Member Exclusive: The intersection of communications and investor relations

What communicators need to know for better collaboration.

By Allison Carter, editor-in-chief of PR Daily. 

Think of investor relations as communications’ nerdier cousin. Combine all the storytelling that underpins the general field of communications and layer on a rock-solid understanding of business and numbers and you’ve got IR.

The fields are usually separate, but the two can work magic when they team up. And in a world where the financial news cycle is often driven by crisis-level events like meme stocks and activist investors rather than just down quarters, it’s becoming increasingly important for communications and IR to work more closely together than ever before.

“It's always been important, but especially today, given how quickly … companies have to be prepared to address both the realities and the rumors that are happening in news cycles in real time,” said Ted Birkhahn, managing director at Vested, a financial marketing and communications company.

This is how you can improve your connections with the IR team to enhance your overall storytelling and communications practice.

The expansion of investor relations

Investor relations isn’t just x’s and o’s. Traditionally, IR has been about communicating with financial analysts about stock performance and related issues. But recently, the field has evolved.

“A lot of people have broadened out that definition and when they talk about investor relations they’re really talking also about communicating with the financial media,” Birkhan said. “And this is where the intersection of traditional PR and IR really come into play, because so much of what you do in traditional PR obviously has a huge focus on earned media.”

IR has shifted more to include the financial media because analysts aren’t just getting their information directly from the company via earnings reports. They’re also consuming analysis and data from news sources. So, influencing those sources and generating positive earned media can in turn influence analysts and bring the entire process full circle.

The skills communicators need to interface with IR

When asked what communicators need to do to build stronger relations with the IR department, Birkhahn doesn’t hesitate.

“First and foremost, they have to understand the business of the company,” he said. That means understanding how the business makes money, the challenges and opportunities, why leadership makes certain decisions, and the overall strategy of the company.

“Having that understanding puts you on a level playing field,” Birkhahn said. “That enables you to have really in-depth, productive discussions so that you can not only understand their needs, but also contribute to their job as well, like by being able to help them with the storytelling aspect.”

Absent that understanding, it will be difficult to build a meaningful relationship with these colleagues.

The importance of financial communications outside IR

That financial literacy can serve communicators well when reaching other audiences as well.

“Eventually, every company is going to have a bad quarter.” Birkhahn said. “So, when you do, you can explain why, and, again, tie back to the story. It ties back to the strategy that you've been talking about all along. This is about building awareness and getting adoption from the analyst audience over time. And that's why storytelling so critical.”

By working together, communicators – especially those in external communications –  and investor relations professionals have a unique opportunity to shape the view of the company from all angles, strengthening reputation among both the financial and general media and creating true impact to the bottom line.

Again, Birkhahn said it all comes back to a firm grounding in business fundamentals to establish trust.

“You have to go out and earn that and do it on your own,” he added. “And if you do that, you have that knowledge, that understanding of how to read that balance sheet, understanding the quarterly numbers, you are going to be able to build that bridge and that relationship with the CFO, the IR department, much, much easier than you would if you say, ‘that’s separate from communications.’”