Consistent, transparent investor communication can encourage ongoing evaluation and accountability, sheds light on new investment opportunities, attracts new investors and bodes well for future growth. Global financial services giant EY has gained some key insights into effective investor communication from discussions with CFOs, investors and executives as part of its Master CFO Collection of studies. Here are five EY tips on gaining investor confidence.
Know when to disclose to the market.
If a CFO is asked the same question more than three times by different investors, it is probably time to think about communicating that message to the market more broadly.
Admit when things don't go to plan.
Investors will be suspicious of a CFO whose company never seems to make a mistake. By admitting to investors when problems have occurred and explaining what actions have been taken to rectify, and learn from, the issue, finance leaders will earn the confidence of investors.
Give investors exposure to a broader group of individuals.
At most companies, the CEO and CFO handle the bulk of investor relations. But by giving investors access to a broader group, including the board and local, rapid-growth market management, companies can build greater trust and confidence among the investor community and demonstrate the quality of the company's broader management.
Articulate a "Plan B."
Both investors and CFOs hope that the strategy will prove sound. But in some cases, it may fall short of expectations. Explaining to investors what the plan would be in case of a shortfall shows openness and a willingness to consider alternative scenarios.
Avoid surprises.
This is perhaps the most important tip of all. Although investors will celebrate strategic choices that lead to sustainable growth, they will expect to be informed about key decisions. Making sudden changes in strategy without first laying the groundwork with investors is sure to cause problems.
