Lessons from the Rise of Retail Investors: How IR Can Better Engage Institutional Investors

The challenges of retail investor engagement

Successfully reaching retail investors posed challenges to investor relations professionals, as “check the box” activities – hosting an earnings call, publishing an earning press release and uploading a PDF presentation – were not compelling motivators for this more varied audience.

Instead, IR professionals found themselves contending with:

• A spectrum of understanding among retail investors about financial markets, industries and specific companies, meant existing messaging may not resonate with a wide audience
• An audience not driven by models, meaning that financial performance needed to be simplified and contextualized
• An audience seeking guidance from a multitude of varied, and sometimes uncredited, information sources, including forums, podcasts, television and social media
• New trading platforms diversifying where and how individual investors buy, sell and hold shares
• Louder voices engaging directly with leadership and other investors

To overcome these challenges, IR teams have deployed new tools – from analytics to advertising – to reach this disparate audience where they are and with messages that will resonate. Many of these tactics should be applied to institutional outreach to enhance relationships with new and existing investors.

An opportunity to improve IR

The crux of retail investor engagement is the joining of financial communications and storytelling. And, this should not be limited to retail investors – these tactics present new opportunities to reach institutional investors, too.

Although the spectrum for institutional investors is more narrow, some asymmetries in investor understanding and objectives occur. Also, like retail investors, institutional investors are similarly taking in a varied media diet – and content targeted to them should follow suit.

Overall, the addition of color and context to financial communications, and disseminating that content across new mediums, will advance shareholder confidence for both types of investors.

Strategies for IR teams: 

Leveraging digital analytics for “real world” data  

• Analyzing publicly available digital media, such as blogs, social media and online news outlets, allows IR professionals to understand the conversation drivers influencing the perception of their company in the “real world”. This can uncover themes and topics being actively discussed, the velocity of conversation around the company and its peers and who is shaping perceptions.
• Couple that with the “lab setting” approach of primary research perception studies and an informed platform for message development, content strategy and touchpoints to shape unique financial narratives.

(Visual) storytelling is key 

• Everyone consumes content differently and there should be an emphasis on pleasing both the data-seekers and the visual learners. Visual storytelling, through digestible infographics, gifs/videos, interactive tools and charts help distill complex information and drill down on the “how”, the “why” and the “so what”.

Creating new and innovative touchpoints  

• Media consumption habits have evolved drastically in the past decade – and financial communications should mirror those trends. Content must be featured on relevant and oftentimes underused channels to encourage understanding, engagement and future investment in the company.
• By expanding touchpoints across earned media, social media, web pages, digital advertising, and other digital mediums, companies can leverage optimization technology to enhance targeting and increase touchpoint frequency to reinforce positive messaging on financial performance and company strategy.

Breaking away from point-in-time communications  

• Historically, “financial communications” includes company earnings, annual shareholder meetings or other event-driven opportunities to reach investors. While these traditional formats will remain prioritized, a steady drumbeat of financial communications across the year – through executive interviews, corporate announcements and investor-focused events – will keep your company top-of-mind and demonstrate transparency.

Alignment across communications to reinforce messaging 

• Well known to industry professionals, yet perhaps unbeknownst to outsiders, financial, executive, employee and company communications are typically handled by different parts of the communications team. Presenting a united voice is critical. Financial content, even when drastically varying in substance, needs to emulate a unified brand tone.

We have seen these principles help clients successfully reach retail investor audiences and pay dividends for public companies in reaching new and existing institutional holders.