Almost everyone talks about how much the IR role has changed in the past five-to-ten years, but some IROs are also dedicating time and energy to considering how their jobs will evolve in the future.
Yvette Lokker, President and CEO of CIRI, explains that the IR role has grown more complex as responsibilities expand into whole new areas. For instance, understanding artificial intelligence and big data is now a part of many IROs’ job descriptions, as is staying abreast of a company’s actions and disclosures on the environmental, social and governance (ESG) front.
Other trends to watch, says Lokker, are the emergence of IR tools enabled by technology and the effects of MiFID II, which are being felt globally and are resulting in less sell-side coverage and fewer opportunities for corporate access managed by the brokerage world.
IR’s Role Amidst a Declining Sell-Side
As the ripples from MiFID II reach Canada, Lokker foresees some important changes in how IROs help public companies tell their stories. She predicts a scenario in which there are fewer sell-side analysts and more third-party research firms. As a consequence, the buy-side will more frequently reach out to issuers directly, and savvy IROs will become even more hands-on in their interactions with institutions.
Practically speaking, this means that Canadian IROs may soon be spending more time targeting investors and arranging face-to-face meetings with them. IROs might also find themselves assuming responsibility for organizing their own roadshows.
“IROs should be developing and strengthening relationships with the buy-side,” says Lokker. Ultimately, she believes, IROs will need more resources, both human and financial, to staff up for roadshows and buy-side meetings and for purchasing targeting and logistics planning tools and dashboards to determine which meetings to schedule and how to arrange them most efficiently.
Darrell Heaps, CEO and Founder of Q4 Inc. in Toronto, agrees: “What seems to be quite clear is that the bar is moving up in terms of what IR will have to do in the future, in terms of being able to market, target, find the right investors, manage roadshows and outreach and really be able to identify and connect with the buy-side.”
He notes that the increased IR burden will fall most heavily on small- and mid-caps and even the “less sexy” large-caps, rather than the usual suspects that tend to already attract the lion’s share of attention.
Can Technology Fill the Gap?
As a result of GPS systems, satellites and other technologies, investors are gathering information about a company’s business in ways that often completely circumvent the IRO.
Heaps points out that some investors in the retail sector are relying on satellite imagery that tracks the number of trucks leaving an issuer’s factories to draw their own conclusions about future sales. Meanwhile, investors in auto companies are monitoring car insurance data to figure out how many makes and models of a certain vehicle have been sold.
“One new role for IR is understanding what information you are intentionally disclosing, and what information you are inadvertently disclosing to the market purely by operating,” says Heaps. “When we look at IR, the role is becoming increasingly more technical and it requires an awareness of the world that we live in today, which is incredibly data focused and has a huge amount of analysis that is going on by machines.”
Technology is changing IR in other ways, as well. Lorne Gorber, Executive Vice-President, Investor and Public Relations, at CGI in Montreal, says he is increasingly aware that technology will affect how his IR message is received. When he writes a press release, for instance, he asks himself: “What are the bots going to pick up instantly?” Anticipating the bot response has made him redouble his efforts to write in plain English and to craft headlines that are simple and clear.
For Gorber, an important takeaway from the growing role of big data and artificial intelligence (AI) in the investing world is that strong, persuasive storytelling counts more than ever. He points out that while AI and data analytics are making whole categories of jobs obsolete, they are not changing careers “based on relationships where adding colour and shaping a story” is paramount.
“The creativity aspect out there hasn’t yet been figured out by Watson,” says Gorber, referring to the famous IBM supercomputer.
He explains that when researching the script for an earnings call, the once monumental task of uncovering what was previously said by one’s own company and by competitors is now easily accomplished thanks to databases of public transcripts. What remains challenging, he contends, is “building a story about what you want your CEO to say.”
Thus, Gorber’s advice to IROs, especially those new to the profession, is to take a course on effective presentation and storytelling skills. He also underscores that what gives fundamental investors the most comfort when making an investment decision continues to be face-to-face interactions. “The IR role is about the relationships that you build and the leverage you can gain from them,” he says.
Shareholder Engagement and ESG
Many of the stories today’s investors are clamoring to hear concern a company’s ESG activities.
The importance of ESG in Canada is growing rapidly, as Lokker points out. She notes that in June, Caisse de dépôt et placement du Québec (CDPQ) and Ontario Teachers' Pension Plan announced a collaboration with the Canadian government to, among other things, speed up implementation of climate-related disclosures under the FSB-TCFD, a voluntary framework for such disclosures. The initiative has institutional investor partners with a total of $5 trillion in assets under management.
Lokker sees a golden opportunity for IROs to expand the role they play in conveying investor concerns about governance to management and the Board. “It’s really important for IROs to be completely up to speed on all governance factors because those are becoming more mainstream discussions than they were in the past – and I think that trend will just continue,” she says.
Frédéric Duguay, Partner at Hansell LLP in Toronto, says that for the largest Canadian shareholders, expectations of engagement are increasing. While interest in ESG remains “a new phenomenon,” he notes that management too often assumes that crafting ESG messages is the domain of the general counsel. Instead, he believes that because of their unique relationship with investors, IROs, in tandem with general counsel or the corporate secretary, should take more ownership for communicating about ESG matters.
A Strategic Role
One reason that IR is enjoying a higher profile, says Hansell LLP’s Senior Partner and Founder Carol Hansell, is CIRI’s certification program, which she commends for “professionalizing the IR space.” Going forward, Hansell is convinced that IROs should “create a bigger spotlight around the profession within the corporation given that the value they provide to the organization is significant.”
Lokker also views CIRI’s certification program as critical to the growing stature of the IR profession. Currently, 80 IR professionals in Canada have attained certification. “In 2025 I would hope that certification would become the norm,” she says. She maintains that IR budgets will increase, too, in recognition of this expanded IR role.
Paul Gryglewicz, Senior Partner at Global Governance Advisors in Toronto, agrees. He says that while he is just now undertaking a CIRI IR compensation survey, which is slated to be published in 2019, he has heard anecdotal evidence that IR compensation is increasing. “As the role became more senior, we’ve seen IROs at public companies get a bump up in pay over the last one-to-two years,” he says. “And it’s likely that this will continue.”
Broadly speaking, the myriad changes to IR show no signs of reversing. As the effects of MiFID II continue to be felt, IROs will be increasingly busy strengthening their relationships with investors and arranging roadshows and other opportunities to meet directly with investors. Meanwhile, the need to keep ahead of the learning curve on ESG, AI, data analytics and other technological advances is pressing, too. Therefore, reading widely, honing communications skills, and forging ahead on accreditation and other forms of professional education should all rate high on any IRO’s list of priorities.
“The IR job,” concludes Lokker, “is becoming more complex, more important and, above all, more strategic.”
Will IR Go Sci-Fi with Cobots?
A future in which robots perform repetitive and tedious tasks while human beings enjoy boundless leisure time has never quite materialized.
That said, as Heaps envisions a future of growing technical expectations for IROs, he is convinced that cobots – short for collaborative robots – might provide some relief from mounting demands. “The idea of a cobot,” he says, “is that instead of having a robot do something autonomously, you have a robot help a human do something.”
Here’s one way in which the cobot future might play out. Heaps envisions an IRO instructing a software program to reach out and schedule meetings with four investors. The software would call the offices of those investors, and then go ahead and schedule meetings should there be interest. To see for yourself how such a scenario would work, watch this YouTube video showing what Google Assistant can do today: https://www.youtube.com/watch?v=yDI5oVn0RgM.
While cobots could free up IROs for honing their communications and engaging in more strategic endeavours, Heaps cautions: “Cobots don’t exist in IR today, and the idea of a cobot hasn’t come into workflow solutions yet. This is what work is going to be like in 2025.”