What Makes a Good IR Professional?
Recently, I had the privilege of serving as a panelist for a career event at the New York Society of Security Analysts. The discussion was focused on what makes a good IR professional and was geared to analysts looking to make the move to agency life (I did feel like saying, "Be careful what you wish for"). After the event, I reflected on what was discussed.
While this may sound somewhat self-serving, I believe that the IR function is increasing in importance. While we live in a time-constrained world, the need for investment information and insight has never been greater. Working against this is the fact that our markets are increasingly disintermediated, in other words, "the storytellers" or sources of information — sell-side analysts and retail stockbrokers — are disappearing… In addition, the world has become far more complicated given the growth of exotic trading vehicles and techniques such as high velocity trading. All of this means that the IR function needs to fill the informational void.
Let’s take a look at what makes an effective IRO. To succeed you should:
- Be knowledgeable about finance, communications, marketing and how the financial markets function
- Possess an understanding about how investors think and act
- Be a strategic thinker
- Remember that listening is as important as talking
- Be ready to question everything
- Possess above-average writing and speaking skills
- Be prepared to deal with crisis situations of all manner
- Be accessible
To effectively represent your company to its various investor stakeholders, you will need to immerse yourself in the company’s operations right down to the minutest of details and have a complete understanding of management’s vision and strategy. You will need to be involved in crafting and delivering messages as well as checking their relevance from time to time through perception studies and by maintaining strong relationships with internal and external audiences (you will be involved in writing and producing a variety of investor communications a la the annual report, financial presentations, press releases and the like). Crisis planning is a big part of the job and they can strike at any time (usually on a Friday at about 5:00 pm) and take many forms such as an earnings shortfall, the departure of a key executive, and the emergence of an activist threat, among many others.
From the standpoint of personal traits, flexibility and a sense of humor are helpful. Having a supply of Tums, Excedrin and Bourbon (for those particularly tough days) can be helpful as well.
I doubt if anyone will doubt the growing importance of the IR discipline. We have come a long way from the days when our key function was making sure the annual report got out on time. Today, the IRO is a strategic management function. We’re in the board rooms. We are the eyes and ears for the companies we serve as we will are in a position to learn of issues before they reach the highest levels of management. We play an important role in safeguarding the reputations of our companies by insuring that all the rules are followed. Finally, we are the advocates for the shareholders rights to information and must foster strong bonds with the investor audiences by delivering critical information in an effective manner.
That’s all lovely, Gene, but you’re writing for an IR audience here.
We all know what makes a good IR person.
What we want to know from your exchange with ex-analyst IR wannabes are two things:
1. How much do they still look down their noses at IR as fluff and hype?
2. Do they acknowledge that having good communications skills is as important as their analytical skills, or do the think it’s all about the numbers?
Hello Paul,
As always, thank you for reading and sharing your comments. While I may be writing for an IR audience, I’m not sure everyone knows what makes a good IR person, having witnessed firsthand a variety of skill levels in the position. Shortly after the piece appeared, I received a wonderful note commending my story from one this industry’s most respected practitioners.
As to your two points… While there may be some analysts who do indeed “look down their noses” at us, the smarter ones (and I have had the pleasure of working with some of them) do not and view us as an important source for information. I also think that many analysts possess good communications skills given their interaction with the institutional investment community. I have seen former analysts transition relatively easily to our side of the desk over the years.
Thanks again for writing, Paul.
Cheers,
Gene
One of the key elements that IR professional will have to understand is ‘being accessible’
You just cannot imagine how many times you try to get an answer from a IR and it takes weeks (if at all you get an answer) before getting the usual no comments.
In these times of information going at speed of light, there is no way these persons can survive in that profession if they do not understand the basics of a blackberry or at least facebook. Both of them have a great button called ‘reply’ and only a few do know that.
I know it is a difficult carrer to be in but after al they decided to go that route and must pay the price.
From a very nice Quebec CIty
François
@Gene Marbach
Thanks, Gene. But still not on point.
Your exchange with the former analysts was an opportunity to collect information of real value to career IR people concerned about competition for IR jobs from Wall Street professionals now effectively exiled from their former careers.
Like you, I’m on the IR agency side, and I have seen dozens of resumes from such people over the last year and a half, and I know that corporations have received ten times more Like you, I have worked with many Wall Streeters that I think would have made excellent IROs, assuming they were willing to take a huge compensation cut.
Many of their job letters get tossed immediately because their cover letters ooze condescension on one hand, and bad writing (grammatically clean but filled with jargon and cliches) on the other. But I know that many CFOs are entranced at the prospect of bringing in a CFA as the IRO, figuring that person will do well in head-to-head matchups with former colleagues.
Your blog audience would find it very interesting to know how (assuming there was some interaction) you would evaluate the particular group you met with in that audience as potential IROs or IRCs, and how you think current IROs and IRCs without Wall Street backgrounds might best defend their career credentials against this wave of job-seekers that so many CFOs seem inclined to consider.
Hello Francois,
Your readership and comments are greatly appreciated. You do indeed live in a very nice town.
There is absolutely no excuse for not being in touch these days given this great unwired world we live in. You should advise the senior management of such companies about this type of treatment for we all know that “time is money” and a little time in dispensing information or clarifying something can result in a positive investment decision.
Cheers,
Gene
Hello Paul,
I did have some interaction with a number of the people at the event. If anything, being out of job teaches one humility (been there, done that) and I did not see signs of arrogance displayed by those I spoke with. Of course, people tend to be on their best behavior when looking for a job. Following the event, I received some resumes and I plan to interview some of those who attended.
Having been in IR for nearly three decades, there seems to be “on again, off again” love affair between CFOs and former analysts. Agencies tend run in those cycles as well. As we both noted, in some cases it works out. In terms of defending one’s career credentials, there are many aspects to consider. One of particular importance is the quality of relationships one maintains with the buy- and sell-side. Do they talk with you or do they use you as a conduit to management? The answer to this one can be telling.
Paul, I do enjoy your comments. You help keep me honest.
Cheers,
Gene