In 2015 the IR profession will enter a new era, 62 years after General Electric created the first formal corporate IR function: pending approval at its board meeting in September, NIRI plans to unveil details of its long-gestating IR certification program – part of departing CEO Jeff Morgan’s legacy – scheduled to launch next year.
While professional certification is a perennial topic of discussion both at NIRI and within the broader industry, the current initiative has gained impetus over the last couple of years, says the organization. Hopefully, even with the search for a new CEO, the board can continue this momentum and lay the groundwork for the future.
In a survey, NIRI identified 19,000 IROs globally, and significant interest in some form of IR certification. Respondents view certification primarily as a way to enhance the stature of the function in the eyes of senior management, board members and the Street. While certification may also increase compensation and job prospects over time, those are not the top considerations among respondents, says NIRI.
Working with the same consultants – Knapp + Associates in Princeton, NJ, which worked with CFA Institute on its certification program – NIRI’s IR certification has been built on a detailed job content analysis conducted by professionals and an updated body of knowledge developed by working practitioners.
While several universities have launched IR curricula and the UK’s IR Society offers an entry-level certification, the NIRI effort promises to take certification to a new level. Because NIRI’S overwhelmingly US-based membership operates in the largest capital market in the world, it often sets the standard for global IR best practice. While the initial focus will be on US practitioners, NIRI plans to roll out certification modules in non-US markets over time.
It sounds like a well-thought-out and thorough approach, but IR certification has the potential to do more than just enhance IROs’ credibility with senior management. If successful, it should also give the IR profession a larger and louder voice in shaping the future of the capital markets – if IR both recognizes the opportunity and seizes leadership responsibility.
If the market meltdown of 2008 and the flash crash of 2010 taught us anything, it’s that issuers should care about not just the price of their stock, but also the fairness, transparency and accountability of the markets in which those shares trade. As IRO certification increases the profession’s stature, it should also increase the profession’s scope.
Two years ago, CFA Institute was pondering the ‘shocking lack of investor trust’ following the market meltdown and insider-trading and LIBOR rate-setting scandals, says Bob Dannhauser, head of capital markets policy at the institute. Subsequent surveys revealed that barely half of all investors globally trusted financial firms ‘to do what is right’, with individual investors less trusting than professionals. Most alarmingly, 61 percent of CFA members reported that the ‘lack of an ethical culture within financial companies’ was most responsible for investor mistrust.
Recognizing the threat those numbers posed to the profession, CFA Institute’s board launched a member-driven initiative under the banner ‘The Future of Finance’, with multiple chapter-driven programs designed ‘to restore trust and promote personal integrity’. It also explicitly expanded the organization’s mission statement to ‘shaping an investment industry for the common good’ and created an independent advisory council to oversee the project while offering strategic guidance to the institute.
IR has always been a two-way dialogue between the financial markets and issuers, with IROs taking on the role of ambassador and translator. While not every industry faces the same challenge as the financial industry, they all have a shared interest in restoring investor trust in the capital markets. If IROs use enhanced visibility and credibility to lend their own and their companies’ voices to that quest, they truly will deserve that long-sought place at the table.
