. CIO is responsible for managing the investment activities, including the real estate, fixed income, and equity securities portfolios. Moreover, CIO oversees pension investments, develops strategies and policies to maintain good investor relations. The demand for a chief investment officer in a business depends on the size and scale of the business. Most likely, they are needed in banks, universities, insurance firms, investment firms, or nonprofit organizations with grants.
Chief Financial Officer
A chief financial officer or CFO is the highest-ranking financial executive in a company. The CFO also reports directly to the CEO. But, unlike the CIO that focuses more on the investment aspect of the business, the CFO is responsible for the company’s overall financial capabilities. They are responsible for financial planning, management of financial risks, record-keeping, financial reporting, and liquidation. CFO analyzes the company’s financial strengths and weaknesses to come up with financial plans and strategies.
While CIO is in demand for smaller businesses, CFO is much needed in a larger business earning about $50 million per year. However, a CFO is also essential in start-up businesses because a CEO is often busy pursuing potential investors. But also keep in mind in start-ups, it is best to hire a part-time CFO at least three months before a new fundraising course.
How do CFO and CIO work together?
The roles and responsibilities of both CIO and CFO are crucial in the business, especially in the financial stability and growth of a business. They work hand in hand in providing the best strategies and plans in the financial direction of a company.
In most corporate businesses, the CFO is also the CIO because most big corporations have established guidelines set by the board. If this happens, the CFO title remains. The combined role gave authority to a CFO to decide the amount of money to be invested. It also allows the CFO to amend the business investment portfolio, ensuring the balance between returns on investment and risks. Although most big companies use a combined CFO and CIO role, some companies, like non-profit or colleges, require a portfolio management officer or a CIO. A CIO can give his recommendations to the board about investment strategies and any projected developments.