Get to KNOW YOUR IRO – Investor Relations

January 31st, 2013 by Jon Bey

 

The following is a modified article that I wrote for, and was featured in, Canadian Investor Magazine (V2I1). For magazine enquiries please visit www.canadianinvestor.com :

So what do you do?

““So what do you do?” That’s usually the second question I am asked by most border guards and custom agents. My reply is often, “Investor Relations,” which always leads to a blank stare. In this profession, travel is almost always a requirement, and it can be a blessing and a curse. I love to travel, but those awkward custom agent conversations wear me down.

I don’t blame the agents; I am still trying to explain to my wife exactly what it is I do. So the issue must be with my profession or my explanation. Unfortunately, the Investor Relations profession is still not well understood. So let me try to explain what (IROs) Investor Relations Officers actually do. If you understand their role in the company, it may make it easier for you to engage with them, and dig a bit deeper into your current or next potential investment.

 

What do we do? 

Simply put, our job is to explain our company to the investment world. But it’s usually not that simple. Most companies are extremely complex, so the explanations tend to be that way as well. Our audience is quite diverse; so we need to craft a slightly different message for each type of investor. That means telling our company story in a way that is meaningful to each one, providing the key information they are looking for. We speak to retail investors, institutional investors, analysts, sophisticated high net worth investors, stock brokers, fund managers and various stakeholders in the company. IROs are also the gatekeepers to the senior executives. CEOs and CFOs do not have time to speak to every investor that calls the company with questions. The IRO handles all incoming calls leaving the senior executives to run the company.

Like many investors, I am a fan of Warren Buffet. He has a special way of explaining complex scenarios that both novice and sophisticated investors can understand. He likes to pretend he is speaking to his two sisters. I like that, but I twist it a bit and pretend I am speaking to my uncle the customs agent. I need to be able to explain my story to him quickly and clearly so he can understand it and then send me on my way. I also don’t want to provide any false or misleading information which might get me locked up.

 

How do we do it?

Although communication methods have changed in recent times with the rise of social media, the heart and soul of a great IRO is still their ability to interact and converse with investors. Great IROs have the ability to engage with their audience face to face or on the phone. But, the reality is, most public companies have hundreds or thousands of shareholders and speaking personally to each one of them is a daunting task. So how do most IROs communicate with the investment community? Most communication now happens online – at least to start anyway.

IROs invest a great deal of time in the corporate website. All material corporate information must be located there and should be easy for investors to find. It must also remain current at all times to stay in compliance with security regulations. A seasoned IRO will know their company website inside and out and will be able to speak to each section in depth and provide colour to areas that may be filled with technical and industry jargon that may be confusing to the average investor. All corporate websites will have a “contact us” page and the IRO contact details will be provided there. Send the IRO an email with your specific question, or simply give them a call.

The communications world is rapidly changing, and social media is the main driver pushing these changes. In the past three to four years, I have seen early adopters in the public-company space, experiment with new technology that is enhancing investor communication possibilities. Public companies are using Facebook, LinkedIn, Slide Share, Twitter, blogs, Google Earth interactive platforms, Flickr and various other social networks to spread their company news and engage with their audience. The security regulators are trying to keep up to ensure disclosure policies are not being violated but it is an endless battle. The rules will need to change. Watch for companies to start disclosing material information in ways other than the traditional news wires.

 

What skills does a seasoned IRO possess?

Like any profession, IROs come in all sizes and shapes. There are no set standards or requirements to enter this career so there can be a huge variance in the skill sets between IROs. The Canadian Investor Relations Institute (CIRI) works hard to provide educational courses and, a professional certification with the IVEY school of Business, for advanced IROs. But the reality is, it’s a real mixed bag. Seasoned IROs will possess skills in finance, marketing, communications and securities law. The majority of IROs enter the profession with some of those skills and learn the rest on the job. Your IRO should be knowledgeable about the industry their company is in. They should know how the company is valued, they should be able to compare the company to its peers and they should be able to explain the company’s business drivers and how there company will drive shareholder value.

The great IROs are said to be a hybrid of a CEO and CFO. They can speak to the big picture of the company and also break down the financials to a granular level.

 

How should the IRO be able to help you?

Your IRO should be able to help you understand the company and explain all the technical, financial and industry jargon in everyday language. They should be able to answer your phone calls and emails in a timely fashion and guide you through the corporate website and help you locate any information you need. Good IROs can help you navigate your way through the traditional mailing materials you may receive like the Information Circulars, MD&A and Financial documents.

But don’t ask them to provide any insider information. They shouldn’t be providing any information to you that has not already be released to the market through proper disclosure policies. And they shouldn’t be telling you to buy the company stock. If they do, it’s time to sell.

 

Get to know your IRO

The IRO can be a great resource for any investor and I urge you to get to know the IROs of all the companies you invest in. If the company happens to be presenting in your community or showcasing themselves at an investment conference, take the time to the visit them and meet the IRO and the other senior executives.

I guess I am hopeful that one day, in my lifetime, a customs agent will ask my profession and then give me a knowing look and send me on my way. But, until that day comes, I’ll just smile, keep my story simple and be thankful that I have my Nexus card.

 

Jon Bey is the President /CEO of Steel Rose Communications in Vancouver, B.C. SRC is a boutique IR firm that specializes in Investor Relations services for publically listed Jr. Resource companies. Jon is a Board member of the BC Chapter of CIRI and is Professionally Certified in Investor Relations. Information on SRC can be found on their website at www.steelrosecommunications.com

 

Like what you’ve read? I will be writing more articles for a few publications in the coming months, so look out for those :-)

In the meantime, we have more good stuff on our blog, take a peek here. And, come on over and say hi on Twitter : @SteelRoseComm . You should also check out Canadian Investor Magazine on Twitter : @CanInvestorMag.

Thanks for reading, hope you enjoyed it!

:-)

Jon Bey

 

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