OPINION: News Analysis - Can IR Davids beat the financial PR Goliaths?/Investor relations agencies are battling for clients against financial PR agencies, pitting highly specialised knowledge against City heavy-hitters

The winding up of investor relations firm Frew Macmaster has put into sharper relief the question of whether specialist investor relations boutiques are a viable business proposition, particularly as the top financial PR agencies are now making a concerted push to seize a share of the market.

The winding up of investor relations firm Frew Macmaster has put

into sharper relief the question of whether specialist investor

relations boutiques are a viable business proposition, particularly as

the top financial PR agencies are now making a concerted push to seize a

share of the market.

According to founder Anita Frew, Frew Macmaster was wound up because

when she quit to return to university, none of the directors wanted to

inherit the company. Other observers say Frew Macmaster’s parent Abbott

Mead Vickers did not give the company the resources to attract the staff

it needed to survive the departure of its founders.

Peter Mead, chairman of the agency’s parent group Abbott Mead Vickers

BBDO, refutes the argument he didn’t give Frew Macmaster enough backing

and says the business was wound up because IR is no longer a core

business for AMV. He says: ’Without Anita, there wasn’t a business

proposition that we found attractive.’

The evidence from the two firms which dominate the IR sector, Makinson

Cowell and Thomson Financial Investor Relations, is that it is a growing


Since its launch in 1989, Makinson Cowell’s client list has grown to

more than 30, and it now employs 45 people.

Thomson Financial, which employs 350 worldwide with 40 based in London,

has grown particularly fast in the last 18 months with the acquisition

in March 1998 of Technimetrics - an information provision company aimed

at the investor relations community - and in the autumn of last year the

purchase of US-based Georgeson Inc’s investor relations division.

There is no doubt that the need for and value of IR is increasingly

being recognised by the UK’s top companies. Headhunters report a rise in

the number of IR posts they are being asked to fill within companies.

And salaries are rising accordingly. Research issued by the Investor

Relations Society last year shows that the average in-house IR salary

rose 23 per cent in three years to pounds 76,000.

The market for advice seems to be there, but who is best placed to

provide it, the financial PR boutique or the IR specialist? One of the

big differences between IR specialist firms and PR agencies is the

extent to which the respective companies invest in research and


The resource doesn’t come cheap. Around a third of Makinson Cowell’s

staff are devoted to analysing the relationship between a company and

its institutional shareholders, its performance relative to its peers

around the world, and global ownership patterns.

IR firms, rather predictably, are keen to claim that financial PR

companies do not invest to the same extent. ’IR is based on in-depth

research and analysis whereas that is not the case for a PR house,’ says

one observer.

Moreover, all the partners at Makinson and Cowell are ex-brokers or

investment bankers. Although financial PR agencies like Brunswick and

Financial Dynamics do recruit people with banking experience, they can

by no means claim that all their senior staff are from the sector.

For Thomson director Steffan Williams, the difference between an IR firm

and PR agency is the specialist knowledge. ’What you tend to find is

that the majority of people in financial PR tend to be generalists and

they claim specialisation, but we have teams that do nothing but their


Charles Watson, UK MD of Financial Dynamics, which has been offering IR

for 18 months, says his agency’s expansion into the field is entirely

client driven and a natural progression of moving on from dealing with

the press, then analysts and now fund managers. Around 30 per cent of

FD’s clients use its IR service. Brunswick also began offering IR around

18 months ago and now has 10 per cent of its staff focusing on this


One reason often cited for why PR agencies have shied away from offering

IR is that they do not want to step on the toes of the investment


PR agencies often offer analyst relations but some won’t talk to

institutional shareholders, because talking to the latter group has

traditionally been the preserve of the investment banks. As most UK

financial PR firms get their referrals for core business from investment

banks, they are a little reticent to bite the hand that feeds them.

At the same time PR agencies like Citigate Dewe Rogerson (CDR) claim

that there are increasing opportunities to advise clients on

communicating with investors on the Continent, or to advise companies

wanting to talk to UK investors. CDR’s international network leaves it

ideally placed to do this, and such communication does not bring the

agency into conflict with investment banks, whose communication channels

with Europe are not as established as they are within the UK.

One of the enigmas of IR is that while Makinson Cowell and other

specialists are achieving growth there are still a small number of such


According to one IR agency source, the explanation is simple. IR firms

recruit people from the banking sector, but, while journalists can often

make more money by entering the consultancy sector, bankers can earn

higher salaries by staying in banking.

But with the growing number of in-house IR roles, specialist boutiques

may yet find the recruitment pool they need to establish their dominance

of the sector.

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