The chief direct investment officer: a role more families are adding
Built on Chapter 2 of The Single Family Office by Richard C. Wilson. Full chapter text: FamilyOffices.com.
As more wealthy families buy and run operating businesses, a newer role is spreading. Some call it a chief direct investment officer. Whatever the title, the job is the same: look after the family's operating companies and help it buy and sell new ones.
Why the role exists
Families that own many operating businesses run into a management problem. Each company has its own leaders, but no one is looking across all of them. Are they sharing resources? Is one struggling while another has spare capacity? Should two be combined?
A direct investment officer answers those questions. I know a family office with a large group of operating businesses that hired someone just to oversee them from a high level. That person makes sure the companies share what they can, get help when they need it, and keep improving.
What the job includes
The role usually covers:
- Watching the performance of each operating company.
- Spotting ways for companies to share customers, staff, or costs.
- Sourcing and checking new acquisitions.
- Leading or supporting the sale of businesses.
- Sometimes raising outside money for a portfolio company.
In some families, the family office itself becomes a backbone for its businesses, offering IT support, access to financing, and introductions to partners. The direct investment officer is often the person who makes that work.
In house or outsourced
Many families do not formalize the role. Others hire an investment bank or M&A firm to act as an outside chief direct investment officer. That costs less up front, but the firm must understand family offices and be able to bring in steady deal flow from other families, private equity funds, and institutions.
What to look for in a candidate
A strong candidate has both deal and operating experience. Deal experience alone is not enough. The person also needs to sit with company managers and help fix problems.
Look for someone who has bought and integrated businesses, sat on boards, and worked through at least one hard turnaround. Check how they talk about managers. The best ones respect operators and know when to step back.
How to measure the role
Measure the officer on the health of the portfolio, not just on deal count. Useful measures include the combined growth of the operating companies, cost savings from shared services, the quality of deals reviewed and closed, and how well acquisitions perform after closing.
Pay should reward long-term results. A bonus tied to closing deals encourages too many deals. A share of realized gains over several years encourages good ones.
How it fits with the CIO
In families with both a CIO and a direct investment officer, the line should be clear. The CIO usually owns the liquid portfolio and fund managers. The direct investment officer owns the operating companies and private deals. Both report to the CEO, who balances the family's overall allocation between them.
A first-year plan
In the first year, a new direct investment officer should do three things. Meet the leaders of every operating company and learn what each needs. Build a simple dashboard that shows how each business is doing month to month. Then pick one or two shared services, such as purchasing or IT, where the companies can save money together. Early wins build trust with company managers and the family.
What to take from this
- Add a direct investment role once the family owns several operating businesses.
- Look for both deal and operating experience.
- Measure portfolio health, not just deals closed.
- Draw a clear line between the CIO and direct investment roles.
This page is general information, not legal, tax, or employment advice. Speak with an employment attorney before setting roles, pay, or hiring policies.
Questions and answers
What is a chief direct investment officer? The person who oversees a family's operating businesses and leads new acquisitions and sales.
When does a family need one? Usually once it owns several operating companies or does regular direct deals.
Can the role be outsourced? Yes. Some families use an investment bank or M&A firm instead.
How should the role be paid? With rewards tied to long-term portfolio results, not deal count.