MIFID II - Using digital to engage investors

Because companies can no longer rely on analysts and sales teams to tell their story to the investment community.

Background

MiFID II came into effect January 2018, requiring banks and brokerages to charge asset managers separately for investment research rather than bundling the fees into the cost of executing trades. More than six months later, the consequences of the Mifid II legislation have ranged from cutbacks in sell-side analyst coverage in the large banks – particularly on small and mid-cap stocks – to consolidation amongst the smaller brokerages, leading ­­­­to a decline in company coverage. As a result, companies – especially FTSE 250 companies – can no longer rely on analysts and sales teams to tell their story to the investment community.

Shifting from ‘reactive’ to ‘proactive’ investor relations

In an environment of reduced sell-side support and coverage, investor relations will need to move away from the historic model of responding to market fluctuations and investor needs as they arise. Investor relations teams need to step into the gap left by analyst coverage and become experts in their sector, able to communicate detailed knowledge and understanding credibly and effectively.

Where face-to-face meetings used to be the standard form of investor engagement, it is now more important than ever for investor relations to use digital distribution channels for company investor communications. A recent survey by Brunswick found that 90% of investors use digital to investigate a company issue. The same survey showed that nearly 70% of investors made an investment decision or recommendation based on digital media.

Today, investor relations officers must anticipate events and communicate directly with a larger investment community. They need to attract the attention of investors and analysts, manage increased levels of inbound inquiries, and develop strategic approaches to investor outreach.

How to deploy digital investor engagement

Brunswick offers a range of digital and social media services, especially designed for companies affected by Mifid II. We recognise that when it comes to digital communications, companies are at various levels of maturity. We’ve designed our approach to digital investor engagement to fit wherever your company finds itself on the digital maturity curve.

The first step is to identify where you sit on that curve. To understand that, Brunswick will conduct a complementary maturity assessment consisting of a top-line review of your current digital activities as they relate to investor engagement, to include an evaluation of website, social media activities, and search performance. (As an aside, Digital Investor Engagement can be a good way to push your sophistication forward without disrupting other digital activities that might be customer or consumer focused.)

 

Download the full note for a comprehensive look at a digital approach to investor engagement, with considerations for companies with a basic, intermediate and advanced level of digital maturity, and the concrete actions companies need to take.