Investor Relations and Financial Communication. Alexander V. Laskin
government agency talks about their budget needs and priorities when it is time to ask for money from the legislature. It is also beneficial for government agencies to have a high-quality financial communication strategy targeted at the general public in order to show the importance of the work the agency is doing and to pressure the lawmakers to expand the budget of the agency or at least to avoid potential budget cuts. As a result, expert financial communicators are needed in every part of the government.
Not-for-profit organizations also communicate a great deal of financial information, especially as it relates to their need for, receipt, and expenditure of money. And these are no small amounts – Americans gave US$410 billion to charitable organizations in 2017 alone. Almost one-third of this money went to religious organizations – this is more than all combined donations to education, health, and culture and humanities charities. Financial communicators responsible for generating these donations are fundraising professionals. Animal shelters, food pantries, college and universities, and even United Nations engage in fundraising activities to support their operations and advance their causes. For example, the United Nations Refugee Agency developed a campaign in partnership with Kickstarter to raise money for a refugee humanitarian crisis.
These fundraising jobs have similar requirements and expectations to investor relations jobs. It is vital for fundraising professionals to be exceptionally knowledgeable about the organizations they work for. Donors may have different preferences and different capabilities – it is essential for fundraisers to align what the donors can and want to support with the needs of their nonprofit. Donors often want to stay engaged with the organizations they support – so, building and maintaining these relationships also becomes an important job of the fundraising professional. And, of course, it is important to report to the donors on how their money is spent and what the progress is of the initiatives these donors supported – not that different from updating the investors of a corporation on the progress the corporation made in the annual reports.
A recent job advertisement from Yale University, looking for a fundraising officer, describes the responsibilities of a future hire:
1 Identifies, cultivates and solicits Yale alumni/alumnae and friends who are capable of making gifts to the University.
2 Devises and implements cultivation and solicitation strategies. Evaluates various gift opportunities and giving vehicles; recommends the most suitable for a particular donor. Develops, writes and presents proposals in keeping with university needs and in line with donor’s interest and financial situation.
3 Initiates and maintains contact with current, past, and prospective donors, promoting positive donor relations. Engages volunteers proactively as needed. Determines and executes events and programs in support of development activities, assessing the success of such events/programs and recommending changes. Identifies disaffected or disinterested donors and devises strategies to encourage/redirect their interests as appropriate.
4 Interacts with internal contacts such as deans, directors, faculty, officers and other Development staff to consult on University needs, cultivation, solicitation and stewardship strategies, and potential donors. Keeps abreast of University events and disseminates University information to donors, prospective donors, volunteers and team members as appropriate.
The professional association for fundraising, the AFP has about 30,000 members. AFP is significantly larger than NIRI – this reflects the fact that there are more not-for-profit organizations that need fundraising than there are publicly traded corporations that need investor relations. The average salary of the fundraising professional is US$85,060. A typical title for the person leading the fundraising function at an organization is the chief development officer (CDO). CDO is the highest fundraising title. It is usually reserved for somebody who manages a large fundraising department or program. However, many fundraising professionals work for smaller organizations and typically are the only person in the department – in this case, they would have the title of fundraising officer or fundraising manager. Other titles in fundraising are vice president for development and advancement, director of philanthropy, or gifts officer.
Returning to the corporate sector of the economy, it is important to note that there are other financial communication jobs in corporations in addition to investor relations. In fact, there are many financial communication professionals in banking and insurance. Communicators working at banking institutions and credit unions communicate a large volume of financial information about credit cards, mortgages, savings accounts, and certificates of deposits. And, once again, often they have a responsibility to go beyond making the information available and instead focus on explaining and educating their audiences about all the nuances of their communications. Insurance is a subject with a very high complexity – life insurance alone can have many different categories with different payments, rules, premiums, and so on – term life insurance, whole life insurance, universal life insurance, variable life insurance, guaranteed issue life insurance, and more! All of this requires quality communications to help people understand the product and its purpose.
Investor Relations and Financial Communication Agencies
All the jobs described above – corporate investor relations jobs, communications jobs in banking and insurance, governmental financial communication jobs, or fundraising for not-for-profit organizations – represent in-house positions. These job functions are located within the organization they are trying to benefit. In addition to the in-house jobs, there are many financial communication jobs in the agency sector. There are many agencies that specialize in financial communication and investor relations and provide their expertise to a variety of organizations that need to supplement their in-house stuff.
One of the leading agencies with a strong reputation in investor relations is Prosek Partners. With offices in two leading financial centers of the world, New York City and London, Prosek has a sophisticated investor relations program that can support merger and acquisition transactions, help with shareholder activism, develop outreach to investors and financial analysts, plan events, and provide counsel to top management.
In addition to dedicated agencies in investor relations and financial communications, many big public relations and strategic communication agencies also offer specialized services in this area. Edelman, the largest public relation agency, has a strong financial communication practice. According to Edelman, its financial communication and capital markets practice employs more than 150 global advisors with backgrounds in finance, investor relations, communications, journalism, and government services.
A financial communication agency may be a great place for entry into the investor relations job. Agencies have no problems hiring recent college graduates with little or no experience. Working at an agency exposes you to many different clients in a variety of industries and builds experience very fast. Eventually, one of the agency clients may offer you an in-house job. It is a common way to transition from an agency job to a corporate job. Salaries in agencies are usually smaller than on the corporate side and, as a result, many agency employees eventually move to corporations, while agencies bring in more new entry-level employees with little or no prior experience.
The new hires at agencies usually have the titles of intern or account assistant. An agency client is called an account, thus an account assistant is the one who helps working on a client’s account. Once an agency employee gains sufficient experience, they may be given an account to manage on their own – then, they become account coordinator. Later, they may be promoted to larger accounts where multiple agency employees are involved – then, their title would reflect that as they grow through jobs of assistant account executive, account executive, senior account executive, and, finally, account director or account supervisor. As agency employees continue to advance up the career ladder, they gradually become more involved in managing the agency as a whole rather than managing separate accounts. The senior-level positions at agencies are vice president, senior vice president, executive vice president, partner, and, finally, senior partner. In large multinational agencies with regional offices, it is possible to be a regional director or a president/CEO of an agency subsidiary or a