Today's market environment, coupled with ongoing regulatory reform, is serving as a catalyst for global companies to develop greater connectivity with all investors, including financial advisers and wealth managers.
Many companies — often led by their investor relations officer (IRO) — now manage more of their investor outreach themselves as the brokerage community increasingly focuses on a smaller group of institutional investor clients. This development, one of many identified by our recent
"Global Trends in Investor Relations" report, is helping to create opportunities and touchpoints for financial advisers and wealth managers with discretionary ability over stock selection to engage directly with investible companies.
This direct engagement with advisers and wealth managers can provide a valued means of two-way communication, giving the IRO engagement with advisers who can potentially introduce companies to new sources of capital, while providing advisers with the opportunity to undertake better due diligence on different industry sectors, regions and companies.
As the investor relations function continues to grow in strategic importance and the role of an IRO continues to evolve, financial advisers and wealth managers should have more opportunities to undertake direct due diligence of the global markets and the companies that operate within them through their IROs. This new dynamic may assist advisers and wealth managers in making better client portfolio decisions.
Regulatory changes — including
MiFID II in the EU — are influencing the way the brokerage community is permitted to interact with investors and global companies. This is a global trend, as IROs from companies domiciled internationally work toward creating their own avenues of outreach to the investment community. It is therefore increasingly possible and desirable for advisers and wealth managers to partner with IROs to better educate themselves, improve their knowledge of the global markets and help maximize investment opportunities. In addition, advisers and wealth managers can benefit an IRO by illustrating how the retail investor segment views its company's equity story and industry sector.
Traditionally, companies have relied on the brokerage community to direct them to which investors to meet with through
roadshows and conferences, but
BNY Mellon's latest report illustrates that companies and their IROs now increasingly manage this outreach directly themselves. The IRO acts as the bridge between the company and its shareholders, and serves to shape and define the types of investors that companies should engage and how best to develop a long-term shareholder base.
It is the shared responsibility of the industry — financial advisers, wealth managers, the brokerage community, and companies and their IROs — to explore better ways to engage, educate and influence better decision-making. Increased partnership will empower advisers and wealth managers to undertake better due diligence, while providing IROs with corresponding insight into investors' views.
Depositary receipts can provide a gateway for global companies that are interested in developing their shareholder base in the United States or in international markets outside their home market.
BNY Mellon's Depositary Receipts group dedicates considerable resources to identify areas where it can partner with companies to help them navigate critical market developments and improve connectivity to all potential investors.
Together as an industry, market participants are collaborating in new ways to create value and provide more access to information for investors.
Guy Gresham is head of the global IR advisory team in BNY Mellon's Depositary Receipts group
