I have recently received an email from a corporate treasurer in an Ukrainian company who asked me about a possibility of a career in investor relations. I think the answers might be interesting to other students and professionals who are considering a career in investor relations as well. So, I kept his original questions with my answers - I just removed the names. Of course, other IR professionals can correct my responses if their experiences were different from mine.
1) What value does financial education/experience in financial industry has for building career in IR?
Tremendous value. Without good understanding of finance it is impossible to be a successful IR practitioner. Also, much of your audience will be financial analysts and professional investors – so, it helps to be able to speak their language. However, in addition to finance, investor relations officers need a good understanding of the way company makes money: know key business processes, key technologies, key R&D strengths, key people, etc. This non-financial information is also very important for investors.
2) What professional experience will be of most value for pursuing career in IR?
People come to IR from various backgrounds – finance is probably the most common; communications/public relations is second, but there are also chemists, engineers, computer scientists, etc. I personally started as a financial analyst, then became mergers & acquisitions specialist, and that led me to IR.
3) What IR services could be provided to a public company by an independent IR consultant? What value can I create as an IR consultant? Is it possible to have an independent practice?
I am less qualified here – I have never been an independent consultant. However, my research shows that although most IR professionals at corporations come from the financial side, most of IR professionals at agencies are communication/public relations specialists. This can suggest that services IR consultancies often provide are related to the communication side of things. Often agencies also do research, perception studies, develop targeting lists for new investors, etc. Finally, I would guess some international IR functions can be outsourced to an agency/consultant. For example, back when I was an investor relations officer, I created ADR/GDR program for the company through the Bank of New York and then worked on listing these securities in Germany, U.K., and USA as well as doing roadshows all over the world to tell the company’s story. Perhaps, some companies might wish to outsource that.
4) What knowledge is of crucial importance for an independent IR consultant and where to obtain it?
I think the uniform advice is before you go independent, work for somebody else. Join an IR agency and try it there – then, you will know what you need and where to get it!
5) What is your opinion about the future demand for IR services in emerging markets like Ukraine?
I think it will be growing in the emerging markets – I do not know much about Ukraine but China, India, and Brazil will probably have many companies looking for an IPO. It is a great way to raise money but it is also a certain status symbol for a company. Just today, Yandex (Russian leading search engine) had an IPO on NASDAQ and did extremely well. It remains seen how it will keep up with all the regulatory demands now.
6) Is IR more about finance or PR?
My view is that IR is right in the middle between finance and PR – both skill sets are equally important for the practice.