A Guide to Becoming a Chief Investment Officer

A chief investment officer (CIO) is the executive in charge of overseeing investments at a company, organization, or institution. There’s a common misconception that a chief investment officer’s primary responsibility is to supervise a team of portfolio managers, but that’s just one responsibility on a long list that can also include: 

• Managing funds
• Managing and allocating assets
• Monitoring investments 
• Developing short- and long-term investment policies 
• Maintaining investor relations 

Chief investment officers in different settings may need to bring different skills to the table; this is not a one-size-fits-all role. As a result, becoming a chief investment officer is about a lot more than getting the right degrees or racking up the right experience. 

In this article, we’ll cover:

• What chief investment officers do
• The kinds of chief investment officer careers
• The educational commitment to become a chief investment officer
• How chief investment officers advance in their careers
• Licensure and accreditation for becoming a chief investment officer
• The pros and cons of becoming a chief investment officer

What do chief investment officers do?

The role of a chief investment officer is to make sound investments, so shareholders are satisfied. How a CIO accomplishes this depends largely on who they serve. In a newsletter published by executive recruiting firm Charles Skorina & Company, Charles Skorina had this to say about how the chief investment officer role transform in different settings: 

“The CIO job is what one makes of it; some are delegators, some are micro-managers, and some are just liaisons between a consultant and an investment committee. Corporate and hospital chief investment officers structure their portfolios primarily to manage risk. Corporate CIOs are liability-driven and have a financial mindset.”

There are some commonalities for all CIOs, however. Their work generally falls into five categories:

1. Identifying and evaluating potential investment opportunities to ensure that those opportunities will maximize shareholder profits and conform to an existing investment strategy
2. Creating, redesigning, and implementing investment strategies and processes that meet organizational goals
3. Using risk management models and budget limits to allocate assets across departments and projects
4. Building and managing teams of qualified people who are responsible for the organization’s investments and asset management
5. Organizing investment reports, reviews, and quantitative and qualitative portfolio studies

There are many subtasks within each of these categories; the biggest challenge you will face when you become a chief investment officer may be time management. You’ll be using technical skills and soft skills, dealing with a lot of moving parts, and communicating with many people, many of whom will rely on you to explain complex financial concepts in plain language. Chances are you’ll report to the chief executive officer (CEO) and possibly also the chief financial officer (CFO), no matter where you work.

Kinds of chief investment officer careers

Many different types of businesses and organizations have managed investment portfolios, which means there are chief investment officer jobs in many sectors:
A large corporation might have a pension fund, and public pensions require management, too
Colleges and nonprofits have endowments
Insurance, banks, and real estate companies all have investment portfolios

Given that, it makes sense to look for opportunities to gain experience in lots of investment areas early on, so you know something about a lot of different asset classes. Deb Brown, the head of asset management recruiting at Russell Reynolds, tells aiCIO that this is hugely important. “Aspiring CIOs should get this generalist experience, whether by getting involved in an asset-allocation study, participating in the board of directors meetings, or serving as the CIO’s sidekick,” she says. “They shouldn’t just become the private equity guy or gal.”

The takeaway: When you have the perspective to take on executive-level investment oversight at a wide variety of businesses and organizations, you’ll be more employable.

Educational commitment to become a chief investment officer

The minimum educational commitment to become a chief investment officer is earning a bachelor’s degree in economics, finance, or accounting from a respected business school. Any major that gives you the tools to launch a career as an investment banker or financial analyst will do, because you probably won’t be ending your schooling just yet.

Most chief investment officers will, after a few years of work, return to graduate school to earn a master’s degree—specifically an MBA. 

Is an MBA essential to becoming a chief investment officer? A scan of job postings on Glassdoor and Indeed suggests that it’s not, but the chances are good that you will be competing for those jobs against candidates with master’s degrees. Earning your MBA is a smart move—so is taking as many investment-specific electives as possible or choosing an investment concentration.

Top MBA programs for becoming a CIO

Some of the top on-campus and online MBA programs for investing—ranked by job placement and starting salaries of graduates—can be found at:

• New York University‘s Stern School of Business
• Columbia University School of Business
• University of Virginia, Darden School of Business
• University of Pennsylvania‘s Wharton School
• Dartmouth College
• Duke University
• Cornell University‘s Johnson Graduate School of Management

How do chief investment officers advance in their careers?

Having an MBA won’t be enough to land you this gig. Becoming a chief investment officer is all about experience, and the typical advancement path for a chief investment officer begins with a trader or analyst position.

From there, a future chief investment officer might become a portfolio manager, a managing director, or (less often) a financial advisor. You’ll need at least a decade of experience in investing to be considered for chief investment officer jobs—if not more.

Here are some minimum requirements summarized from actual job postings:

• Minimum of ten years of investment experience, including at least five years of work at a defined benefit plan consulting firm
• At least 15 years of investment experience managing/advising on institutional assets
• Minimum of 12 years of direct experience in the industry or related industries required, including a minimum of five years experience managing a team
• 10 to 15 years of investment experience including securities analysis and portfolio management

Developing the skills needed to become a chief investment officer takes time, so be prepared to invest as much in yourself as you do in the market. 

Licensure and accreditation for becoming a chief investment officer

You don’t need a license to work as a chief investment officer, but you will need to hold certain professional licenses from the Financial Industry Regulatory Authority (FINRA) if you come to the role via portfolio management. Which FINRA licenses you need will depend on the types of securities and assets you manage. You’ll also need to register with the Securities and Exchange Commission (SEC) if your work as a portfolio manager involves asset management in excess of $25 million. 

What most employers do require of chief investment officer candidates is that they hold a chartered financial analyst (CFA) designation. The title of CIO is considered the highest distinction in the investment management profession, and earning it requires passing three examinations.

There are other certifications in finance, investing, economics, and accounting that you may want to pursue as a way to bolster your resume, but most employers won’t require them. 

The pros and cons of becoming a chief investment officer

To become a chief investment officer, you’ll need to commit to years of study and work. It’s important that you carefully consider the pros and cons of this career. 

Pro: You will earn good money

According to Salary.com, the average salary for chief investment officers is $331,900, and salaries can exceed $400,000 for chief investment officers with the most education, skills, and experience. Most CIOs receive other incentives that can double their annual earnings.

So, while you’ll shoulder much responsibility and maybe also endure much stress in this role, you’ll certainly be well compensated.

Con: You won’t get to do much actual trading and investing

CIO is a big-picture role. Chief investment officers don’t do much of the day-to-day management of investment portfolios because they’re busy managing teams and shareholder expectations. That may not be a con to you, but for those who enjoy the excitement and unpredictability of trading, it’s something to consider.

If you’re intrigued by this career path because you love playing with data and the excitement of investing, you might be happier working your way up to portfolio management or a financial analyst role and then staying there.

So, is becoming a CIO right for you?

Some institutions outsource their chief investment officer role to asset management firms. These outsourced CIOs (often referred to as OCIOs control over $1 trillion in assets in the United States alone, and more than $1.6 trillion worldwide. Given this emerging trend, perhaps the best way to become a CIO in the future will be to work your way up the ranks at an investment house to land an OCIO role.

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