What Does an Investment Club CFO Actually Do?

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“Oh, so Sean, you are the CFO of Sneaky Falcon Enterprises? That’s really interesting! What does an investment club CFO do?”

A question that I get literally all of the time never.

Does nobody even read my bio?! I’m the CFO of my own company that I co-founded, dammit!! Don’t you know who I am?!? I have the word CHIEF right in my title; that means I’m an effing BOSS!! RESPECT MY CFO AUTHORITY!!! 

*rips off dress shirt and throws desk*

Sorry about that.

Anyways, despite no one actually asking the question, I thought I’d answer it anyway.

Well, I’ll tell you, Bobs.

First, let me level set with the widely accepted responsibilities of a “real” Chief Financial Officer.

According to Monster.com, a CFO:

“Develops financial well-being of the organization by providing financial projections and accounting services; preparing growth plans; directing staff.”

 

Citing Wikipedia like I’m back in high school:

“The chief financial officer (CFO) or chief financial and operating officer (CFOO) is a corporate officer primarily responsible for managing the financial risks of the corporation. This officer is also responsible for financial planning and record-keeping, as well as financial reporting to higher management.”

 

Those all sound like “real” CFO tasks to me. So, how do they line up with what I work on as our investment club CFO here at Sneaky Falcon?

Managing Financial Risks

Hahaha. Nope. This is the main responsibility of any corporate CFO, and it’s totally not on my radar. To say that Sneaky Falcon doesn’t do a lot of “risk management” is an understatement.

We find stocks we like, we consider what we are already invested in, and we probably invest in said new stock anyway. Our risk processes are “maturing” and other business buzzwords that dance around the fact that we don’t do much of this.

That being said, we are a pretty simple business at this point. We don’t have employees, outside investors, expenses, or debt. We are long on all our stock positions, so we only really stand to lose the money the members have contributed.

If all the companies we own shares in were to collapse and file for bankruptcy (a very real possibility given our track record), we’d just close up shop, curse the market gods, and move on a little poorer.

Financial Planning, Projections, & Record Keeping

Although we aren’t doing a lot of forecasting at this stage, record keeping is an essential part of running our investment club.

Keeping an accurate record of all transactions, and making sure the cash ties out to our brokerage is accounting 101. It enables us to error-check our brokerage statements, create more flexible reporting, and easily prepare tax documents for each of the members come tax time.

Accounting Services (and Treasury)

While the work in this category of responsibilities generally falls into the purview of staff accountants and other various paper pushers, at Sneaky Falcon, the CFO takes care of that too.

For an investment club, this encompasses three main tasks: collecting member contributions, moving money, & making trades.

I’m always working hard to ensure we have adequate funds to keep investing in the next Novavax that gets proposed. Hitting up members to contribute more money to the pot, and then getting it into our brokerage keeps us growing.

I also get to manage our brokerage account with E*TRADE. See that lack of risk management in action? Once the team votes to invest in a stock, or sell it off later, I execute the trades. Checks and balances be damned!

Financial Reporting

You know those well articulated and insightful financial reports you find here every month? CFO shit right there.

However, what you don’t see is the even more detailed and actually useful monthly dashboards I create. With info on how each member is performing, detail on every stock, every transaction, and even tax liability, it’s an excel work of art. That probably only I look at regularly…

Whether it’s for filing our annual tax return or to just get an assessment of where we are losing money or how much cash we have on hand, detailed financial reporting is a must for every business, including investment clubs.

Directing Staff

As mentioned, I’m not lucky enough to get any staff. I try to tell other members what to do, with mixed success…

 

Time for the SPOILER.

If you made it this far, you are either really interested in our financial leadership, or you just skimmed ahead to see if I continued to go crazy. Either way, good on you for getting to the end.

If you’ve come to the conclusion that I was bestowed the prestigious title of Chief Financial Officer and given the corresponding responsibilities outlined previously due to my financial acumen and inspired work ethic…

FALSE.

I became the de facto CFO because I worked in financial services at the time we started, had used E*TRADE before, and I knew how to Excel. I was willing to put in the work to flesh out the reporting, and accepted the additional duties of collecting contributions and filing our tax returns.

Also why I became the CFO.

Being an investment club CFO is clearly not quite the same as running any other business really. And other club’s may more accurately refer to the role by a different title. But I’ve taken it on and run with it. Without the CFO, Sneaky Falcon wouldn’t know to the penny how much money it has lost on its poor investment decisions.

To the rest of the Sneaky Falcon team, you’re welcome!

Sean S

Sean S

Sean has combined his banking experience, analytical & financial background, and passion for business to lead Sneaky Falcon Enterprises as a founding partner and its CFO. He's also still patiently waiting for Lending Club's stock price to rebound.
Sean S
Sean S

ABOUT THE AUTHOR

Sean S
Sean has combined his banking experience, analytical & financial background, and passion for business to lead Sneaky Falcon Enterprises as a founding partner and its CFO. He's also still patiently waiting for Lending Club's stock price to rebound.
COMMENT (1)
Dan@NinjaCapitalist.com / August 17, 2017

Hi Sean,

I love the article. What’s funny is that I report to a CFO of a publicly traded company and I feel like its really not that different from what you described! Sure, things are much more formal at a normal company and processes are a little more developed. But at the end of the day, its really just window dressing. Large company CFOs have analysts like myself building financial models and putting numbers into fancy PowerPoint decks, but during the financial crisis we all saw how well some of our nations top CFOs “managed risk”.

Being a CFO of your own company sounds pretty bad-ass though. Best of luck!

-Dan

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