by Brian DeChesare Comments (2)

The Investor Relations Career: Ideal Exit Opportunity or “Finance Lite”?

Investor Relations Career

If you want vague job titles that could mean almost anything, it’s hard to find a field more fitting than investor relations.

At large, public companies, “investor relations” normally means fielding shareholder questions, preparing documents and presentations for earnings reports, writing press releases, and speaking with current and prospective investors.

You might specialize in one of these, do a bit of everything, or work on other tasks that aren’t even on this list.

We’ll get into recruiting, salaries, exit opportunities, and whether or not the investor relations career is worthwhile, but let’s start with some basic definitions.

What Do You Do in an Investor Relations Career?

“Investor relations” (IR) roles exist at both investment firms (private equity firms, hedge funds, asset management firms, etc.) and normal companies.

IR at investment firms is mostly about fundraising and building relationships with the Limited Partners (LPs).

Your job is to keep the existing investors, such as pension funds, endowments, and funds of funds, happy and get them interested in contributing more capital to future funds.

You’ll also spend time sourcing new LPs and convincing them to invest, which tends to be easy at the mega-funds and as difficult as getting struck by lightning at smaller, lesser-known funds.

By contrast, IR at normal public companies is less about fundraising and more about answering questions from existing shareholders and preparing documents.

For example, you’ll answer questions from research analysts and institutional investors following earnings calls and contribute to your company’s annual report, its investor presentations, and even its press releases.

As you move from the junior levels to the senior levels, you’ll spend less time creating documents and more time building relationships with investors.

Some companies place investor relations within corporate finance, while others make it a completely separate group.

And some companies even offer hybrid roles such as Treasury and Investor Relations, where you split your time between each area.

In this article, we will focus on IR roles at normal companies because the ones at investment firms are so different that they should be in a separate category.

Why Investor Relations Varies Significantly Between Different Firms

The description above is simplified because investor relations, even at “normal companies,” differs based on the industry and company size.

If you’re working in IR at a large company – say, one of the Fortune 500 – you’ll spend most of your time on tasks such as:

  • Organizing the company’s financial statements and other material for annual and interim reports, such as the MD&A (Management Discussion & Analysis, which explains the financial results).
  • Taking calls and answering questions from investors ranging from day traders to large institutions – though the senior IR professionals tend to own the relationships with the biggest shareholders.
  • Writing press releases and investor notes about the company’s financial results, earnings guidance, acquisitions, and planned capital raises.
  • Setting up conference calls to announce the company’s results and field questions from current and prospective investors.
  • Creating presentations for each reporting period and significant announcements such as acquisitions.

At smaller companies, IR is less specialized, so there is often more overlap with the corporate finance team and the rest of the company.

So, in addition to everything above, you might also work on tasks such as:

  • Working with bankers during capital raises and M&A deals, which includes preparing the executives for roadshows and contributing to possible deals.
  • Communicating with equity research analysts, answering their questions, and sending them the information they need to build their models. This is trickier than it sounds because you have to disclose enough to be useful but not anything that could hurt your company.
  • Gathering market intelligence, such as recent news, M&A activity, and analyst commentary on the sector and using it to write summaries and create dashboards.
  • Maintaining internal models of the company, such as the forecasts and 3-statement projections that you can use to answer analyst questions.

Do You Do Financial Modeling in Investor Relations?

This seems to be one of the top questions about the industry, and the answer is: “Maybe a little, sometimes, but it’s not the focus of the job.”

You need to understand accounting, financial modeling, and valuation, such as how your company stacks up to comparable public companies, but you do not necessarily build models or complete those tasks yourself.

You may get to model an M&A deal or divestiture if you get assigned to work on a “special project” or if your company treats IR professionals as finance generalists that can do a bit of everything (more common at startups and smaller companies).

However, your baseline expectation should be little financial modeling.

A Day in the Life of an Investor Relations Associate

An average day for an IR Associate at a mid-sized public company might look like this:

9 AM – 10 AM: Arrive at the office, scan news sources such as the WSJ, FT, and Bloomberg, and send a quick summary of relevant items to management and the IR team.

10 AM – 12 PM: Accompany your IR Manager and Director to a meeting (virtual or in-person) with an institutional investor that owns 20% of the shares in your company.

This group is skeptical of your company’s recent results and product roadmap, so you spend a long time answering their questions and send supplemental information afterward.

12 PM – 1 PM: Head to lunch with a co-worker in the corporate finance group (you’re thinking about moving there as a “Plan B” if you get tired of IR).

1 PM – 3 PM: Review interim financial statements for the upcoming quarterly results and make notes about the most common questions you expect. You start updating the standard quarterly presentation to include these new figures.

3 PM – 4 PM: Join a conference call with the IR Manager to introduce the company to a hedge fund interested in increasing its stake in the company.

They have many technical questions about your company’s recurring revenue, the true churn rate, and how you’re booking the deferred revenue associated with contracts.

4 PM – 6 PM: The entire IR team meets with the C-level executives to update them on these investor meetings and prepare them to answer questions on the next earnings call.

6 PM – 7 PM: Respond to some emails you missed earlier in the day, finish your presentation updates, and head home.

The main theme here is that the job is more about understanding the financial statements and valuation concepts like the DCF rather than doing the modeling work.

Hierarchy and Advancement in the Investor Relations Career

The hierarchy in investor relations tends to be compressed relative to the investment banking and private equity career paths, and the names vary quite a bit.

The three main levels are:

  • Entry-Level: Common names for this role are Analyst, Associate, and Assistant IR Manager; you normally need 2-3 years of experience in another field of finance to win this role.
  • Mid-Level: Common names include Manager, Senior Manager, Director, and Senior Director (all at slightly different seniority levels). You might enter this level once you have 5-6 years of total experience (so, 2-3 before IR and 2-3 at the IR entry-level).
  • Senior-Level: The most common title is “Head of Investor Relations,” but at some companies, it might also be the VP or SVP of Investor Relations. Smaller firms might even make the CFO the Head of IR. You normally need 10+ years of experience within IR to reach this level (so, 10-15 years total).

To advance, you need to make the executives happy with your performance and build good relationships with institutional investors.

As with advancement at all large companies, the key challenge is getting “credit” for your accomplishments, as the environment is bureaucratic and highly political.

Investor Relations Salaries, Bonuses, and Equity Compensation

If you work in investor relations at a normal company, your compensation will consist of a base salary, cash bonus, and equity.

Base salary ranges change based on your level, and the cash bonus and equity both tend to be percentages of base salary from ~10% up to ~40%+ depending on your level.

According to compensation surveys as of 2021, IR base salaries and bonus/equity percentages tend to be the following at large companies in the U.S.:

  • Entry-Level (Analyst/Associate): $100 – $150K USD base salary; bonus and equity might each be around 10-15% of base.
  • Mid-Level (Manager/Director): $150 – $250K USD base salary; bonus and equity might each be around 20-30% of base.
  • Senior-Level (Head of IR): $250 – $350K USD base salary; bonus and equity might each be around 25-35% of base.

These numbers, plus a bit of rounding, imply the following total compensation ranges:

  • Entry-Level (Analyst/Associate): $120 – $200K USD
  • Mid-Level (Manager/Director): $200 – $400K USD
  • Senior-Level (Head of IR): $400 – $600K USD

Compensation reports confirm that median pay at the top level is around $500K at large companies.

At smaller firms, expect lower base salaries, lower cash bonus percentages, and higher equity percentages.

There’s limited data on IR compensation in other countries, but expect a discount in Europe and Asia, just like IB compensation is also discounted.

If you’re working in IR at a private equity firm or hedge fund, total compensation might be higher than the numbers quoted above because:

  1. Base salaries are often similar, but the bonus percentage could be substantially higher.
  2. Senior staff like the Head of IR usually get carried interest, which could add up to a significant amount if they stay for the long term.

So, it is possible to earn above the ~$500K level quoted above if you’re at the top levels of IR at an investment firm.

You’re not going to earn what the Partners do (i.e., potentially several million+ per year), but you will be very well-compensated.

Lifestyle and Hours in the Investor Relations Career

At normal companies, the average workweek in IR is around 40-50 hours.

However, if there’s a disaster or a big announcement or something else that panics investors, you could find yourself answering emails and taking calls late into the night and on weekends.

This scenario is much less common than in investment banking, but it does happen sometimes.

At private equity firms and hedge funds, the hours could be significantly worse – closer to the hours of investing roles – because IR and fundraising are critical to operations.

If an investment firm can’t raise capital, it has to shut down; it’s not like a public company that can operate indefinitely via its positive cash flows.

Expect a higher volume of calls and emails, more travel, and the expectation that you’ll also generate leads for potential new LPs.

Recruiting: Who Gets Into Investor Relations?

Most firms do not recruit candidates right out of university for IR roles.

You normally need a few years of experience in another field of finance, such as IB, ER, CF, or fundraising, to do the job effectively.

Some professionals in sell-side equity research and investment banking move into IR because they like accounting, finance, and investing but want a better lifestyle and prefer numbers + communication to the numbers alone.

Others join from private placement agent roles, fundraising roles at PE firms and hedge funds, and potentially even funds of funds.

Interviews tend to be qualitative because the role is all about communicating and selling your company’s vision to investors.

You might go through a few rounds of interviews, speaking with successively more senior staff, and typical interview questions could include the following:

What are the toughest investor questions you’ve received in your previous roles, and how did you answer them?

How much experience do you have with financial statement analysis? What are the top 3-5 items you would look for?

Can you work under pressure with tight deadlines? When have you done it before?

If our company made a mistake in its financial statements and had to restate earnings, how would you communicate it to investors?

Imagine that our company announces a large acquisition and plans an investor call. What information would you request so that you could answer questions about it effectively?

Suppose that you need to write a press release to explain why our company just missed its earnings target for the quarter. How would you explain it?

You may get some technical questions about valuation and the financial statements, but they won’t be to the same depth as IB interview questions.

Exit Opportunities from the Investor Relations Career

Investor relations is not ideal for winning exit opportunities because you don’t develop the deal or investing skill sets required by most of these jobs.

If you start working in investor relations, your main advancement and exit options are:

  • Stay in the role and climb the ladder. But you’ll probably need some other experience, such as Audit or FP&A or Treasury, to get on the CFO track.
  • Switch to IR at a different company.
  • Move to the corporate finance or corporate strategy team at your company.
  • Move to an IR/fundraising role at a private equity firm, hedge fund, or independent placement agent.

And… that’s it.

It is extremely unlikely that you’ll win a deal-based role such as investment banking, corporate development, or private equity if you’ve worked in IR and have no other experience.

Even something like a hedge fund analyst role at a long/short equity fund is normally out of reach because bankers and ER professionals are better qualified.

The Investor Relations Career: Final Thoughts

For the right person, an investor relations career can be a good exit from IB/ER, but it’s not the best entry point into finance.

It doesn’t give you many direct exit opportunities, and it’s often a “jack of all trades” role.

That may sound nice in theory, but in practice, it means that you get blamed when things go wrong but may not receive credit when they go right.

The best part of the IR job is getting broad exposure to the C-level executives and other divisions at the company, such as marketing, sales, and product.

The worst part is that the job can become quite repetitive because you’re working based on monthly, quarterly, and annual cycles, similar to corporate finance; the reduced exit opportunities are a big downside as well.

On the other hand, it’s still a career where you could earn into the mid-six-figures while working 40-50 hours per week.

So, if you’re a banker or research professional who likes communicating more than crunching numbers, and you want a better lifestyle, investor relations might be your ideal exit opportunity.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Avatar
    Shivam Sarswati

    Hello,
    At present, I’m working as Investor Relations Associate. Alos preparing for CFA exmas.
    I need to know if I could get into investment banking providing I am willing to do whatever is needed in terms of skills, career, competencies etc.

    Please answer.
    This is very important for me to know as I’am willing and interested to become an Invesmtent Banker and I am willing to put my life into this. It is only because I am genuinely interested to become an investment Banker.

    1. I think it will be very difficult to move from an IR associate role directly into IB without doing something like a top MBA first. If you’ve only been there a year or less, maybe you can transfer to something like corporate banking or Big 4 valuation, etc., and get in, but very few people move directly from IR into IB.

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