Tag: investor relations; IR

This was asked in a recent London Stock Exchange webinar, so I though it would be fun to ask ChatGPT what it thought. It got a little over-excited, but here goes…

In the swirling vortex of the digital revolution, one question has risen to prominence: can artificial intelligence ever truly replace roles anchored deeply in relationship and engagement? The undercurrent of this debate resonates especially when we zero in on professions like that of the Investor Relations Officer.

At its core, Investor Relations is not merely about disseminating information or presenting data. It’s an intricate dance of trust-building, interpreting unspoken sentiments, and navigating the often tumultuous waters of stakeholder expectations. It requires a delicate balance of logic and emotion, a symphony of the objective and subjective.

AI, with its staggering computational abilities and predictive prowess, undeniably offers a treasure trove of advantages. But can it authentically engage, build trust, and foster long-lasting relationships in the same way a human can? Or is there an irreplaceable essence to human connection that AI can’t emulate, no matter how advanced?

As we navigate the intricacies of Investor Relations in this digital age, it’s evident that the roles of AI and human IR Officers are not at odds but rather in harmony. Together, they forge a pathway that marries efficiency with empathy, data with discernment.

AI, with its unparalleled data processing and predictive capabilities, brings a level of precision and speed that can supercharge an IR team. It automates, it analyzes, and it accentuates the best of what technology has to offer, streamlining tasks and offering insights that were once beyond reach.

Yet, for all its marvel, AI remains a tool—a sophisticated and immensely powerful one, but a tool nonetheless. It cannot replace the innate human ability to connect on a deep emotional level, to understand the subtle undertones in a conversation, or to build trust through genuine, heartfelt interactions. An Investor Relations Officer, with their insights, intuition, and intrinsic emotional intelligence, embodies these very human strengths.

The future of Investor Relations, therefore, is not about choosing between AI and humans but embracing the strengths of both. While AI will undoubtedly continue to revolutionize the operational facets of the profession, the essence of investor relations—the human connection—remains irreplaceable. In this symphony of tech and touch, the melody of genuine relationships will always play the loudest.

Actually, I don’t disagree with this conclusion, although personally I would dial back on the use of “marvel” and “symphony”! In summary, AI can’t replace an IRO, but it can free up time for them to do the more valuable (and fun) relationship building and strategic decision making.

Now, because I prefer to be a little more practical, and a little less effusive, than ChatGPT, here are the main areas where I can see AI improving the efficiency and effectiveness of the IR team.

1. Chatbots and Translation Tools. AI-driven chatbots can serve as the first point of contact, addressing basic investor inquiries and freeing up time for IR officers. At it’s most basic, this could tackle the FAQs – how do I change my address, what do I do if a shareholder has died, when is the ex-dividend date etc. I’d also be a fan of language translation tools powered by AI for improved communication with international stakeholders.
2. Data Analysis and Forecasting. This gives access to real-time insights into market trends, investor behaviours, and potential opportunities or threats. As an easy starting point, I can see myself using it on competitor reporting days to compare their results and market reactions to our own performance.
3. First drafts. Preparing first drafts of press releases and social media posts is time consuming, and many of us find it much easier to edit rather than get the words onto a blank sheet of paper. If AI can provide a good solid starting point, I’m up for exploring this. I am going to add a big fat caveat here re confidential/ price sensitive info which clearly limits the use.
4. Outsourcing admin tasks. I could come up with a list of things to try here and see if they work for you: writing up meeting notes (from a recording?) and summarising action points, preparing Board reports, drafting event plans, etc. But I’m sure as we get more comfortable and the AI evolves, this is going to be a really key area.
5. Investor targeting. I’ve heard several people suggest AI is good at investor targeting, although I’m yet to be convinced. I like the qualitative insights from a sales force, but I’m sure it can be a useful addition and challenge to the traditional targeting methods.

What would you add to the above?

Now, before we get carried away, and before I sound super pro-AI (I think I’m currently modestly pro-AI), I’m going to flag my concerns, in addition to the obvious relationship building and strategic decision making ones. And they are big.

1. Data quality. We all know AI has a tendency to “hallucinate”, and will swear on its life that it is not making things up when challenged. Everything needs to be checked. Also, while AI can provide data, it lacks the emotional intelligence to read between the lines, gauge underlying sentiments, or foster genuine empathy. An IR officer, on the other hand, can sense nuances, build rapport, and offer reassurances that only a human can.
2. Lack of expertise. It is going to struggle with technical/ unique aspects of any business. And given these are almost certainly critical to your investment thesis, this is an issue.
3. Crisis management. In moments of crises, be it a financial downturn or a PR nightmare, what investors seek is clarity, honesty, and empathy. Such sensitive scenarios demand a human touch.
4. Regulatory challenges. It goes without saying regulation is complex, and I don’t trust an AI to replace legal counsel. Or to be up-to-date on new/ emerging regulation.
5. Ethical concerns. Investor relations isn’t just about sharing the right information; it’s also about upholding a company’s values and ethical standards. While AI can provide data, it can’t weigh the ethical implications of a decision or communication. This moral compass is intrinsically human.
6. Cost, skills, and resources to implement and use AI tools.

And one final thought. If you are going to integrate AI into your IR operations, please get a (human) legal advisor to prepare a policy on the use of AI. This should provide “guardrails” covering matters such as handling confidential information, verification protocols, permitted platforms etc.

Are you going to give it a try? Have you tested it already?

One of the most exciting things about IR is the diversity of the role – as an IRO you can get involved across the business looking at strategy, communications, financial reporting, ESG, governance, fundraising, M&A, etc etc. Depending on your background when you joined the IR department of your company, you may have had experience of several of these, but it is perhaps unlikely you will have worked across them all before. In addition, whilst aspects are recurring (e.g. the annual reporting cycle), IR has a knack of throwing the unexpected at you – crisis communications, hostile bids, activist investors, leadership change, regulatory developments…

Creating an effective and successful IR programme can be challenging without the right support. As an IRO, and particularly if you are Director of IR or Head of IR, you will be expected to act as a trusted advisor to the Executive team and the Board. And very often, the IR team is small – in a typical mid/ small cap company, it is probably a team of 1 i.e. you. Of course, you have advisors – the corporate broker, NOMAD (for AIM companies) and potentially also PR and IR agencies, but a mentor brings a different kind of support.

Many companies have an internal mentoring programme, which is great. In general, a professional mentor brings the following benefits:

1. Experience and Expertise: A mentor brings valuable experience and expertise to the table. They have already navigated the challenges you may encounter and can offer insights, guidance, and practical advice based on their own successes and failures.
2. Knowledge Transfer: A mentor can share their knowledge, skills, and industry-specific information, helping you gain a deeper understanding of your field. This transfer of knowledge can accelerate your learning curve and equip you with the tools necessary to make informed decisions.
3. Networking Opportunities: Mentors often have extensive professional networks built over their careers. Through your mentor, you can gain access to valuable connections, introductions, and opportunities that may otherwise be difficult to access, expanding your network and opening doors for collaborations or future prospects.
4. Career Guidance: A mentor can assist in setting and achieving your career goals. They can help you identify your strengths and weaknesses, guide you in selecting the right career path, and provide advice on career advancement strategies. They may even offer guidance on specific skills or knowledge areas to develop to enhance your professional growth.
5. Emotional Support and Encouragement: Starting or advancing in a business can be challenging and stressful. A mentor provides emotional support, encouragement, and motivation during difficult times. They can offer a fresh perspective, act as a sounding board, and boost your confidence, enabling you to overcome obstacles and stay focused on your goals.
6. Accountability: A mentor can hold you accountable for your actions and goals. They can provide guidance on setting realistic targets, monitor your progress, and provide constructive feedback. This accountability helps ensure you stay on track and make consistent progress towards your objectives.
7. Expanded Perspectives: A mentor can help broaden your perspectives by challenging your assumptions, encouraging you to think outside the box, and offering alternative viewpoints. This can stimulate creativity, foster innovative thinking, and enhance problem-solving abilities.
8. Personal and Professional Development: A mentor can provide guidance on personal and professional development opportunities, such as workshops, seminars, or further education. They can help you identify areas for improvement, suggest resources for skill enhancement, and support your growth as a well-rounded professional.
9. Risk Mitigation: Having a mentor means having access to someone who has likely encountered similar challenges and risks. They can help you navigate potential pitfalls, share strategies to mitigate risks, and offer advice on decision-making processes. This can save you time, money, and unnecessary stress in your business endeavors.
10. Long-Term Relationship: A mentorship is often built on a long-term relationship, allowing you to benefit from ongoing support and guidance. As you progress in your career, your mentor can continue to provide valuable insights, serve as a trusted advisor, and celebrate your achievements.

But not everyone wants an internal mentor, for a number of reasons:

1. Limited Perspective: Internal mentors may have a limited perspective due to their familiarity with the organisation’s culture, practices, and biases. They might be influenced by the same organisational limitations and may not be able to offer fresh insights or alternative approaches that an external mentor could provide.
2. Conflicts of Interest: Internal mentors may have their own vested interests within the organisation, such as personal agendas or ambitions. This can lead to biased advice or guidance that may not be in the mentee’s best interest. It could potentially hinder the mentee’s ability to explore opportunities outside of their current role or department.
3. Power Dynamics: In an internal mentorship relationship, power dynamics can come into play. If the mentor holds a position of authority or has a direct influence on the mentee’s performance evaluation or promotion decisions, it can create a barrier to open and honest communication. The mentee may feel hesitant to express their true thoughts or concerns, fearing potential repercussions.
4. Limited Exposure to External Networks: An internal mentor may have limited exposure to external networks and industry trends. This can restrict the mentee’s access to diverse perspectives, innovative ideas, and potential opportunities that can come from connecting with professionals outside the organisation.
5. Narrow Skill Set: Internal mentors may possess a specific skill set that aligns with their role or department within the organisation. While they can provide valuable insights in their area of expertise, they may lack broader knowledge or experience in different aspects of the business or industry. This can limit the mentee’s exposure to a wider range of skills and perspectives.
6. Lack of Objectivity: Internal mentors may struggle to remain objective due to their familiarity with the organisation’s dynamics and politics. They may have preconceived notions or biases that can impact their advice or guidance. Objectivity is crucial for mentors to provide unbiased support and facilitate the mentee’s growth.
7. Limited Fresh Perspectives: An external mentor, coming from a different organisation or industry, can offer fresh perspectives and bring in innovative ideas. In contrast, internal mentors may be influenced by the organisation’s established practices and may not challenge the status quo or encourage out-of-the-box thinking.

This is where an experienced, external, IR mentor can really help.

An IR mentor is extremely valuable in terms of their detailed knowledge and practical experience of the IR function, within different organisational structures. They bring fresh insights and different perspectives. This can help a mentee develop their own skills and knowledge.

An experienced IR mentor will have probably also dealt with, or at least seen, a broad gambit of situations and scenarios and worked through them from an IR perspective, so they are ideally placed to act as a sounding board for options, prior to discussions with company appointed advisors or the Executive team.

An experienced IR mentor will have built a strong network of connections within the capital markets community from a range of different areas including the buy-side, sell-side, advisors, and service providers. By working with an experienced IR mentor, a range of networking opportunities can become available to mentees. This may help you take the next step in your IR career, which, although I may be a touch biased here, is the best career choice!

If you are curious to see how an IR mentor could benefit you, please do reach out for a confidential chat. Here is a quote from a Head of IR at a FTSE 100 company that I worked with for a number of years. “Lorraine provided professional, timely and insightful support throughout my transition to a leadership role in IR. I continue to lean on Lorraine to ensure I deliver best practice IR solutions whilst keeping my personal and professional development on track.”