What Is a Chief Investment Officer (CIO)?

A chief investment officer (CIO) is the executive position responsible for setting the investment style and strategy of a firm's investments. The CIO oversees the management of an organization's investments.

Depending on the type and size of the organization, the CIO may directly oversee investments, or they may manage a team of professionals with this responsibility. The CIO may also choose to outsource some or all investments to an outside sub-manager.

Broadly, the CIO is responsible for these activities: sourcing, managing, and monitoring investments; establishing an investment policy statement (IPS); and working with external portfolio managers, analysts, and investors.

Key Takeaways

  • Chief investment officers (CIOs) are executive-level employees who manage the investment strategies and portfolios for businesses or organizations.
  • Sometimes the responsibilities of this role are taken on by the chief financial officer (CFO) of a company.
  • The role of a chief investment officer (CIO) is most likely to be found at banks, insurance companies, investment firms, or nonprofit organizations with endowments.

Understanding the Chief Investment Officer (CIO) Role

A wide range of organizations and businesses have investment portfolios that need professional management. Universities or nonprofit organizations have endowments that need to be managed. Corporations have pension funds. Banks and insurance companies maintain investment portfolios. Basically, any business or organization that has a portfolio of assets, including any stocks or bonds, will want an investment professional to oversee the management of those assets. The role of a CIO sometimes is combined with other responsibilities within a company; sometimes the responsibilities of this role may be taken on by the chief financial officer (CFO).

CIOs are responsible for deciding what amount of an organization’s operating funds may be put towards investment activity while maintaining limited overall risk to the organization. This typically includes tailoring the portfolio of the company’s investments in order to create a desirable balance between risks and return.

If managed properly, the investment activity of a company should not introduce a threat to the liquidity of the organization or its ability to support its operations. While the CIO may follow guidelines set by a board of directors, this executive also may offer advice and recommendations to the board on potential ways the investment strategy and policy should change.

CIOs typically face high expectations regarding the performance of the investments they choose to make. Even in challenging market cycles, when yields remain low for extended periods of time, CIOs are still expected to uphold the fiscal security of their organizations.

Communication skills are vital for CIOs because they must be able to make strategies and expectations clear to board members and other stakeholders.

CIOs are responsible for establishing investment strategies that are best for an organization's goals. For example, the goal of a pension fund might be limited to meeting its payment obligations, while an investment firm might seek returns that outpace the market. These goals will determine how aggressive or conservative the investment strategy should be.

Certification as a financial analyst and a keen understanding of financial markets are beneficial for those who seek this role.