Although the prime focus of the IR department will be on institutional investors, it is also important to pay attention to private investors. This group comprises of individual investors who allocate some of their savings to invest in listed securities for their personal account, rather than for a company or investment firm.
Compared to large professional investors, these investors typically have smaller funds available for investment and their investment process is less often professional and sophisticated. Another typical difference is the connection that a retail investor may have with a certain company or brand, for instance as an employee or as a customer of the company’s products and/or services.
Collectively, retail investors can sometimes represent a substantial part the company’s shareholder base, predominantly for smaller companies.
Types of retail investors
Retail investors can include:
- Employees and management; and for instance
- Investors who may feel strongly connected to the company’s brand, its products and/or services.
Contacts with retail investors
For most quoted companies it is not feasible to maintain direct and individual relationships with retail investors. There are efficient and effective ways to maintain those relationships indirectly: through a group of organised retail investors (for study or leasure purposes), private banking relationship managers, presentations on conferences for private investors, articles (interviews) featuring company and management in dedicated magazines and dedicated websites for instance.