Each year Peter Lee Associates speaks to Institutional Equity market participants in order to better understand how they view the service provided by their preferred stockbrokers. Until last year our questioning focused entirely on discovering how research analysts, sales teams, and traders were perceived by their clients – this time we also added a few new questions to our repertoire.
Before the advent of such things as the internet, electronic market services, and social media, investors were forced either to go hunting for the news themselves or use brokers to do that for them. In this way they hoped they knew everything about the companies they invested in – and those they might be thinking about adding to their portfolio. But that task is now made much easier for the investor – and, perhaps somewhat perversely, more difficult for brokers – due to the technological advances of the past 15 years.
Throughout this cycle the role of investor relations people employed by corporates and other issuing entities such as Government authorities has also undergone considerable change. In the good old days IR was a much more straightforward role – roadshows, result presentations, Annual Report preparation, and occasionally meeting with foreign institutional investors who just happened to be in town on a fact finding mission that coincided with the Rugby World Cup, the Spring Carnival or something equally as important.
But today they, too, have fallen victim to the changed technology, a more stringent regulatory framework, and investors who, generally speaking, are much more intellectually focused and more highly trained than many of their predecessors. The IR industry has had to reinvent itself as a result and it was the outcomes of that metamorphosis we were looking to use our research to delve into.
What did we discover?
That little of what might have been contained in an IR job description 15 years ago would appear in a similar document today. So what is it that distinguishes the best IR people from the rest:
And perhaps the most important task is to, as one respondent succinctly put it – and I guess that this is not surprising as it is similar to what we consistently hear across a number of our programs – “engage with investors to find out what is important for us as investors.” And there you have it. Simple really.