The rules of investor relations are changing. Since the early days in the development of the discipline it has been accepted practice for investor relations officers to concentrate their efforts on links with institutional investors.
That’s fine. Indeed, that should remain the case. One hour spent with a key fund manager can have a real impact on your stock.
What’s no longer fine is the view that retail investors are the poor relations of institutions. It’s the commonly-held view among the IR fraternity that these troublesome, pesky private investors who waste everyone’s time are somebody else’s problem.
Of course, you’d be hard-pressed to get any company to express this on the record. The feared media backlash is too great. But a quick vox pop among Investor Relations magazine journalists reveals the depth of the problem.
Witness the IR officer at a leading UK bank who insists off the record that he has no time for private shareholders. No time to deal with their concerns. Or take the IR officer at a French blue chip who jokes she has a secret desire to wipe private investors off her shareholder base. They’re just too much trouble.
It’s an attitude that has been encouraged by the powers that be in the IR world; by the IR societies run by IR folk who have always worked that way. To be fair, it’s an attitude that has also been encouraged by this magazine in the past.
But the rules are changing, the internet is making sure of that. And some companies are already playing by the new rules and gaining a real advantage. Take a look at the growth of the power of the retail investor in the US. Check out the companies with retail investor levels running at around 50 percent and more. See if they are the companies that are taking time to look after the information needs of their retail shareholders and see just how many of them are customers too. Cast your eye over the number of US companies that are actively encouraging retail investment through cheap dealing schemes, dividend reinvestment programs and the like. Finally, make a mental note about which companies are leading the world in the race for capital, customers, growth and power.
Non-US companies had better play catch up. And fast. This month’s cover story looks at some of the quandaries that companies are facing in their struggle to create a level playing field between institutions and retail shareholders. IR officers who take note and begin to struggle with the same issues themselves will likely gain an advantage in the future.
