A good time, not a long time
Investor relations provides a lifelong career for many, as evidenced by the number of academic courses emerging in the field. For many others, however, a stint in investor relations can be part of a formal or informal development plan to build a more rounded understanding of corporate finance and leadership. General Electric, Ford, TD Bank and Sun Life Financial are just a few of the companies that use rotational IR programs.
These programs are seen as an effective way to develop the next generation of business leaders by creating a group of individuals who have a deep understanding of a variety of business divisions and functional roles. The programs are also believed to be effective in retaining top talent; while people don’t tend to spend decades in the same job these days, they may extend the length of time they stay at a company if they are exposed to new opportunities and roles every two or three years.
For Justin Wang, the opportunity to spend some time in investor relations was part of an informal approach from Sun Life Financial’s HR team to move top talent across the organization and provide a breadth of experience. Wang served as assistant vice president of investor relations for three years, between 2015 and 2018, and says it was clear during his interview that Sun Life Financial wasn’t tapping him for a lifetime in IR.
‘I got a sense from the interview that this was a great opportunity to learn about Sun Life, get the external and internal view and build key relationships across the organization, but that after a few years in IR I would be moving on to something different,’ Wang says. He now serves as CFO of enterprise services and global expenses at Sun Life Financial.
For Gillian Manning at TD Bank, the situation was much more formalized. At the time – in 2012 – the TD Bank IR team had about 12 people in it, and the second-in-command position was reserved for someone coming from a more specialized role elsewhere in the bank. Manning had worked at TD Bank for 12 years, first as an economist and then in the institutional asset management business, before working under Colleen Johnston as vice president of investor relations. She held the position for three years before moving on to a position in the risk team. She then rejoined the IR team as vice president and head of investor relations in 2016.
‘The investor relations experience was a great opportunity to understand the retail side of the business and how the bank runs,’ Manning recalls. ‘I would say it was easier to have a rotational role in one of the more senior positions because the department was larger and we had other people who [had significant] tenure in the team.’
Getting up to speed Even so, Manning says the first year in investor relations was challenging for her. ‘When you first join, you’re going to feel that your knowledge is a mile wide and an inch deep,’ she says. ‘It’s not a great feeling. But if you keep plugging away, that inch will get deeper and deeper and you will build your own institutional memory.’
Wang says he had a similar experience, but that his early days in the IR function helped shape his understanding of the value an effective IR department provides. ‘I had a very limited knowledge of IR,’ he says. ‘I thought it was probably just dealing with some retail shareholders, but I quickly changed my mindset because I saw how meaningful IR is to the organization. I was helping to communicate the internal story to external stakeholders and helping to synthesize questions from investors for senior management.’
He adds that he felt his first year was all about getting up to speed with the IR function, who Sun Life’s investors and analysts were and the cadence of the investor relations calendar. By year two, he felt he was beginning to contribute more to the IR program, and by year three ‘the business is really getting the ROI out of your time in IR.’
The average IR department is small – between two and three people – according to the 2019 Global Investor Relations Practice Report from IR Magazine, so it’s important that companies think about how to effectively onboard new members of the team. It can be easier said than done, given that IR is a function often misunderstood by individuals who haven’t had much exposure to it.
Manning hasn’t forgotten how she felt when she first joined the IR team. There is currently a position on TD Bank's IR team reserved for the bank’s junior rotational program. To help new recruits get up to speed on the role of investor relations, Manning created a comprehensive onboarding binder, which contains a list of the bank’s covering sell-side analysts, top shareholders, the most recent IR calendar, the number of investor meetings and conferences the bank participated in the previous year, how IR measures its own effectiveness, and many other details.
‘We tweak the binder for the level, but I’d give it to a new CFO if one came in,’ Manning says. ‘It’s a little bible. Some of it is very operational and functional, but some of it really helps to explain the role IR plays.’
Creating contacts across an organization Investing time in individuals while they’re in the IR department pays dividends after they’ve moved on. Manning says it’s valuable to have individuals across the organization who have spent time in IR. ‘We love people who spend time here and then go into other departments, because then we have another friend and contact who can be a great support for us to help others understand what IR needs – and why,’ she explains.
A stint in IR can also act almost like a mini-MBA for individuals who want to spend a long time with their current company: they are likely to walk away having a better network than before and an understanding of financial modelling, analysts’ commentary and investors’ concerns.
‘IR departments are small but they definitely have a big bark,’ says Wang. ‘IR can be a launchpad for many people. It’s helped to change the way I think. I used to be siloed and think only about the function I was in. Now I’m able to switch hats and think about customers, investors and management, and consider how different decisions will influence them. That’s hard to teach if you haven’t experienced it.’
He says he continues to read analyst reports about Sun Life Financial because he wants to stay connected to the Street’s view of the company. He also still uses AlphaSense to conduct competitor analysis, which he says gives him an edge in his current role.
Manning agrees that her first stint in investor relations made her think differently about TD Bank.
‘I’ve always had a broader perspective on TD Bank, because of my time in economics, but when I was in IR that understanding became so much deeper,’ she explains. ‘IR helped me understand how the bank actually makes money, gave me a deeper understanding of each individual business line, and helped marry our corporate culture with our strategy –and an understanding of where earnings come from.’
Rotational programs are likely to be favored by larger companies with expansive HR and talent management functions, while also having a strong enough IR presence that turnover in the team isn’t detrimental to the IR team’s output. If both of those boxes are ticked, however, it’s clear that rotational programs can be equally effective for the organization, the individual and the IR department.
