Speaking figuratively

Communicating to the media and shareholders can be contradictory, but building trust is key


The current economic crisis sweeping across the globe is more than a crisis of finance; it represents a comprehensive breakdown in communications. Communication has always been an integral part of finance – in fact, it underpins all forms of monetary transaction. Even something as small as signing a cheque is an act communicating that you are in possession of sufficient funds to cover your costs. And the point of this communication is to foster trust. For instance, banks, companies and politicians alike must convince the public to place their trust in them and invest in their schemes. So, far from being merely a question of packaging, communication allows financial transactions to take place. The centrality of communications to the financial world is reflected in the fact that financial communications has grown over the past few years, with 14.9 per cent of all European communication professionals working in this sector (according to this year’s European Communication Report, published by the EACD). But what are the skills and training required of these specialists?

Skills and background

We are used to the idea that a successful corporate communicator must draw on a broad range of different skill sets in order to communicate effectively; seldom is this more applicable than in the field of financial communications. The ‘hard’ stuff – the figures, reports, statements – must be grasped, outcomes must be foreseen, and all this clearly communicated in a preferably jargon-free manner, so that even the most maths-phobic shareholder can grasp the corporate strategy.

A financial communicator can expect to work in several functions within the finance area, such as accounting and reporting, business planning, strategy and risk management. But there are more and more academic channels appearing in European universities that prepare a new generation of specialists to be able to bridge the gap between the financial experts and the investment decision makers. Graduates are encouraged to apply knowledge of business, economics and law with the appropriate argumentative and interpersonal skills, and a sophisticated approach to working with and within the media. Above all, it is the mastery of jargon and the necessity of translating this into clear communication that is at the heart of many of these new degree programmes, making up for a perceived gap in the training of many corporate communicators. Professor Eddo Rigotti, who teaches part of the MSc in Financial Communications at the University of Lugano in Switzerland, emphasises the importance of this new development: “I personally think that there is an increasing need to translate the figures and business jargon, and most of all its interpretation, into everyday language. This requires specific skills that business specialists sometimes overlook. One of the reasons why our master’s in Financial Communication was created is that some Swiss bankers personally acknowledged the need of improving the communicative and argumentative skills.”

Earlier this year, Hydro, a Fortune Global 500 supplier of aluminium and aluminium products, achieved three top listings in the annual Investor Relations Global Ranking of corporate financial reporting and investor relations performance. Stefan Solberg, Hydro’s head of Investor Relations, has an extensive background in financial analysis, giving him not only a solid understanding of financial and business models, but also the ability to deliver clear communications: “I’ve worked in several functions within the finance area such as accounting and reporting, business planning, strategy and risk management. I guess the sum of these experiences has enabled me to explain and communicate often complex financial issues in a simple way.”


The global growth of corporate business means that there is now a huge number of different publics with a vested interest in how companies perform, and financial communicators must be in constant contact and ready to engage in dialogues with all groups in order to earn and keep their trust and, by extension, their loyalty. Recent moves towards creating more transparency in corporations have meant that stakeholders (including owners and shareholders, employees, trade unions, customers, creditors and local communities, as well as government) can now find out a lot more about the firms they are connected to; and communication and PR professionals are always the first port of call.

Communication channels

Dialogues with the different audiences can be conducted through a wide variety of channels, which in turn leads to stories being interpreted in different ways by different groups. Industry-specific channels include presentations at capital market days, shareholder meetings and financial road shows. Communicators must also be in touch with sell side and equity research groups, who sell securities and make recommendations for brokerage firms. The media is also a key tool in communicating your story to the world, including outlets such as CNN, Bloomberg, CNBC Europe, and newswires such as Reuters. Deborah Hargreaves, business editor at the UK’s Guardian newspaper, agrees that the media, and the Internet in particular, are playing an ever-larger role in the evolution of the financial communications industry: “Over the last decade, financial communications has been revolutionised by the growth of the internet and the increasing resources devoted by traditional media to their websites. This has meant that financial PR professionals must now also communicate with web journalists on early morning assignments. If a news story gets posted on a website first thing and contains information that is not right, that story then forms the basis for much of the rest of the day’s reporting. This makes it even more important for PR professionals to get their message across at the beginning of the day.”

Crucially, companies must be aware of investors’ reactions when communicating information to the press. They must also ensure that the material they send to journalists does not clash with the message to investors. It is a three way dialogue: financial communicators talk to analysts and investors on the one hand, and the financial press on the other, but the media also engage independently with the analysts and investors. Therefore, communicators must realise that reporters will call investors to pick up on any discrepancies or unhappiness among shareholders.

What needs to be communicated, and what doesn’t?

With the media reporting anything and everything they can get their hands on, financial communications professionals must constantly be on their toes. It is their responsibility to publicise every detail that the law requires of them. However, there are also some things that many companies would rather keep to themselves. The dissemination of periodic and ongoing information is subject to a growing web of checks and balances. For example, an important principle financial communicators are called upon to observe is equality of access to information: each stakeholder group must be privy to the same information at the same time as everyone else. In the US, the Sarbanes-Oxley Act of 2002 introduced changes with the aim of cleaning up the corporate environment. In opposition to this push for transparency is an underlying corporate bias towards secrecy and private disclosure as opposed to public exposure, a bias rooted in concrete concern for managerial and corporate reputation, executive job stability and succession, personal marketability and pay schemes.

With these increased and stringent demands for transparent disclosure, financial communicators must work hard to accommodate the need to limit the exposure of their corporation. Eddo Rigotti sees no inherent contradiction in the two different tasks: “It is important to identify what information the markets exactly claim. Very often, what is requested from companies is not that they reveal their secret strategies for obtaining a competitive advantage but, rather, the necessary warrants that their business is safe, sustainable and legal. The financial communicator should always take into account the deep and real interests held by stakeholders which are not necessarily in conflict with the corporation’s desire of limiting its exposure.” And Stefan Solberg agrees that certain sensitive details should not always be revealed: “In today’s volatile market environment it is critical to have disclosures that enable investors and analysts to predict the future performance of a company, but it is important to make sure that we do not disclose forward-looking information that is commercially sensitive.” Ultimately, the message given out must be clear and must satisfy the different audiences, without giving away more than is strictly necessary. What stakeholders want from their company is effective communication, a return on their investment, a healthy balance sheet and dividend payments. It is the financial communicator’s job to deliver this news and more to the outside world.

Measuring effectiveness

But perhaps the most important element of a corporation’s financial communications is measuring their effectiveness. Research and observing the market helps to quantify, control and refine your financial communications, and can provide for long-term responsive strategies. Changes in the stock price can be the first observable indication that either problems or opportunities have been observed by the market in the company’s strategic development, so a close eye is kept on the stock market reaction to specific acts of disclosure. There are a plethora of key performance indicators one can use: the obvious ones, like comparing your price/earnings ratio with that of your competitors, or your share price in relation to fair market value. Then there is the health of your financial operations, your ability to raise equity capital, institutional ownership of your stocks, volume of trading, or even conference call attendance. There are also other external indicators such as the quantity and quality of analyst coverage and information inquiries. Fund managers, analysts and market traders can also add their feedback in the course of private dialogues with the company. The company’s relationships with the various stakeholder groups will be monitored carefully, to ensure that the information provided is adequate to the taks of enabling informed decisions. But ultimately, the key test of success is whether or not there has been a strengthening of the company’s image and reputation among its stakeholders and the wider market.


There is only room here to scrape the surface of the complicated and interrelated field of financial communications. But the essential point remains: whatever the different demands placed upon your communications strategy, it is fostering trust that must be at the heart of it, and that applies to having trust in your communications. As Eddo Rigotti explains: “There is always a conflict between the desire to retain information and the obligations to disclose it. However, it is only by communicating themselves and their projects that companies can build their reputation and attract capital.”