The Changing of the Guard in IR Part Two: Companies Turning to Wall Street for Top Talent

Sep 2016

This is the second installment of the three-part series: The Changing of the Guard in IR?

For those of us who’ve made careers in the investor relations business, the signs of change are unmistakable. One of the biggest is the rise of talented executives who have made careers on Wall Street or elsewhere in finance taking on lead IR roles within companies (and also as consultants). In our last post, we looked at how maturing companies are beginning to demand more from the IR position. Today we focus on the new entrants to the field who are stepping up to meet that demand.

In our travels we see CFOs (as well as CEOs) increasingly looking to recruit IROs who aren’t just good managers but also bring strategic thinking to the table, as well as the profile to function as senior executives who command the respect of the C-suite, the board and Wall Street. So where does a CFO find the right fit? There are great career IROs (if you can pry them away) and astute finance professionals ready to take on the role as a rotational opportunity or a tack-on of responsibilities. But more and more often, companies are finding their answer on Wall Street.

The growing Wall Street pipeline.

The investment community has always been a breeding ground for IR pros, but traditionally the typical profile was the younger professional making an early career pivot after becoming disillusioned with the “glamor” of Wall Street, long hours and an even longer climb up the ladder. That typical profile is now changing:  seasoned investment pros from the sell-side, buy-side and even banking increasingly see IR as a strategic career move.

Joe Pollaro left a senior banking job at JP Morgan in 2014 to lead IR for Internet software platform Ltd., a company he helped take public. “I’ve certainly seen a handful of colleagues who have made the move [in the past], but I’ve seen increased interest recently as more people reach out and talk to me about it.” Pollaro adds that he sees the trend as part of a broader move of bankers from a post-recession Wall Street to corporate roles including strategy and finance as well as IR. “I have seen more of that in the past three to four years than the previous five to six when I was in banking,” observes Pollaro.

Wall Street is smaller today, particularly on the sell-side as research became more of a cost center beginning in the 2000s, and as brokerages have continued to consolidate. The economics have changed for the analysts themselves too, making IR a more attractive option. Stefan Anninger, Group VP of Investor Relations at broadband provider Charter Communications, Inc., a former ranked analyst for Credit-Suisse covering the cable industry, noted, “In my own world, I’ve seen four of my close colleagues at my former firm move into IR roles. While interesting and exciting, being a sell side analyst today has its challenges. For many, the pay isn’t as good as it once was, and the resources needed to do deep and meaningful analysis are declining. There used to be a stigma that IR was a step down in prestige for sell-side guys, and while there is still some reality to that for some, things have changed.”

A natural fit?

Pollaro, Anninger and others we’ve spoken to believe the jump is a natural both for the ex-Wall Streeters themselves and the executives considering hiring them. A banker or analyst’s practiced ability to tell (and sell) a story, their deep industry knowledge and their investment community relationships all smooth the transition. They also often bring immediate prestige and credibility in the eyes of a CFO who perhaps has worked with them closely in their Wall Street role, believing their Street status will be seen by investors as a reinforcement of the company’s commitment to serving shareholders.

Despite these obvious benefits, others who have spent their careers in IR are often quick to note that the job is not as easy as ex-Wall Streeters might think. They point out that the role is highly specialized, nuanced and multi-disciplined; in other words, much more than just being able to build a financial model and knowing who’s who on the Street. That’s all true, but it’s missing the larger point. Companies are demonstrating that they’re willing to hire based on talent, adjacent experience and future executive potential, figuring the right candidate can learn the nuances. Ask any CEO what’s her biggest challenge, and she’ll usually answer, “finding and retaining top talent.” This truism increasingly applies to IR as well.

The migration of Wall Streeters to corporate roles including IR is a clear sign that the look of the IR profession is changing rapidly. Change creates opportunity, but as always with opportunity comes challenges and decisions. In our third and last post on this topic, we’ll offer some practical advice for companies as they evaluate the options for staffing the lead IR role.

Originally Published on LinkedIn