Echoing market changes of recent years, Alexandra Hockenhull describes her personal City evolution from fund management to becoming an IRO.
First-hand market experience in the City can certainly help kick-start your IR career. It is by no means essential; many successful IROs today have entered the profession as a first career, and it is a marker of the coming of age of the profession that this is the case. However, it does help you be effective more quickly.
For starters you will already be fluent in ‘City speak’. You know City audiences well, who you want to talk to (half the targeting job done) and have many personal relationships already; what information they want (cut to the chase quickly – fund managers are busy people); and how to engage with them (making most effective use of your efforts and their time allocation). In turn all this will project credibility and enable you to engage meaningfully and quickly with this demanding audience.
However the move from one side of the roadshow meeting room table to the other might not be as simple as it seems. There is a limit to how far under a company’s cultural and operational skin you can explore via periodic meetings. Site visits and capital market days are helpful; but these showcase events only scratch the surface.
In my early career as a fund manager, I had the great good fortune to work with a director who had run a family business prior to selling up and becoming a fund manager in the City. I kept noticing that, when meeting company management, after I had run through all the usual ‘plain vanilla’ questions, he would follow up with just a couple of ‘outside the box’ questions that really got to the heart of what would make that company succeed – or risks that would make it fail.
Learning about the business
And as the years rolled on, I became increasingly frustrated and uncomfortable sitting opposite CEOs and CFOs – hugely experienced businessmen – opining on what I thought about their business performance. What did I really know about what makes a business tick?
Realising the answer was “very little”motivated me to make the move from fund management into plc-land. And my instincts were right. Working in a plc encompasses a whole world beyond the spectrum of things fund managers and analysts can look at. My first year (at Delta plc, the engineering company) was a real eye-opener. I learned a huge amount – and enjoyed the learning curve immensely. I remember thinking after about a year “… and I get paid!”
I know I was definitely hired in part because of my fund management background. Even in those very early days of IR, Delta’s enlightened CEO could see that a City person would provide an ideal bridge between the two worlds. The steady stream of City people moving successfully to in-house IR roles over the years shows this formula works well.
Moving from a City role into an IRO role can look deceptively straightforward. You have extensive and relevant experience and have had lots of interaction with CEOs, CFOs and IROs.
This makes it easy to underestimate what it will take to adapt and extend this prior experience in an environment that is operationally and culturally quite different. As IRO you are no longer a consumer but a provider of first-hand corporate intelligence. The role will carry a portfolio of responsibilities that are completely new.
As Louise Turner-Smith, formerly special situations analyst at Allianz Global Investors, and now head of IR at Kier Group plc, puts it: “Having been a user of many different IR outputs confers advantage as one knows what good looks like. Producing it is entirely another matter and requires one to ramp up communication, time management and diplomacy skills rapidly.”
More demanding roles for IROs
I was an early entrant into the then new pure IR profession in the UK at a time when, to most people, ‘IR’ still meant industrial relations. There was very little experience about and no senior practitioners to consult. NIRI in the US were very helpful; but we were developing the rules and best practice for our UK IR model for the first time.
The good news today is that help is at hand. The IR Society works hard to provide events and training for IROs of all levels and there is now a bank of senior experience that simply didn’t exist even 15 years ago.
At the sharp end of placing IROs, Andrew Lowe, principal at leadership consulting firm Korn Ferry has found that: “Companies are demanding more from IR leaders, not just financial acumen, but also deeper technical skills, greater strategic input and broader experience. An increasing number of IR leaders have risen from financial services areas, including equity research. With the right induction and support to develop their corporate and wider IR role skills, ex-financial services candidates can do very well.”
I have never looked back for one moment since making the transition from fund management to IR. It is a truly privileged role, working alongside the board (with many of us now sitting on executive boards), with unfettered access to the business and management. Many senior IROs have deservedly earned the status of ‘trusted adviser’ to the directors.
So, if you are thinking of making the move, you will be making a career decision that I personally found extremely rewarding.
To avoid surprises, and help you get off to the best possible start, find out about the new plc environment into which you will be moving, and what exactly the IR role will encompass. What areas of expertise will you be expected to know about and how should you work with your new colleagues? Don’t assume that what you know about the company from your contact so far is the full story!
On the other hand, as an ex-City hand, you will be able to impress your CEO and CFO from day one by guiding them swiftly through the City back street short cuts – and the best coffee shops en route – during roadshow!
Alexandra Hockenhull, who offers coaching and mentoring services to directors and IROs, was one of the first entrants into the full-time IR profession in the UK. She was also one of the first IR Society fellows created (1997), a director for over 10 years, latterly as deputy chairman, and chairman of a number of the committees.
Alexandra Hockenhull is founder and managing director of Hockenhull Investor Relations, the IR professional development consultancy.
Published: 4 April, 2017