Planning investor relations education courses is a real challenge. IR is a relatively young job compared to most others. Unlike accounting, the law or even corporate finance, it does not have years and years of tradition on which to draw. In fact, the US National Investor Relations Institute (Niri) only recently published a defined skill set for investor relations.
The newness of the field is what really makes it exciting to work in investor relations – there is still ground to break, still things to learn. IR is truly a hybrid discipline. It requires a sophisticated understanding of capital markets, the regulatory system, accounting practices, governance and the law. And, given its role in building relationships between a company and the financial community, excellent communication is also a key IR skill. This cross-fertilization makes investor relations a complex area to understand, and planning courses is sometimes difficult for IR educators.
One of the other issues in designing IR courses is that the people within the industry come from vastly different backgrounds. Some are ex-stockbrokers or fund managers, some have a background in communication, and some have just fallen into their roles.
‘IR has traditionally been a training ground for highfliers, to open their eyes about how to keep the City happy, and to teach them about strategy,’ says Andrew Hawkins, director general of the UK Investor Relations Society.
Hawkins believes people are beginning to treat investor relations as a career in its own right. But careerist IROs are not following a defined path; rather they move into IR from a related field and pursue an IR career on their own terms.
These issues – the newness of the industry, the interdisciplinary nature of the field, and the vastly different skill sets within IR – make designing courses a minefield. A one-size-fits-all course would bore half the audience and confuse the other half. And more specialized courses sometimes don’t appeal to a broad enough audience.
Nevertheless, many investor relations societies are trying to address these problems and a range of new courses have recently been developed around the globe.
Basic skills
IR courses can be broken into two basic areas: pure introductory courses, and advanced and usually more specialist courses. The introductory courses in different regions usually cover similar ground and address the fundamentals of investor relations.
‘An understanding of a common set of issues is increasingly required,’ comments Ian Matheson, chairman of the Australasian Investor Relations Association (Aira). Matheson thinks all IROs should have a grasp of the fundamentals of markets, valuation methods and the structure of the investment industry. He also believes IROs need an understanding of communication tools, corporate finance, international capital markets and cross-border investments.
These subjects are often the backbone of introductory investor relations education courses. Other areas covered often include communication, regulatory compliance, accounting, financial analysis and the law.
Both introductory and more advanced investor relations programs are often delivered through seminar or workshop programs. This teaching style suits busy IR practitioners who would prefer to attend short workshops rather than commit to a long-term course.
Around the world
Most of the investor relations societies and associations around the world have developed or are currently developing IR courses.
‘We do workshops every two to three months dealing with specific topics like compliance rules or corporate governance,’ says Randolf Fochler, president of the Cercle Investor Relations Austria.
Fochler also teaches an investor relations seminar for undergraduates, which ‘introduces young students to the world of stock exchanges and listed companies.’
The Japan Investor Relations Association offers a basic, two-day introductory seminar course and a practical course during which students learn how to prepare IR materials such as annual reports. Special courses that cover fields relating to IR such as accounting and the law are also provided.
‘We also offer seminars on IR topics for management and directors,’ says Jira’s Yoshiko Sato. ‘Our education programs vary according to the experience of the students,’ she adds.
The Finnish Investor Relations Society also offers an introductory course and, since 1999, has provided a course in investor relations for the Helsinki School of Business and Business Administration. Moving away from the seminar model, a longer IR program for executive level IR practitioners has also recently been established in Finland. ‘The new program is more of an academic approach to IR,’ says Minna Mars, a board member of the Finnish Investor Relations Society.
The German Investor Relations Society has also just started a new IR program, the Certified Investor Relations Officer (CIRO) qualification. ‘Starting in September 2002, we are offering a comprehensive IR course that covers IR basics, capital market fundamentals, financial analysis and accounting, regulatory compliance and the law and communication,’ says Kay Bommer, general manager of the German Investor Relations Society.
This course includes online tutoring with both written and oral examinations. Bommer is hoping that the course will be considered the definitive IR education program in Europe. ‘But it’s important to recognize that we don’t want to turn IROs into analysts or lawyers. We want them to become qualified representatives of their companies who understand how the various members of the financial community work, what they want to know and why,’ Bommer explains.
The UK Investor Relations Society (IRS) recently reworked its courses to be more interactive and to include more real-life case studies. Three levels of courses are offered, with the third level somewhat different to standard IR courses in that it looks beyond financial stakeholders and also covers corporate social responsibility.
‘We have also announced that we’re launching a formal qualification, and that’s now at quite an advanced stage,’ Hawkins says. ‘We hope it will provide employers with reassurance that the IR person knows enough not to fall foul of the regulations and that they know how to pick their way around the financial markets.’
Hawkins adds that he would like to see this new qualification become a benchmark for investor relations training. ‘So many people are coming into the industry at the moment. This is due to new regulations and also increased concerns at a board level about good investor relations. Good education is an important issue at the moment,’ says Hawkins.
Online courses are also becoming more popular. In conjunction with a number of US universities, Niri now offers a broad range of internet-based learning programs for IROs. Topics covered include IR for small-cap companies, best practice in international IR, intangibles and non-financial performance, and the earnings estimates process.
The benefit of online courses is that IROs in every part of the US – and indeed the world – can access them. Those working in jurisdictions in which there is no established investor relations society can still get access to good quality IR education.
Niri also has a range of campus-based courses that are held in conjunction with the University of Michigan, Northwestern University and the University of California. These are probably the most advanced of all investor relations courses and the programs are generally quite technical. Subjects offered include strategic targeting, measuring investor relations program effectiveness and advanced integrated communication.
Mandatory training
There has been ongoing debate over whether there should be mandatory training for investor relations professionals. After all, you wouldn’t trust a doctor without a degree in medicine, so why would you trust an IRO without a qualification in investor relations? The industry has, however, largely reached agreement that compulsory training is not the path to follow.
‘It would be impossible – it would kill off IR,’ says Andrew Hawkins, who believes there is no need for the UK Investor Relations Society to become a chartered organization, providing formal education programs similar to, for example, programs provided by the accounting bodies. ‘IR is just not that developed at the moment – maybe in ten years’ time,’ he posits.
Lou Thompson, president and CEO of Niri, says research into whether there’s a need for mandatory training for IR has consistently proven voluntary training is the preferred approach. ‘The Niri board has looked extensively at the concept of IR certification and each time we have concluded the costs exceed the benefits,’ he says.
Thompson outlines a number of reasons why mandatory training is just not cost effective: ‘The critical mass of prospective candidates is insufficient to warrant the costs of a certification program. Also, many of the people who come into investor relations have extensive business experience and would not put themselves through course of instruction over several years just to have initials behind their name.’
Thompson also says Niri’s research shows people don’t hire IROs for their qualifications, and that executive recruiters say that certification makes no significant difference when hiring an IRO. In addition, analysts say that an IRO’s access to senior management is far more important than whether he or she is certified to practice IR.
‘From my 20 years of experience at Niri, I believe that individuals should identify their educational needs from the variety of offerings from Niri and from the other executive education programs we offer with some major US universities,’ Thompson says.
Thompson says the experience of the Public Relations Society of America and the International Association of Business Communicators also indicates that statutory certification is unnecessary: ‘Their certification programs… have been costly and unpopular, largely because they are irrelevant to the success of those who practice PR. In fact, these programs were often cited in focus groups of IR people who were familiar with them as reason for Niri not to establish a certification program.’
Randolf Fochler concurs: ‘If education is to be mandatory for IROs, then it should be mandatory for CEOs and CFOs as well. Of course all IROs should learn permanently. The best education in my opinion is to be in close contact with the market, to listen to what the market requires and to learn what is best practice in IR.’ He adds, ‘But I do think there is a lack of educational opportunities for IROs in Europe compared to other professions. This situation needs to be improved.’
A number of senior practitioners believe compulsory training is irrelevant because the market will decide whether IROs are doing their jobs properly or not. ‘We don’t believe IR education should be compulsory – Germany is over-regulated anyway,’ says Kay Bommer. Instead, she believes the financial community should exert pressure on companies to improve their IR efforts. The flow-on effect from this will be a better educated IR community.
Aira’s Ian Matheson believes the eclectic range of experience among IR practitioners and the very different roles IROs play preclude compulsory training. ‘The IR role means different things to different companies, which means the required skill set will vary from company to company’ says Matheson.
‘It would be difficult, for example, to set a mandatory course on corporate finance because it’s not clear in all cases what the IRO’s responsibilities are with respect to corporate finance,’ he points out, remarking that it would be nearly impossible to specify a well-defined curriculum at this point.
On the other hand, Finland’s Minna Mars believes there should be some sort of coordinated approach towards education among the different national bodies. ‘Different IR societies have all recently come up with diploma courses, and that’s our idea as well,’ she says. ‘With so many societies doing the same sort of thing, I think it would be useful to try to aim for an internationally acknowledged certificate, like the CFA exam for financial analysts,’ says Mars.
As a young industry, investor relations is unencumbered by the legacy systems contained in older professions. Because of this, IR has a unique opportunity to develop a homogenous, global body of knowledge. A coordinated, global approach to IR education would go a long way toward achieving this, and would assist in the development of the industry right around the globe.
Higher education
This fall IR and corporate communications professionals based in the Big Apple can go back to school and get a certificate in IR from New York University in collaboration with Niri’s New York chapter.
The program consists of six courses including two that are mandatory. ‘The introductory course [Financial Public Relations/Investor Relations] and the IR Project Plan are required,’ explains Kelly Leung, VP of professional development for Niri New York.
The certificate is designed to fulfill the educational needs of IR professionals at all levels of experience, whether new to the field or seasoned veterans. Students can chose from a number of communications and finance electives including Crisis Communications and Financial Statement Analysis. In order to accommodate working professionals, courses are held at night once a week and usually run a couple of hours, and the fee for each class is $600-700. To encourage Niri’s membership to hit the books, ‘Niri New York offers a scholarship for one course to two Niri members every semester,’ notes Leung.
For now, this is the only IR certificate offered outside of UC Irvine’s certificate program that is also offered online. For more information on Niri New York’s and New York University’s Certificate in Investor Relations, visit www.scps.nyu.edu and find the Marketing & Management Institute under ‘departments’.
