Investor Relations (IR) refers to the responsibility of managing communication between a company’s corporate management and its investors. An Investor Relations Manager helps support releasing information, handling inquiries and meetings, providing feedback to management, and crisis management. Investor relations professionals focus on the company’s financial community, rather than its business customers or the general public.
Due to heavier regulations regarding financial reporting set forth by the Sarbanes-Oxley Act of 2002, most publicly-traded companies now have dedicated departments responsible for handling investor relations to ensure compliance with reporting laws.
The objective of the IR department within a company is to help investors make informed decisions in their actions regarding the company’s equity. The IR department does this by providing up-to-date information about the company’s operations, financial statements to current and potential shareholders, as well as third-party equity research analysts.
The material given may include quantitative financial documents such as annual/quarterly reports, but also qualitative information such as the company’s business model and strategic direction. Information is regularly disseminated through sections of the company’s website dedicated to IR, but also through events such as press releases and shareholder meetings. When done correctly, this leads to stability in the company’s stock prices, as shareholder expectancies about the company’s performance are correctly formulated around the actual decisions made by management. A positive secondary effect is that the company is painted in a positive (albeit correct) light that is attractive to potential investors.
Communication is also a two-way street; the IR department is also responsible for forwarding input from significant stakeholders of the company to management. During times of crisis (financial or otherwise), the IR department will advise management with a goal to preserve the company’s relationship with its investors, as well as to mitigate any damage to share prices.
Where the IR department falls within a company’s corporate structure can oftentimes reflect the roles/objectives the management team desires the IR team to prioritize. The IR department will usually be found as a subset of some company’s Public Relations department, but can instead also report directly to the Chief Financial Officer (CFO) or Finance departments. Other company structures might place it under the Legal or Accounting departments, while a few have it as a standalone department.
Typical Responsibilities of an Investor Relations Manager
Typical responsibilities of an Investor Relations Manager, according to multiple job descriptions as of 2017, include a wide range of tasks.
The main responsibilities of an Investor Relations Manager are:
Within the IR department, these tasks serve as the information backbone and support needed by those within the department, and sometimes the equity analysts themselves, who directly interact with investors and management.
Data analysis refers to any tasks that involve interpreting data related to the company that could affect shareholders. This could include anything ranging from internally sourced data regarding the company’s quarterly financials to trends found by third-party analysts about the industry as a whole. The Investor Relations Manager is also sometimes fully or partially responsible for carrying out financial valuation and creating financial models to form a view on the company’s share price. The goal here is to create a story from the numbers given, i.e. to turn data into information that can be populated in the corporate investor relations presentation.
Information collection mainly revolves around sourcing information pertaining to the company’s financial status, its investors, and the industry that it’s in. This task also includes the creation and/or upkeep of the company’s information database, so that investment information is readily available at times of future needs. Subsequently, information preparation involves consolidating relevant material based on the need of the user (whether it’s current investors, third-party analysts, management, etc.), and summarizing it in a comprehensible manner.
The logistics and schedules for the events at which this information is disseminated to existing company shareholders are also usually partially coordinated by the Investor Relations Manager as well. On the flip side, the IR Manager is also responsible for advising company management on decisions regarding identifying and approaching suitable potential investors, a process known as investor targeting.
Qualifications for an Investor Relations Manager
To become an IR Manager, companies usually require a Bachelor’s degree in Finance, Accounting, Communications, Economics, or related fields. A Master’s degree (such as an M.B.A.) is not necessary but is considered an asset.
Investor Relations Manager is not typically listed as an entry-level position. Companies usually require anywhere from two to seven years of work experience in positions where the applicant has gained experience in investor relations, public relations, financial investment, accounting, legal, and other related fields. It is strongly preferred that these experiences be with a publicly-traded company that operated under the regulatory framework regarding investor information disclosure laws. Experience within the same industry as the hiring company is also a plus.
Applicants must demonstrate extremely strong communication (verbal, written, graphic) skills, as well as the ability to develop and maintain business relationships. A strong understanding of financial reports, analytic methods, and financial data tools are often required. Due to the large amounts of data to be processed and presented, applicants should have intermediate-high proficiency with the MS Office Suite, particularly Word, Excel, Access, and PowerPoint, as well as with the ERP software of choice used by the company.
The position often requires some international traveling. Due to the effects on finance by globalization, multilingual applicants can expect a slight advantage.
More Helpful Resources
We hope this has been a helpful guide to the role of the investor relations manager. CFI is the official global provider of the Financial Modeling and Valuation Analyst (FMVA)™ certification, designed to transform anyone into a world-class financial analyst.
To learn more about finance careers, these resources will be helpful: