For Wealth Managers, It’s Time to Understand “Investor Relations 3.0”

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The world of social media, new digital channels and pressure on traditional sell-side broker research are changing the discipline of “investor relations”. We’re talking to a company on the front lines of this space.

Fund managers and individual investors trying to understand the kind of information companies release about themselves have a new term to conjure up: Investor Relations 3.0.

The term, which refers to how companies describe what they do, their profits, their strategy and their capital needs, is in a third stage. In the first iteration, it involved publishing company statements and presentation materials; IR 2.0 was an evolution, focusing more on targeting specific investors.

And now IR 3.0 takes a holistic approach to IR and brings together networks of institutional and non-institutional investors, making the best use of content, not just search content, and using multiple channels and routes such as Linkedin, Google, Twitter and others through the clever use of digital marketing techniques.

That’s the view of Patrick Yau, managing director of investor relations at Edison Group, an investor research and advisory firm.

“Investors typically need seven or eight points of contact with a company before making a decision to buy that company’s stock. Through IR 3.0, we’re using a mix of content and media to connect in smarter, more differentiated ways to accelerate that path to purchase,” Yau told this news service in a recent interview. “It’s an evolution of what we’ve seen in consumer marketing, for example.”

In recent years, regulations such as the European Union’s MiFID II directive have reduced traditional sell-side research and forced companies in need of capital to think about different ways to get their message across. Investors looking for company studies have also had to change the way they operate. One of the features of MiFID II was the requirement for firms to unbundle research payments and make costs more transparent, with the aim of improving value for money for investors. The net effect of this has been to make companies think twice about old ways of buying from search, and sell-side bids have declined, according to reports.

Companies like Edison aim to fill the void and take research to another level.

Edison has partnerships with exchanges around the world such as Deutsche Boerse, the Tel Aviv Stock Exchange, the New Zealand Stock Exchange and the OTC in the United States. It covers 450 stocks and its blue chip client list includes HSBC, Newmont Corp. (the largest producer of gold in the world), Manchester United, YouGov, Severfield and Britvic.

Edison focuses on the publicly traded sector rather than private companies.

Transmitters pay for the data — it’s Edison’s revenue model that avoids bias and conflicts of interest, he said. “We don’t take trading commissions or transaction fees, so we have a very clear relationship with our client; we work entirely in their best interests. Our extensive experience in capital markets and investor relations across the business means we can offer the best advice – and support that advice with a full range of capabilities, such as content, media and broad access to investors,” Yau said.

“There’s a big demand there,” he said.

Yau believes that modern digital technology should be embraced more fully to manage research and investor relations objectives.

Brokers, research firms and IR specialists must step up their use of technology, tools and web-based platforms to ensure companies can continue to access the capital they need for growth, Yau said. .

 

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