You know that uneasy feeling that gnaws in the back of your head? Well, I’ve got it bad right now. I talk with a lot of people and what I’ve been hearing over the last several months has contributed to a growing sense of unease about the future of the investor relations profession. Of course, the National Investor Relations Institute’s (NIRI) Think Tank survey on the future of investor relations did nothing to allay those worries.
Change is nothing new. IR has weathered changes and evolved over the years and I believe has come out stronger and more influential as a result. However, from the rise of private equity, the dearth of IPOs and decline in number of public companies … to the pressures of short-termism and growth of algorithmic/robotic trading … to the impact of MiFid and the secular decline of the sell side … it somehow feels like we are on the cusp of a paradigm change.
Will these changes further elevate IR as a strategic function or will IR become more tactically focused? Anecdotally, I’m hearing companies are upping their focus on financial disclosure, analyst projection models/estimates and capital allocation. The notion is to focus on the same things analysts and investors do and use the quarterly earnings process as the milepost for driving valuation.
What I’m not hearing is a focus on communicating about company purpose, market opportunities, strategy, operations or reputation – factors that create value – with analysts and investors. Nor does there appear to be any priority being placed on developing relationships or having a dialogue with analysts and investors. Maybe this is because this is the easy part and it’s all been done. Maybe it’s because “soft” subjects are hard. Maybe it’s because investors aren’t interested. Maybe its all of this, or none of this.
What worries me is the laser-like focus on the financials may narrow IR’s sphere of influence. When there’s a matter related to strategy, operations or reputation, will the C-Suite seek counsel from IR? Will IR have a seat at the table or simply serve as the messenger? Will this laser-like focus limit IR’s ability to sense a shift in investor perceptions or develop the supportive long-term investor relationships important during challenging times?
I have no crystal ball to answer these questions. IR as a profession has proven resilient in the past and may continue to prove such long into the future. But as we look ahead, I want to paraphrase something I recently heard: “Facts (i.e., financials) are like bones, but there’s a lot more to life.”
Lead-IR Advisors, Inc.