Intrigued by the idea of wooing Wall Street? Investor relations might be for you.
An influential Wall Street analyst can send shares of a stock skyrocketing with a strong buy recommendation. But news that a big institutional investor is selling off a chunk of a company’s shares could cause the stock price to tank.
While sophisticated investment managers and analysts draw information from many places, one important source is the company itself. Who handles these critical communications? The investor relations (IR) department.
Companies face constant pressure to keep stock prices going in the direction that benefits shareholders — usually up.
The investor relations professionals who help “the Street” understand a company’s financial potential need a mix of skills: A clear understanding of company finances, a firm grip on strategy and operations, and compelling communication skills.
That combination is almost perfectly tailored for accountants or those with deep accounting skills and knowledge. And these same accountants are discovering that a few years in the investor relations department can open up new career opportunities.
The investor relations department has the primary responsibility for communicating with the decision makers and influencers who help determine whether a company’s stock will go up or down.
This includes handling meetings and calls with analysts and major shareholders, developing presentations and talking points for the C-suite, and responding to requests for investor information.
“That’s where accountants really have an advantage over other people, because we know what the numbers are,” says Brad Hendricks, assistant professor of accounting at UNC (add qualifications briefly). “One of the advantages we have is being able to help communicate this information to a broad group of individuals with various levels of financial literacy.”
Accountants have always had a central role to play in preparing financial statements and auditing those financial results. When they work in investor relations, their role becomes more forward looking.
In addition to explaining what just happened with a company’s performance, IR professionals also explain what could happen in the future.
That might include laying out a company’s growth strategy or explaining how a firm is planning to handle a challenging industry trend. Often, they must do this in a short time — cutting the fluff out of presentations and getting right to what an audience cares about most.
An accountant’s ability to understand a company’s finances and to understand, fundamentally, what drives those numbers is a critical part of investor relations. That’s why earning a Master of Accounting (MAC) degree with a strong foundation in accounting fundamentals, plus exposure to finance and other business disciplines, is so valuable.
But knowing “the language of business” is only half the job. IR professionals face a lot of pressure to clearly and quickly explain complex financial information and corporate strategy that might have been months of years in the making.
“A role like this really highlights how important it is to be a well-rounded individual, to have people skills,” Hendricks says.
Rock-solid writing and speaking skills — plus an ability to think on your feet — are critical. A top-ranked MAC program will provide coursework that focuses explicitly on these critical skills. At the UNC Kenan-Flagler Business School, MAC students have required classes in communication. They can also take electives in improv or using data to communicate.
“There’s a class on storytelling with data, which is really what these investor relations people are doing,” Hendricks says. “You’ve got data and now you’re trying to help people understand what the numbers mean.
Although most accountants are unlikely to go into investor relations for their first job out of college, a few years in public accounting — where they are exposed to many different businesses — or a corporate role involving financial statement preparation are two paths that could potentially help land a position in investor relations.
Though Wall Street is the primary audience for many investor relations efforts, many investor relations teams are growing. One new area that IR pros are grappling with is the growing role of individual investors, including those who make investing decisions based on social media and online discussion forums.
While the IR profession is still grappling with how best to engage these investors, it’s clear that accountants who are social media savvy and understand online culture will be better prepared.
“Companies now, they’re engaging investors earlier and differently than they used to,” Hendricks says. “We have firms now that want to engage with retail investors, which previously wasn’t as common.”
Companies now, for example, frequently share financial information on Twitter.
While there are still gray areas as to what companies can and can’t do when it comes to communicating with investors online, it’s becoming increasingly important for businesses to “have their ear to the ground on all this stuff,” Hendricks says, if only to understand the kinds of questions that investors are asking and the discussions that are occurring online.
Some accountants find that after a few years in investor relations, they have new skills and relationships that equip them to take on bigger challenges.
The communication skills accountants hone in investor relations are often invaluable in top management roles requiring a lot of speaking and presenting to very busy senior executives or boards of directors.
The depth and understanding they’ve gained about a company’s future direction prepares them to take on critical finance and accounting roles where they need to know how their work connects to overall financial performance.
Whether it’s a career wooing the Street, or just another stop in a series of challenging, interesting jobs, investor relations provides accountants opportunities to flex their business muscles in new ways.