Global Practices

Perfecting the Art of Financial Storytelling

Beyond the Numbers



Investing, to use an analogy, is like driving forward while looking in the rear view mirror: in order to decide whether to buy, sell or hold a company’s shares, investors must make judgments about the company’s future prospects based primarily on the only data at their disposal – its past performance.

The implication for investor relations (IR) practitioners and financial communicators is clear. Far from letting their company’s numbers “speak for themselves,” CEOs, CFOs and IR officers should use the company’s past operating and financial results as proof points for their own investment narrative and as guideposts for the future.

Long-term investors, especially, find great value in having a company tell its own investment story, provided it does two things: explains, or adds color, about the company’s past performance and provides insight into its anticipated future direction.

Financial storytelling is powerful because a well-structured, narrative-driven view gives investors information about a business that cannot be gleaned by analyzing historical charts and financial statements. Even qualitative anecdotes or soft information that expresses a sense of management style, operational track record or competitive differentiation is of value to investors.

Mastering the art of financial storytelling means doing the following:

  • Maximizing Your Opportunities
    • The earnings call is your regular point of contact with investors – and yet we hear investor concerns that some earnings calls are a regurgitation of press release information and vague question and answer sessions. Earnings conference calls and Investor Days are opportunities for management to fill in the gaps that the numbers can’t tell. These communication opportunities should reiterate the strategy, even if you think investors already know it and tie the results to specific initiatives; highlight industry trends and other macro factors, including how they affected performance and the impact going forward; and provide proof points that execution is on track.
    • Few companies use visuals on their earnings calls. This is a missed opportunity to help clarify your message. In addition, clearly delineating the roles between the CEO and the CFO enables investors to have a perception of accountability. Preparing in advance so a separation of roles is evident in the question and answer session is key. If there is another member of the team whose business or success is part of your long-term story, give them a role as well.
  • Providing Qualitative Information to Round-out Required Financial Reporting
    • A company’s financial storytelling should fill the space between the lines. It starts with interpreting current period results and providing guidance, but it goes beyond that: intangible, but still important, qualitative information is conveyed in management’s tone on a conference call, its forthrightness and preparedness when answering questions and the honesty with which it addresses both shortfalls and successes. Investors’ radar is heightened for perceived deflections and “non-answers.” There is as much focus on what isn’t said as what is said on an earnings call.
  • Saying it Clearly … And Saying it Again
    • The Edelman Trust Barometer has repeatedly documented that the effective frequency of exposure to information to ensure absorption and influence behavior is five times. Individuals also need to hear the message from multiple sources – credible and often peer sources – in order to be validated.

Consequently, traditional IR channels are not enough. For example, business media can be a partner and resource in sharing newsworthy and truthful information and is a channel that is trusted, accessible and broadly available to investors. Social media and other digital tools are great for sharing stories visually, which is also critical to absorption.

Investors value non-quantitative information. The form it takes and the way it is disseminated is the art of IR that goes beyond traditional IR channels to include Investor Days, video, social media, traditional media, data visualizations, topical webcasts and annual reports.

The noise in the marketplace is louder than ever. The goal of financial storytelling is to break through the clamor, reach investors where they are looking, focus minds with short attention spans and present compelling information in a manner that will ultimately contribute to a company’s securities achieving fair valuation. This, according to NIRI, is the definition of IR.

Geoffrey Mogilner is a vice president in Edelman Financial Communications & Investor Relations.

Image by Michael Daddino.
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