Investor relations professionals evolve to satisfy savvier investors

Singapore

IN A new age of information and accountability, investor relations (IR) departments are adapting to a new challenge: financially savvy retail investors who know what they want and are making their voices heard.

Tasked with ensuring clear communication between the company and the rest of the financial community, IR professionals normally deal more with buy and sell side analysts and the big institutional investors. Queries from retail investors would only trickle in mainly around earnings period, particularly if the stock had done badly.

But things may be changing. IR professionals have told BT that there is a rise in small shareholders writing in or calling year-round to ask about every thing from specific charts in financial reports to topical issues such as the impact of the US-China trade war on the stock. Their questions at annual general meetings (AGMs) have also become more intelligent and probing.

"The shareholders come prepared with questions on the performance of the companies, strategies going forward and roles of independent directors who are supposed to look after their interests," said Alan Lee, managing partner of IR firm August Consulting.

Financial education programmes and other information online are empowering retail investors to ask better and sharper questions - and companies have to supply the right information in return, said Keith Chu, senior vice-president of corporate marketing and investor relations at Boustead Singapore.

Investors can look up historical information about the infrastructure engineering company on its Investor Centre webpage. The IR team prepares for more detailed enquiries by keeping updated on the wider industry and global economic, political, environmental and social landscapes.

Boustead is also engaging non-traditional research teams such as those at retail investor portals Seeking Alpha and Motley Fool as well as embracing new methods of conveying information. For instance, Mr Chu recently appeared in a Facebook live interview with Value Investing Asia.

At Manulife US Real Estate Investment Management, an in-house client service centre has been set up to handle retail investors' queries. Retail investor days are held in the evenings so the working crowd is able to attend.

Manulife's head of investor relations Caroline Fong invites analysts to share insights on the US and Singapore real estate sectors, adding to investors' understanding of the industry.

Since the firm's assets are mostly in the US, it also provides individual videos of its properties to help shareholders visualise and understand their quality and locality - a service that Ms Fong believes is unique to Manulife.

Wealth management firm iFast Corporation throws open its investor events not only to all investors, but also to non-shareholders. Its chief executive Lim Chung Chun, a former investment analyst and an active investor himself, says these sessions allow him to address difficult questions head-on from all parties, including users of iFast's online platform - and not just analysts or large shareholders.

"If you want their long-term support through good and bad times, then you need to make sure that by your actions over the years, you are always trying your best to be fair to all stakeholders," said Mr Lim.

"This means proper communication of the vision and direction, and proper sessions where you can take any questions that they throw at you and take them with a very positive attitude."

The vice-president of Singapore Post's investor relations Jason Lim noted that honesty is the best policy, even when delivering bad news to shareholders.

"Being forthright and avoiding positive spin may result in a short-term impact to the share price, but you will build credibility and develop the long-term trust and confidence of investors and analysts," he said.

"When the turnaround plans start delivering results, investors will recognise this and the market will reward you for it."

Clients of August Consulting undergo thorough Q&A sessions with the agency before AGMs to prepare them for the range of questions to expect.

"I remember one AGM recently where the chairman was told off when he was seen as disinterested in the AGM proceedings and giving motherhood statements to questions asked by the shareholders," said Mr Lee.

"Gone are the days when the chairman or directors can just try to patronise shareholders during the AGMs. Retail investors do not get many opportunities to query the board, so we want to make sure that the directors have the necessary information on hand to readily address shareholders' questions."

Harold Woo, president of Investor Relations Professionals Association of Singapore (IRPAS), said that as regulations and trends evolve in the IR field, IR officers need to constantly update their skills. To help them acquire the multi-disciplinary skills demanded by their jobs, IRPAS offers the International Certificate in Investor Relations, and hopes that the Monetary Authority of Singapore will officially recognise IR as a profession in the financial services sector so more IR officers will be motivated to take up the course.

External IR agencies have to stay updated on the various industries their clients operate in, since things can change rapidly thanks to disruption, said Gerald Woon, director of IR firm Cogent Communications.

"Theoretically speaking, you can say you know all about a certain industry, but even if you do, it's for a particular period of time unless you follow developments in that industry," he said. "You may know the transport industry well, but Uber or Grab appear out of nowhere and then disappear. Trends or disruptions always come up, and we have to adapt."

By establishing stronger relationships with retail investors, companies can create a database of shareholders to share information with and to mine for feedback on company announcements and ideas of what external information is affecting share prices, Mr Woon said.

"If you've seen the share price suddenly drop for example, you can ask them if they've heard anything in the market. They may know of rumours going around which need to be corrected, and direct you to some obscure online forum or some WhatsApp message you haven't seen."

Also, while retail investors may not have much influence individually, their collective support can be crucial when larger shareholders are sidelined.

"If you put forward something where the main shareholder is an interested party and can't vote at the shareholder meeting, you'd want to know that you have a base of loyal shareholders who will support it," Mr Woon noted.

Establishing this level of trust between shareholders and the company is the foundation of the IR professional's job, even as technology and other tools change how the work is done, said Emily Choo, CEO of IR agency Gem Comm.

"IR is about relationship building," she said. "Just like technology is not going to replace a boyfriend or husband, it will not replace this fundamental part of IR. IR needs people who can be engaging and build confidence in every one of the shareholders."