What I learned Wednesday: Financial communication is misunderstood

Mention financial communication to many communication consultants and you are met with a blank look. “We’re words people” they say. While that is true, financial communication is more than just a numbers game — it combines the best parts of communication with the best of investor relations and then mixes in design and issues management. It really does tick a lot of boxes.

Let me explain:

  1. Communication — quite self-explanatory. ASX announcements, annual reports and investor presentations are all integral to the success of a listed company. The fundamentals of good communication practice (key messages, Q & As and positioning) all play a part in what investors read and how their investment decisions are influenced.
  2. Investor Relations — if you have shares in a listed company or are considering buying some, then you will have most likely experienced investor relations in practice. Investor relations is like any specialist communication discipline. It is based on understanding the audiences and creating content with their specific information needs in mind.
  3. Design — the layout of an investor presentation or the imagery in an annual report are all used for a reason and to explain a message. A company’s annual report will have a key theme and a targeted message every year. The audience and the brand are all taken into consideration when deciding what that theme will be.
  4. Issues management — from activist shareholders to short-selling attacks to profit downgrades, financial communication has its share of issues. These, combined with strict reporting rules and regulations, mean that a poor response can have catastrophic consequences and not only affect share price and shareholders’ returns, but can also undermine a company’s credibility and reputation. A great deal of time is also spent dealing with the media who report on listed companies and can shape the agenda for shareholders.

Next time you read an annual report or glance over an ASX announcement, think of the financial communication professional who has carefully considered how to explain the company’s strategy, positioning and performance, and not just the numbers.