Tips one and two
While it has long been common practice for corporate access teams at brokerages to facilitate investor meetings for IR, recently there has been an enormous uptick in direct engagement. One reason for this seismic shift? The buy side is operating under a changing set of economic forces and regulatory imperatives.
Active managers, for instance, face mounting pressure to offer favorable terms as indexed funds and ETFs encroach on their terrain. To compete, buy-side firms are keeping a tight rein on the fees they charge in several ways, including insourcing corporate access.
Since the Covid-19 pandemic, everyone has become more open to direct and virtual engagement
Another contributing factor is the ‘juniorization’ of brokers on sales desks. Many of today’s brokers are young and lack the depth of experience and the relationships necessary to facilitate the types of meetings that both sides want.
Forces driving more direct engagement vary by region. Within the EU, for instance, Mifid II, which took effect in January 2018, means the commissions investors pay to brokers must be unbundled. Buy-side firms in Europe now foot the bill for research and corporate access services directly within their P&Ls, rather than passing them on to investors as fees.
In response, some larger asset managers have established their own corporate access desks, allowing them to reach out to investors directly.
Ross Moffat, head of IR at WiseTech Global, headquartered in Sydney, Australia, has seen direct engagement increase with Mifid II and with ‘brokers reducing or eliminating their offshore dedicated Australian equities sales teams.’ Since the Covid-19 pandemic, he says: ‘Everyone has become more open to direct and virtual engagement.’ Not only has he made more outbound contacts, but he has also seen inbound engagement increase.
Many large institutional investors are adapting to these new dynamics.
‘We have definitely received an uptick in inbound requests from IROs to meet with our investment professionals – and our outreach to companies has increased, especially in the small-cap space,’ said Jennifer Langieri, senior manager of the US corporate access team for Fidelity, in a webinar hosted by IR Magazine and ACCNITE on April 27, 2022.
Langieri encourages IR professionals who have a direct relationship with an individual analyst to approach that analyst instead of going through the official corporate access team. For those lacking such relationships, Fidelity launched an IR portal in late 2021 to simplify engagement between public companies and the firm’s investment professionals.
Ross Moffat, WiseTech Global
The Covid-19 pandemic spurred IROs and institutional investors to meet virtually outside the traditional brokerage-sanctioned forums – and consequently shone a light on the similarities between IR and more traditional sales roles.
Thanks to technology and a raft of new targeting tools, an IRO can line up leads, turn those leads into touch points and then manage prospects over time.
Nurturing leads along a journey to becoming investors is something IROs have always done – but it’s not necessarily how IR professionals envisioned their roles. They tended to rely on brokers to serve as agents and matchmakers, making introductions, planning conferences and roadshows to get better acquainted and shepherding relationships from courtship to marriage.
For IROs, the newest challenge is taking the driver’s seat when it comes to managing investor relationships. Doing so isn’t easy, especially given how lean and mean investor relations teams have become. For IROs with very full plates, finding the right technology solutions is imperative.
When Caspar Tudor, director of IR at Waters Corporation, a large-cap tools company in the Boston area, spoke at the IR Magazine/ACCNITE webinar, he urged IROs to find innovative ways to launch targeted campaigns that are not so ‘sell-side driven’.
