Competent Investor Relations Professional ARe Rare
There is no school pumping out investor relations professionals with a complete blend of regulatory knowledge and skills in finance, communications, graphic design, digital marketing, and more. Most companies who have committed to hiring a an investor relations professional will often end up hiring a professional from one of two streams:
- Finance & investment banking
- Corporate communication and public relations
By virtue of their backgrounds, each of these streams offer certain advantages as well as blind spots that must be addressed for companies to be successful in the market.
Finance and Investment Banking Professionals
Steuart Britt once wrote that ‘Doing business without advertising is like winking at [someone] in the dark. You know what you are doing, but nobody else does’. Professionals coming from the a finance and investment banking background must learn the art of advertising and communications to be successful.
Finance professionals are often steeped in the technical language of finance and industry. This can make it difficult for them to translate the operational narrative of the businesses they serve for generalist investors. Bear in mind that most fund managers are generalist investors, not specialists. Be on the watch for overly technical language in the copy being developed for news releases, management’s discussion and analysis, conference call scripts, etc. In the same way, watch out for an overly technical approach to your investor presentation (too much detail, small fonts, slides overwhelmed by copy rather than compelling imagery).
Investor relations professionals from a finance background must develop the following key skills:
- Great written content that is accessible to the lay person;
- Compelling visual design;
- Knowledge of how to use modern marketing technologies to reach and retain the target audiences; and
- The strategic thinking to deploy all the elements of a successful marketing program.
Remember that portfolio managers and retail investors are not experts in your industry. Investor Relations should work to eliminate jargon and incorporate visual elements to simplify your message about the company’s value proposition, financial position and strategic plan.
MCI’s Market Coach services can help backstop this essential function while imparting the necessary skill sets with your internal investor relations team.
Corporate Communications and PR Professionals
Professionals from this stream often lack the accounting or finance background required to competently understand and convey the company’s operational narrative and investment thesis. They may also struggle to keep up in their interactions with finance professionals and anticipate the information needs and questions of your investors and analysts.
Those investor relations professionals from a communications background must develop the following key skills:
- Knowledge of the accounting principals that apply to the company;
- Ability to make sense of the financial models being used by analysts to forecast the company’s performance;
- Ability to provide commentary about the macro-economic context and it’s impact on the company; and
- Conversant in the capital allocation priorities of management and the ability to articulate this to investors.
Professionals from a communications background must be able to weave the numbers and the operational narrative into a coherent package that makes sense to the lay investor. They must also check their innate spin-to-win tendencies that only serve to damage management credibility. Investors just want the news straight, whether it’s good or bad, without the fluff or spin.
Again, our Market Coach services can help you build an aspiring communications professional into a complete investor relations professional.
Key Investor Relations Skills
The graphic below depicts the diverse skill set and competencies required by investor relations professionals to drive success for the companies they serve. As a company, you should commit to identifying the areas you will need to support development in.
Beyond the four essential competencies shown in the figure above, an IR person must have grace under pressure. Maintaining and promoting a calm demeanor in intense environments is essential to supporting positive outcomes for management and investors. Someone who is prone to panic, who struggles to manage the unexpected, or who is intimidated by senior management and investors creates unnecessary risk.
Communications
Communications covers everything from basic public relations (writing news releases along with media engagement, monitoring, and management), branding, design, strategy, to digital marketing. Make no mistake, your investor relations functions must manage a sales funnel. Your investor relations professional must know how to implement an investor conversion funnel that captures capital effectively through conventional, digital and AI enabled communication channels. The best IR professionals also ensure the company’s investor conversion funnel captures capital effectively through conventional, digital and AI enabled communication channels.
Communications need to be credible, clear, compelling and connected. Beyond the words used in the company’s messaging and communications, and the numbers used in financial analysis and the company’s financial reporting, good IR professionals design engagement that achieves a dominant share of mind in the market. This is often done through well designed visual communications that convey complex information so that it can be rapidly transferred with high impact.
the Regulations Governing an Investor Relations Professional
No matter where a company operates, or what exchange it trades on, its investor relations must adhere to a strict set of rules and regulations. Stock exchanges, securities commissions, and legislation at both the regional and federal levels all have worked to establish these rules.
For securities trading in the United States (“US”), the primary rules and regulations governing your investor relations activities include:
- Regulation Fair Disclosure (“FD”);
- Regulation S-X; and
- Regulation S-K.
In addition, the rules set by the Financial Industry Regulatory Authority (FINRA) impact US investor relation programs.
For securities trading in Canada, the primary rules and regulations include:
- National Instrument (“NI”) 51-102;
- NI 52-112 Non-GAAP and Other Financial Measures Disclosure
- NI 43-101 for mineral exploration and production;
- National Policy 51-201; and
- Other policies as set forth by the various provincial securities commissions.
In addition the rules of CIRO, the Canadian Investment Regulatory Organization, impact Canadian investor relation programs. CIRO was formed by the merger of the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA).
It is imperative that your IR provider know and respect the rules and regulations. Your company’s credibility and legal well-being hang in the balance.
Investor Relationship Management
Investor relationship management is really another phrase for the broader activity of managing all of your capital market relationships. In addition to your present and future investors, this also includes managing analysts, investment bankers, trading desks and brokers. Your provider should know how to use one of the investor relationship management platforms. These platforms are used to identify and screens potential buyers, nurture your relationships with broker-dealers, and track outcomes over time.
Conclusion
Finding a competent investor relations candidate is like finding a needle in a haystack. However, with the right support you can build a great investor relations function from a diverse array of backgrounds. MCI‘s Market Coaching services can provide the support your investor relations person needs. The reputation of your company and the credibility of its management team hinges on their skills and professionalism.
Frequently Asked Questions:
What does an investor relations professional do?
Investor relations (“IR”) professionals design a public company’s engagement and communications to achieve a premium valuation. They ensure the company’s IR program is credible, clear, compelling, and connected. At a fundamental level, an IR professional ensures investors have a clear understanding of the company. They manage expectations appropriately to ensure investors’ view of the company matches reality. Beyond basic investor relations, IR professionals must design engagement with the market that achieves a dominant share of mind. They must also ensure their company’s investor conversion funnel captures capital effectively through conventional, digital and AI enabled communication channels.
How much do investor relations professionals make?
Compensation for IR professionals depends on geography, industry, company size, and seniority. For IR professionals employed by a public company, total compensation is often comprised of:
- Salary;
- Short-term incentives tied to the company’s business performance; and
- Long-term incentives tied to the company’s market performance.
For external IR professionals acting as outside consultants, compensation is often salary based with annual bonuses. IR professionals should avoid taking options for compensation as this can compromise their ability to interface with important counterparties. From a global perspective, 80% of IR leaders make more than US$150,000 and 50% make more than US$200,000. IR Impact is a good source for more granular information.
What makes a good Investor Relations Professional?
Good investor relations professionals translate a company’s often technical message into something easily understood by generalist investors. They understand the guardrails of the regulatory environment, and protect management’s credibility at all times by appropriately managing expectations. Beyond the words used in the company’s messaging and communications, and the numbers used in financial analysis and the company’s financial reporting, good IR professionals design engagement that achieves a dominant share of mind in the market. The best IR professionals also ensure the company’s investor conversion funnel captures capital effectively through conventional, digital and AI enabled communication channels.
What is the salary of investor relations officer?
From a global perspective, 80% of IR leaders make more than US$150,000 and 50% make more than US$200,000. IR Impact is a good source for more granular market data on IR salaries that can provide a more accurate view of the salary you should expect based on your region, industry, company size, etc.
Is investor relations a stressful job?
Yes. Most investor relations professionals interface directly with the company’s CEO, CFO, and board of directors. While you might avoid a lot of the politics of being further down in the organization, your company’s leadership expects competence, accountability, grace under pressure, and wisdom in high-stakes situations.
What kind of person is good for investor relations?
Beyond having a high tolerance for ambiguity and a rapidly changing environment, investor relations professionals must be well-versed in securities laws and regulations, possess high emotional intelligence, have excellent spoken and written communication skills, and have a creative mind for visually expressing information so that it can be rapidly transferred with high impact.