Investor Relations – a career or a stepping stone?
I have been working as an investor relations (IR) consultant for about seven years and I have witnessed peers playing something akin to a game of musical chairs. Is it because the IR industry is still young and evolving in Singapore unlike in the US and Europe where it’s fairly mature. Or is it due to a small pool of IR personnel or because IR consultants find more lucrative career options easily?
Let us first analyze the skill sets needed to be a good IR consultant. If I were involved in the hiring process, I prefer applicants with academic attainments in business management, economics, accountancy or finance. I feel that the role of a good IR consultant is to first analyze the client’s business well, then analyze what the company is lacking in terms of IR (the gap between its fundamentals and the market’s perception), then come up with a detailed and relevant IR strategy and lastly interact with analysts, investors and media. But, looking around, I may be wrong… There is practically no barrier to entry in this profession and some of the most successful people in the industry come from none of the academic backgrounds that I have just mentioned. Take for example, my MD (Ms Kathy Zhang). She studied chemistry in university but have established one of the most successful, and currently Singapore’s biggest, IR firm.
Now let’s analyze the skill sets that one hones in the IR industry. The interesting aspects of the job include opportunities for interaction with C-suite executive of listed entities, understanding the client’s needs and grievances, devising strategies to improve the company’s IR, providing consultancy to the C-suite executives based on the market feedback and evaluation, and lastly representing the client and interacting with analysts, investors and media. If you stay long enough in this profession, you should be able to (1) analyze the business models of the companies easily, (2) know the industry dynamics the companies operate in, (3) find out if there is a gap in valuation for the counter, (4) advise on what needs to be done differently in terms of promoting the companies, (5) have a strong network across various professions involved in the equity markets, (6) develop excellent presentation skills as you bring out the investment merits of the clients to investors, (7) understand all the financial jargon and how investors look at a company, and (8) craft interesting angles for the client’s corporate updates to enhance its profile.
Armed with these skill sets and having an unparalleled network, quite often IR consultants move out of the industry for roles in other industries. Over the years, I have seen consultants move from our company to become sell-side and buy-side analysts, reporters, in-house communication officers for listed companies, private equity investors, consultants in bigger and international PR firms, and some other roles. Some might feel that being a fund manager or an analyst with a big financial institution is way sexier than being an IR consultant. Others probably switch employers for better compensation or just to try out different industries. But what makes people stay in the industry if the job scope seems to remain pretty much monochrome over the years? Well, I like to work with different clients. Each client comes with a sui generis, or unique, business model and issues that need to be addressed. Working with the top management of the companies to solve their problems is quite exciting. Another satisfying aspect is that the level of advice and consultancy that you provide to the clients increases imperceptibly with experience and that helps you evolve into a better and more sought-after consultant. Lastly, IR is enriching for the networking you get to do. You continuously interact with the top management of listed companies (who share their views on the industry), both sell-side and buy-side analysts (who are always eloquent in their views on the companies, markets and the industries), investors (who give you a whole new perspective on how you should look at companies) and reporters (who are always up-to-date with the latest trends). The information flow you get from all the networking can be overwhelming but definitely helps you to elevate your level of thinking.
I would end this piece with some advice for newcomers to this industry. It doesn’t matter whether you make IR a long term career or take it as a stepping stone to other jobs, but as long as you work as an IR consultant you get an opportunity to make your name in the market, so work hard on your favourite client and make it shine in the market. I have realised that people in the market have elephant memories and they will remember the good work you have done and it will definitely help you in your future endeavours.
Romil is a Director of Financial PR Singapore