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
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.