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Why effective investor relations are crucial
Put simply, the investor relations (IR) department is “a division of a business whose job it is to provide investors with an accurate account of company affairs”[1] . The reality, however, is much more nuanced. When done well, investor relations is an integral part of any investment firm, helping to build the necessary trust and providing the required transparency for investors to commit their capital to fund managers.
However, the function of investor relations has changed dramatically over the last decade. New technologies have radically changed both the means of available communication and also the high expectations of a wider than ever pool of investors who are rapidly changing the way IR across the globe is operated.
The changing landscape of investor expectations
It is well documented that there is now a new generation of investors flocking to alternative investments. This is partly due to the lowering of barriers on entry to private markets but also how new generations hold sceptical view of traditional methods (i.e. public markets) to consistently generate attractive returns. A recent survey from the Bank of America found that Millennials and Gen Z are three times more likely to invest in the alternative markets than older generations [2].
This represents an exciting new opportunity and at the same time a tricky dilemma for IR professionals. While new entrants into the private markets will be welcomed amongst the backdrop of a challenging fundraising environment, these digital-first, tech-savvy investors have high expectations when it comes to communication. They will demand instantaneous access to accurate, up-to-date information. This has to be not only fully transparent but personally tailored to their specific requirements as an investor.
Above all, they expect the digital platforms they use to offer a seamless user experience while ensuring the highest levels of security. Investors now crave real-time dashboards holding all the relevant information tailored towards their profiles. When done well, this not only helps to improve levels of investor engagement but should reduce the amount of one-off investor enquiries, thus easing the workload of IR professionals.
If firms fail to adapt and provide access to these innovative investor portals, investor confidence will suffer and their investor base (also known as Limited Partners, LPs) could shrink as a result.
Challenges in maintaining strong and long-lasting IR
The key to good investor relations is providing timely, consistent and relevant information. This is easier said than done. The plethora of communications methods available today can often lead to fragmented communications causing misalignment and frustration. The requirement to be 100% transparent and provide all requested data involves sharing huge amounts of sensitive information. Without modern technology solutions, it can overwhelm investment teams and investors alike. This is particularly challenging for midmarket or small firms without extensive IR teams to manually work through these traditionally time-consuming tasks [3].
Then there’s the conundrum of responding to the ever-changing regulatory requirements. Fund managers often have to navigate across complex, multi-jurisdictional marketplaces where regulation can differ greatly. To emphasise this point, a recent survey found that 41% of fund managers in Europe believe keeping up with the complex demands of regulatory requirements is seen as the “greatest threat” to their overall operations [4]. From Know Your Customer (KYC) onboarding to ensuring you are Anti-Money Laundering (AML) compliant; there’s a myriad of regulatory requirements for today’s fund managers.
The role of personalization in IR
While new technology allows for instantaneous and automated communication, it should not be used as a copy and paste tool. Today’s investors expect the information provided to be tailored to their specific investing needs.
An obvious point worth repeating; different investors have different requirements. What a sole High Net Worth investor will need in terms of general communication, compliance requirements and reporting metrics will be inherently different to more traditional institutional investors. As a prominent IR professional told Private Equity International recently,
“we now have many different types of LPs with different needs, so we need to be able to provide information that is relevant to each investor [5].“
This is exactly why managers need to use effective IR software which takes into account the different profiles of all investors subscribed in their fund. While information produced will be automated and offer on-demand communications, it has to be tailored for each specific investor. Good technology platforms can scale personalisation, providing as much or as little information as each investor requires.
Digital tools that revolutionize Investor Relations
In the last 5 years we have seen a remarkable uptake in the private markets industry to utilize new digital solutions aimed at streamlining operations. An array of smart solutions are now at fund managers’ and investors’ fingertips. Even e-signatures which seem run of the mill now have transformed the IR industry. This has led to the creation of more practical solutions like smart forms and push notifications; all saving IR professionals precious time and expense.
Innovative platforms are playing a crucial role in the super competitive fundraising ecosystem, serving as secure portals to allow investors access to real-time data, reports and general communications in a way which was unimaginable 10 years ago. These platforms now streamline and enhance meaningful communications with potential investors, from screening prospective investors to onboarding and capital calls, this has the potential of taking months (if not years!) off fundraising processes.
Secure data rooms allow firms to automatically share sensitive documents instead of manually sharing documents in person. Smart document collection with automated reminders to fill in the correct information at the right time (such as KYC & AML forms) significantly reduce manual workloads, enabling IR teams to focus on what matters most, building strong relationships with current and prospective investors.
Future industry trends
Technology continues to improve and enhance communication tools for investors and fund managers. More platforms than ever before are providing access to advanced data analytics as well as providing in-depth research on relevant themes.
Unsurprisingly, we expect AI to play an increasingly important role on investor relations communications. According to the Nasdaq’s 5th annual IR Issuer Pulse survey, while 64% of IR professionals have not yet embedded AI into their processes and operations, they are prioritising their efforts to understand its full potential when looking at enhancing communications with investors [6]. Specific tasks where AI could play a key role to enhance IR functions are streamlining CRM information such as investor data and meeting notes, capturing and summarising complex regulatory updates, and helping IR teams to pre-empt common investor enquiries [7].
Despite the understandable focus on how AI might transform the private markets, its secure, end-to-end digital solutions that have been the real game changers over the last 5 years. These solutions have not only provided greater levels of transparency at a time when new generations of investors are demanding full disclosure but have boosted operational efficiency beyond the imagination. All of which means both investors and fund managers across the globe should strive to implement the best and safest technology available to stay ahead of the chasing pack.
Sources:
[1] Investopedia, Investor Relations (IR): Definition, Career Path, and Example, updated May 2023
[2] Bank of America, BofA Private Bank Study of Wealthy Americans Finds Generational Divide in Investing, Giving and Preserving Wealth, June 2024
[3] Buyouts, Private equity fundraising timelines hit a record 19 months in 2024, January 2025
[4] Funds Europe, Regulatory challenges are a high concern for asset managers, August 2024
[5] Private Equity International, Regulatory challenges are a high concern for asset managers, August 2024
[6] Nasdaq, 5th Annual Global IR Issuer Pulse, February 2024
[7] IR Magazine, Maximizing the potential of and mitigating risks in IR using AI, January 2025
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