One solution is to quit and become a ski bum.
Another is to go work at a normal company and get better hours in corporate development, corporate finance, and yes, also Investor Relations – one area that has generated lots of comments and questions over the years.
Today’s interviewee is an Investor Relations Manager at a Fortune 500 company in Asia – and he’s worked in similar roles at another company in the region over the past 6 years.
Here’s what we convinced him to share with you:
- How to break into Investor Relations
- What you do in IR and how it’s different from investment banking and corporate finance
- The structure and hierarchy within IR and the different roles available
- Interview questions you might encounter in your IR interviews
- Exit opportunities if you decide you want to go back to those 100-hour workweeks
Pitching to Investors: It’s All About the Story
Q: So how’d you get started? Did you know you wanted to do Investor Relations since you were a kid?
A: Nope, it was much more random than that.
After graduating from a university in the UK with a major in IT and a minor in Economics, I began my career at a financial software firm as a Systems Analyst for a little over a year. And then I found my way into fund management and worked for a couple of leading global banking institutions, where I picked up my financial analysis skills.
After a few years at the financial institutions, I was a bit tired of the work and met up with a headhunter friend who suggested that I try working in the corporate world as an Investor Relations Manager for a mid-sized local company.
Q: That seems like a pretty random recommendation – IT to fund management to… IR?
What made her think that you were cut out for Investor Relations?
A: I think she realized that I was more of a “people person” and didn’t want to be crunching numbers in spreadsheets all day. I didn’t mind that as part of the job, but I wanted to do more than that – the long(ish) hours also didn’t help.
I worked in IR at the local company for a few years, and then moved over to a much bigger multinational firm to get more responsibility and higher pay – plus, I gained the opportunity to work with senior management, bigger banks, and institutional investors worldwide.
Investor Relations – Defined
Q: OK, so more exposure to executives, the buy-side, and more work outside of just number-crunching in Excel… sounds good so far.
What exactly do you do in Investor Relations at a normal company?
A: It depends on the level you’re at – just like with equity research, there’s less hierarchy than what you see in investment banking, but here are the 3 levels:
- Business Analyst / Assistant IR Manager – Normally, a few years of experience in a finance-related field are required for this role.
- IR Manager – This requires at least 5-6 years of experience.
- IR Director – This takes more like 10 years of experience, and you report to the CFO at this level.
At a smaller company, you might have only 1 or 2 people in the Investor Relations department, so the hierarchy is compressed.
Also note that only public companies (or companies about to go public) actually need an IR department – if and when private companies deal with investors, the CFO handles most of it.
The IR Manager and IR Director focus on speaking with institutional investors from major buy-side houses and also research analysts from investment banks – they try to tell our company’s “story” effectively and make investors and analysts excited about the company, while also being truthful and giving accurate information.
As a junior person on the team (Analyst or Assistant IR Manager), you’re charged with producing weekly and monthly reports, following the markets and seeing what analysts and investors are saying, and putting together summaries for the senior management to review.
We also help with drafting the language for earnings announcements and with annual and interim reports (semiannually in Asia and quarterly in the US).
In addition, we also speak with other divisions to understand the entire company’s latest operations and answer questions from investors and analysts that call us.
Sometimes, management asks us to help with special projects and find information in areas they need for business development, or to find market data that they may get asked about at presentations or on earnings calls.
Q: So it sounds like there’s a lot of overlap with Corporate Finance, Controllership, and Treasury roles?
A: Yes and no. At a really small firm, some of these functions might be combined and the same person might perform some or all of them.
The main difference is that corporate finance deals more with the company’s internal finances, while investor relations is more about communicating with the external investment community.
You still need to understand and interpret the financial statements, but you don’t need to know as much about accounting, valuation, or modeling as someone in a traditional corporate finance role. And you would not be the one actually creating the financial statements for the company.
Overall, I’d say 30% of the role involves financial skills while the remaining 70% requires solid communication and presentation skills. Certifications like the CFA/CPA might help a bit, but are not necessary for the role.
Q: So are there any “standalone” Investor Relations firms? Or do you only see it internally at public companies?
A: Yes, there are some 3rd-party firms that companies can “outsource” IR work to – one example in Asia is irasia.
However, these firms mostly host events for listed companies and post documents for them, so they wouldn’t necessarily do everything that you do internally at a large public firm.
Then there are groups such as IR Magazine that host events in many major international financial centers.
But, the bottom-line: if you want to be in IR, you’ll be working at a decently-sized public company in most cases.
A Day in the Life
Q: OK, thanks for clarifying. So what’s an average day in your life like?
A: I usually get in at 9 AM and leave at around 7 PM (about 50 hours per week on average). My hours are fairly regular and I rarely work weekends, except for when a “major unexpected event” happens over the weekend.
If that happens, I’ll need to go back to the office to meet with the IR Director and senior management to figure out what we’re going to tell investors on Monday.
A “major unexpected event” might be a rumor or a leak on corporate activities in the news, a major company announcement to be made, or anything else you can think of.
One other point specific to Asia: Hong Kong-listed companies do not provide forecasts and EPS guidance in the same way US companies do, so we need to look at how the results we’re about to announce compare to Bloomberg consensus estimates or to those of individual analysts… and if they’re off, we need to explain why in the Q&A document we release.
If it’s a “normal day,” I start off in the morning by scanning through news sources such as the Wall Street Journal, Financial Times, Bloomberg, local newspapers, and research analyst reports from various investment banks.
I then alert senior management if I find any important news that they need to be aware of, and send over a brief one page summary. I also circulate it to other Senior Managers for their information as well.
Intermittently during the day, I also look at things like our own share price movement, competitors’ share price movements, major M&A or capital markets deals, industrial news, strategic partnerships, and anything else going on outside our own firm that needs to be reported to management in a timely manner.
After that, my tasks vary by the day – they might include:
- Accompanying the IR Director or senior management to meet with investors from a major asset management firm or hedge fund that owns a stake in us or is considering acquiring one.
- Reviewing interim financial statements, scanning for numbers that investors or analysts might ask about, and preparing responses to distribute to management.
- Drafting presentations given at annual meetings and sitting down with senior management to rehearse answers to expected questions. It’s almost like prepping a management team for a roadshow before an IPO – and the IR team is always involved with roadshow process as well.
Q: It sounds like those tasks could create conflicts of interest – how do you get around that?
It must be tempting to tell research analysts, senior management, and investors different stories depending on what they want to hear.
A: Yes, it does require a skill set to handle these situations.
In IR, you have to be very cautious of how and what you communicate to the “external world.” You have to tell everyone – analysts, management, and investors – the exact same message that senior management conveys to the investment community to avoid any inconsistencies.
Q: Great, thanks for explaining that.
So why did you transition from a smaller firm to a bigger company? Was it just because of the pay?
A: Part of it was the pay, yes. The other issue is that in smaller corporates, it’s usually a “one-man band” operation. I was involved in investor relations, public relations, as well as some business development given the lack of resources.
While I learned a lot in that role, I was underpaid for the effort I put in and I felt like moving to a larger firm with more of a dedicated IR role would be better for me in the long-term.
Breaking In… At All Levels
Q: What’s the recruiting process like for Investor Relations?
A: The recruiting process is straightforward. At our firm, candidates go through 2 rounds of interviews: one with HR and the other with the Director of IR.
An interview usually lasts one hour, and the first round with HR involves the standard behavioral questions. The second round with the Director of IR involves more in-depth questions specific to the job, such as:
- Have you had interaction with fund managers and research analysts in your previous jobs? You don’t “need” to have experience speaking with investors and analysts in most cases, but having such experience will definitely be a plus.
- Can you deal with deadlines under pressure? We look for candidates who perform well under pressure and can multi-task, because there are a fair number of “unexpected events” and it’s always a rush right around earnings season.
- Do you have experience analyzing financial statements? We need candidates who know how to analyze financial statements so they can prepare reports for management, and so they can prepare answers to expected questions from investors and analysts.
- Do you have a background in IR and/or PR? Having such background is not crucial, but it is a plus.
- Have you written any reports to clients before? How strong are your writing skills? Having solid communication skills is crucial in this role, particularly for the more senior roles, where your job consists of talking to people and writing correspondence all the time.
You may get technical questions on accounting, valuation, and interpreting the financial statements, but they generally won’t be as in-depth as in banking or PE interviews.
Q: What about how to “tell your story” in IR interviews?
A: It depends on your background, but if you’re coming from investment banking the short version of your story might go something like this:
“I went into banking to gain the best all-around financial / analytical skill set and work on large-scale deals… but on one deal I was staffed on, I saw firsthand how the management team and some of our own team wasn’t quite telling the company’s ‘story’ properly and pitching them effectively, which made it difficult to get investors interested because of [Describe Why]…
I had ideas for how to improve upon those, but as an analyst I couldn’t implement them directly. But it made me more interested in a role such as IR where you leverage both the analytical and communication skills, and I started speaking with more and more people in the industry and learning more about it – in the future I want to take on that role for companies in [Industry X], and this role is a great way to get there.”
You need to highlight a specific instance where you saw a way to improve the company’s story and to use it to attract more/better investors.
Q: What kinds of candidates are they looking for? Do IR groups even recruit undergrads or MBAs?
A: Generally, no – we focus on candidates with at least a few years of experience in finance-related roles.
That experience could be almost anything, from investment banking to equity research to corporate finance or previous IR experience.
But most large companies do not recruit brand-new graduates for these roles.
Pay, Culture, and What to Do When Your “Relations” Go Bad – Exit Opportunities!
Q: So what’s the culture in IR like? Is it more “intellectual” like what you see in equity research, or more like what you see in banking or S&T?
So don’t expect quick decisions or quick advancement.
Q: You’ve mentioned a few times that the pay is lower and that you were underpaid in your own role – what should you expect for compensation in Investor Relations roles?
A: First, let me just state that I can only speak to pay in Hong Kong because that’s where I’ve worked before.
I am assuming it will be different in North America, Europe, and other places, partially because taxes are much lower in HK.
Here are the approximate ranges I’ve seen:
- Assistant IR Manager – 20K+ HKD / month (roughly $30K USD per year)
- IR Manager – 40K+ HKD / month (roughly $60K USD per year)
- IR Director – 1 million HKD / year (roughly $130K USD per year)
Q: Really? I’m a little skeptical because those numbers sound very low based on a quick search I did on Glassdoor and a few other sites.
A: Yes, as I said, a lot of it depends on the size of the company and the region you’re in.
If you’re at a Fortune 500 company in the US, the pay range might be anywhere from $100K USD to $700K USD based on surveys like the one described here.
And in developed markets, you might start out at more like $60K+ per year, as in other entry-level finance roles; it really depends on the size of the company and the team.
But there is a definite discount to the compensation that you’d receive in other fields.
Sure, you can still make it to the $150 – $200K+ range, but you won’t do it in only a few years as you might in banking or PE.
Of course, the trade-off is that your lifestyle is more controlled and you’re dealing with far less stress.
Job stability is also higher because they’re not going to cut the IR department if earnings fall – in fact, that’s when they need you the most!
Q: What are the most common exit opportunities? Are you more limited because it’s a specialized skill set?
A: Other than climbing up the ladder in IR, candidates usually work for another corporate in their IR division in the same capacity, or get promoted along the way.
Candidates who are outstanding and recognized in their work might possibly be invited to join a smaller corporate as a financial controller or CFO.
Better yet, candidates can look for start-ups who are about to go public and assist them in their initial public offering process. However, these cases are relatively rare, and most candidates usually stay within their same firm in IR and exit opportunities can be limited, unlike in IB.
You can move from ECM or fund-raising type roles on the buy-side into IR, but it’s quite rare to do the reverse, though I’m sure people have done it before.
Here’s an interesting example of how someone gets into IR: take a look at Wen Hsin Tong, who moved from IB to IR to Executive Chairman of the Board at Foxconn.
Q: Thanks for explaining that one. Based on everything we discussed so far, who would fit in best with the group?
A: Someone who wants job stability, regular hours, and who wants to build relationships with the investment community and fit in with the corporate culture.
There’s also the prestige factor involved if you are working for a multinational corporate because you work with a team of high-caliber senior executives – even as a junior-level person, you’ll have significant access to executives, which is pretty rare in any job.
So if you like that type of opportunity and you really enjoy working with seasoned executives, IR could be a great fit for you.
Q: Great. Thanks for your insights and your time!
A: Anytime, enjoyed the chat!