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CHAPTER 22
Public Relations in the World of Finance
Clea Bourne
Learning outcomes
By the end of this chapter you should be able to:
identify some of the different PR activities in global financial centres
distinguish the range of interests represented by PR in financial markets
understand some of the challenges of communicating finance to different stakeholders
appreciate the skills and training that are beneficial to PR practitioners in this sector.
Structure
Public relations for global financial centres: the context
Public relations for wholesale financial markets
Public relations for retail financial markets
Media in financial centres
Post-financial crisis communication
Introduction
So much of daily life depends on the wheels of finance to keep things going. We are used to withdrawing money from a cash machine whenever we need it, without thinking about how that service is organised. It is increasingly normal to have student debt, credit card debt or a mortgage on our homes. Many of us are investors in company shares, bonds, property or other assets without even knowing it, because we do so through a life insurance policy or pension scheme. Our daily lives have become increasingly financialised as we seek to get ahead in a globalised world ADDIN EN.CITE Martin20027776Randy MartinFinancialization of Daily LIfe2002PhiladelphiaTemple University Press(Martin, 2002).
The wheels of finance are also crucial in helping businesses to invest in infrastructure, to expand and enter new markets. Finance has enabled major commercial developments in green energy such as solar panels, wind farms and hybrid cars; together with one-of-a-kind projects on a grand scale constructing major oil rigs or launching the worlds largest telescope. Governments need finance too to manage the flow of money in the economy, to borrow money to facilitate trade, to invest in social housing, schools, hospitals and major infrastructure such as highways, or the expansion of the Panama and Suez Canals. These multifaceted areas make public relations in the world of finance a fascinating activity.
Much of the arranging and issuing of finance takes place across scores of international financial centres, particularly the four leading centres London, New York, Hong Kong, and Singapore (Z/Yen, 2015). Major European centres include Zurich, Geneva and Frankfurt. Tokyo and Seoul are significant players in Asia/Pacific; together with Dubai in the Middle East; Toronto, San Francisco and Washington DC in North America; Sao Paolo and Rio de Janeiro in South America and Johannesburg in Africa (Z/Yen, 2015). It is in the largest, most global financial centres and their satellites that public relations has evolved into a range of activities representing financial markets.
PR for global financial centres: the context
Public relations as a specialist activity in major financial centres came into its own after many Western economies deregulated and liberalised in the 1980s, releasing money to move more freely around the globe. In these locations, financial markets expanded rapidly in size, complexity and distribution channels as more companies turned to capital markets for finance, issuing bonds and shares, merging with or acquiring other companies. For more than twenty years, many developed and developing countries experienced faster growth in their financial sectors than in their actual economies.
In this fast-changing environment, public relations became an important means of building credibility in and shaping attitudes toward financial markets. PR enabled various groups of financial experts to compete by promoting their differentiation. PR was also enlisted to build compelling narratives about all sorts of financial products and services offering safety and protection from risk, while meeting the needs of the future. Above all, PR helped position investment as the discovery of hidden financial opportunities, thus supporting the value of financial instruments and the growth of financial markets. Such PR activity is not without controversy, as will be discussed later on in the chapter. For now, it is worth acknowledging that in many countries, financial services contributes to a substantial portion of domestic productivity, while the world of finance is responsible for a significant share of the money spent on PR.
Today, there are many different roles for public relations within financial centres: Some PR practitioners represent publicly quoted companies, as part of their overall communications role. Others are the sole PR representative within a financial institution or professional services firm. Still others belong to small in-house PR teams, or are part of large teams where each PR practitioner represents a single financial product line or business area. Some practitioners work for PR agencies representing both listed companies and financial institutions.
In addition to the range of PR roles, there are a number of different specialisms within financial sector communication from individuals focused on public affairs and lobbying on behalf of financial services to those engaged in Business-to-Business (B2B) activity or in consumer finance, and finally, those focused on Investor Relations and Financial PR. Of the various specialisms, Financial PR is arguably the best-known; coming into its own when financial markets opened up in the1980s. Financial PR addresses the communication needs of companies accessing finance from capital markets through Mergers and Acquisitions (M&A), initial public offerings (IPOs) and the marketing of shares and bond issues (See Explore 21.1). Of all the PR activity in financial markets, Financial PR is seen as the most quantifiable, because of the immediate impact it can have on a companys share price.
As more and more financial institutions opened their doors, PR practitioners began to represent all sorts of financial providers including investment banks, asset managers, private equity firms, retail banks, credit card companies, supermarket banks, insurance companies, building societies, wealth managers, stockbrokers, mortgage specialists and financial advisers. As the rules of marketing professional services were modified, practitioners also represented the professional services firms offering financial services expertise, including law firms, accountancy firms, actuarial firms, management consultants and other intermediaries.
Explore 22.1
Financial Public Relations
Financial PR practitioners help to promote the many ways money can be used to help businesses start up, grow and enter new markets; below are some of the activities they advise on. What can you discover about these terms?
- Bond issues
- Company results
- Initial Public Offering
- Proxy battle
- M&A
Feedback
Once you have learned a bit about M&A, look for business stories about Pfizers acquisition of Allergan in 2015, the second biggest M&A deal on record. Which PR firms were involved? What were the messages communicated by the two companies and their stakeholders? What familiar products do the two companies make? Why did US politicians speak out against this deal?
While there is no precise data available on the number of PR professionals representing financial markets, in the UK home to the worlds largest financial centre (Z/Yen, 2015) some 20% of in-house PR practitioners in the private sector work in financial services/corporate PR. Of those working for PR firms, some 26% rank financial services/corporate among the clients they are most likely to represent (CIPR, 2015). Some of these PR practitioners focus more on wholesale financial markets (the factory floor of financial services), while others spend more time working in retail financial markets (the shop window).
box 22.1 In the spotlight
A Financial Services PR Practitioner in Zurich, Kilian Borter
As one of the worlds most important financial centres, Switzerland is the subject of constant media attention, both nationally and internationally. Against the backdrop of fiscal transparency initiatives worldwide and European countries trying to recover assets held by their nationals offshore as they seek to tackle their sovereign debt problems, this focus is even keener today than in the past.
Being a small country, Switzerland has always been very internationally oriented. It is broadly accepted that the impact of economic, financial and political aspects are not limited by its national borders, and neither are the factors influencing them. There is a strong interdependence with neighbouring countries, the European Union and the other important financial centres worldwide. Hence everything a PR professional in the financial industry does is international in nature. There is also an important political dimension, as the international pressure on Swiss bank-client confidentiality has prompted political discussions of this issue and how to deal with international tax issues. High bonuses for board members and management are also the subject of heated public debate.
This creates an extremely interesting and challenging environment for PR professionals. More than ever, all communication activities have to take into account the potential political reaction, while at the same time keeping constant tabs on moves and comments by politicians that could trigger new disputes or debate on the national or international level.
The Swiss financial centre is therefore firmly in the spotlight of both national and international media alike. What does this mean for Financial Services PR professionals in Switzerland?
On the one hand, daily working life has become more challenging. With the advent of online media, everything has become faster and internal information has more than ever become intertwined with external communication. The range of expertise required to deal with these challenges has changed, and PR specialists now need to have greater knowledge of other markets, legal and compliance risks, political aspects and regulatory changes. Last but not least, banks are having to contend with high pressure on their margins, necessitating more efficient organisation and changes to business models. These are all aspects which have to be communicated internally and externally. While integrated communication was for a long time merely an expression used to impress, it has now become a real need. PR professionals now have to take a broader view, and address a wider range of stakeholders than just the media and internal audiences.
That said, all these aspects make for a much more interesting working environment, one where the need for well-qualified PR expertise is beyond dispute. Be it internally within companies or as external consultants, the standing of PR professionals has never been higher.
Public relations in wholesale financial markets
Wholesale financial markets are rather like the factory floor of global finance, where everything takes place on a large scale. Mathematicians and physicists devise complex models to forecast future financial performance. Bankers conceive large transactions, or engineer new and innovative financial products. Central banks issue bank notes, monitor currency, manage inflation and act as lender-of-last-resort to other banks. Here too, is where companies make a market for and trade in large blocks of company shares, in government and company loans, in commodities such as wheat, corn or soya, gold, oil or diamonds; together with derivatives of all these investments. Institutional investors manage billions in pensions and investment funds, and companies seek out insurance and reinsurance policies against potential risks and disasters. In wholesale financial markets, arrangements are also made to assist companies with export or trade financing or help countries borrow large amounts of money.
PR represents a host of established and emerging players in wholesale financial markets (See Figure 21.1), where communications needs vary. The most high-profile activity is Financial PR those PR practitioners who promote company results, prepare for share issues, mergers and acquisitions, and garner investor perceptions of company and market activity. Financial PR is high-profile because it is often well-compensated, particularly when offering strategic and crisis communications support for large multinationals and blue chip companies, as well as for billion dollar cross-border transactions. While Financial PR practitioners often focus on wholesale markets, aspects of their work require them to communicate directly with consumers when representing a new company share issue, for example, or when promoting company results.
By contrast, there are many PR practitioners working in wholesale financial markets who are not engaged in Financial PR. They may, instead, represent financial institutions providing specialist, outsourced services to other financial institutions, or serving companies in the wider economy. These PR practitioners may specialise in corporate communications and/or B2B communications, in wholesale market roles which include representing investment bankers targeting corporate clients, money market funds targeting treasury departments or asset managers targeting pension schemes.
One of the most important tools for PR practitioners working in wholesale financial markets is thought leadership, a term used rather loosely to describe the intellectual firepower ADDIN EN.CITE Brocklebank-Fowler200817: 8171727Simon Brocklebank-FowlerPR WeekHaymarket PublicationsDifferentiation Wins the Day8Financial Essays2008LondonPR Week(Brocklebank-Fowler, 2008: 8) assembled and published in communications material. Thought leadership is an important means by which firms in wholesale markets assert their certainty, skill and expertise in a way that sets them apart from the competition. In its simplest form, thought leadership can describe technical articles contributed to specialist trade publications explaining how a product, service or legislation works. It can also include the speeches and presentations made by industry experts at conferences and events. More accurately, thought leadership describes lengthier, thoughtful documents or white papers promoting an organisations views on government policy or industry issues. In various scenarios, a PR practitioner may be commissioned to write thought leadership material, assist in editing it, and/or package completed thought leadership to promote with stakeholders and the media (Bourne, 2015). By promoting thought leadership, PR can help an accountancy firm, an investment bank, a management consultant or other financial expert to establish greater authority and differentiation in wholesale financial markets.
mini case study 22.1 Thought leadership: Creating the BRICs
The term BRICs the acronym referring to Brazil, Russia, India and China is now part of the lexicon due, in some measure, to PR activity in financial markets. BRICs was originally coined as an investment term by the asset management business of Goldman Sachs, the global investment bank. In 2001, Goldman Sachs published the first in a series of reports to demonstrate its thought leadership on new global growth opportunities to be found in emerging markets. However, the initial research introducing the BRICs concept was scoffed at by many economists and investment experts. In order to convince Goldman Sachs clients and prospects, the BRICs concept would need to build credibility with global financial experts.
Goldman Sachs asset management arm launched a sustained communications campaign to defend its BRICs thought leadership in the marketplace of ideas. This was achieved, in part, through a series of opinion editorials or op-eds in the Financial Times (FT), targeting the business and financial elites who form the FTs readership. By using the FT as a thought leadership channel, Goldman Sachs could reach chief executives of well-known companies around the world, some of whom would later cite the firms thought leadership as the most influential research they had ever read. In addition to its FT op-eds, Goldman Sachs also promoted its BRICs concept through annual reports, corporate videos, client meetings, speeches, investor presentations and its annual BRICs summits.
(Source: Bourne 2015)
Public relations in retail financial markets
Connecting with savers and investors
Retail financial markets are the shop window of the financial world. The shop window connects ordinary people with finance in many different ways as consumers and taxpayers, savers and investors, employees and holidaymakers, and as homeowners and pensioners. In highly-competitive financial markets, financial institutions have to work hard to communicate with customers to keep existing business, and to cross-sell new products and services to existing customers. The size of a countrys retail financial market correlates with levels of affluence, so it is not surprising that many of the narratives PR produces for retail finance link to aspirations such as buying a home, planning a family, saving for a university education, taking a dream holiday, insuring against emergencies and saving for retirement. It is these narratives which drive PR activity in retail financial markets, more so than the products enabling these aspirations, such as bank accounts, general insurance, personal loans, mortgage loans, credit cards and more sophisticated, long-term financial products such as pensions and investments.
think about 22.1
First Aid for financial jargon?
Could you be the PR super hero who one day translates the arcane terms used in everyday finance into straightforward, compelling language? One veteran PR practitioner describes the ongoing challenge of communicating the difference between pensions and annuities:
What I was not prepared for, on entering the UK life sector was the sheer lack of interest anyone has in the pension industry...those who would benefit from understanding annuities, dont; while those who do, do not need them in the first place...I began to realise that the problem may be semantics. Everyone I know thinks they understand pensionslong-term savings for the time you no longer earn money from employment. The problem is that they also think that the money they receive each month in retirement is also called a pension. As one friend recently put it, it was a car when I drove it into the garage, why is it a tractor when I take it out again?
ADDIN EN.CITE Fulton201024242417Fulton, ScottPersonal View: One CandleCorpComms: The magazine for the corporate communicatorCorpComms: The magazine for the corporate communicator46-47February 2010(Fulton, 2010)
PR for retail financial markets is influenced by technological, geographic and cultural realities as well as individual attitudes to finance. In some countries, increased connectivity, transaction speed and efficiency of e-commerce has enabled new market players to set up online-only businesses. In these countries, internet penetration is very high, enabling many people to do their banking online or on their mobile phones, and to shop for financial products on the internet. Other people have very restricted physical access to finance because they live in isolated rural areas with poor transport and technology links. In certain countries, traditional financial institutions such as community banks, credit unions and friendly societies continue to thrive as mass market providers. Elsewhere, non-traditional providers such as supermarkets, department stores and websites are now successfully retailing loans, insurance and other financial services.
PR practitioners in retail financial markets also need to be aware that customers have different attitudes to financial products and services. These attitudes can be shaped by many factors including personality, family background and socio-economic status. Certain individuals and groups of people also have strong ethical and religious beliefs about finance, which has led to the development of special products tailored to these beliefs (see think about 21.2).
think about 22.2 Its a good day for gold
Early one April morning, Indian television anchorman, Udayan Mukherjee opened his live market show Bazaar Morning Call on CNBC-TV 18 with this cheery announcement: Its a good day for gold! Mukherjee was acknowledging the annual festival of Akshaya Tritiya, considered an auspicious day in Hindu mythology for buying precious metals and making investments. By the end of the day, the gold price in India had reached record highs driven by heavy buying to mark the festival.
Akshaya Tritiya is widely celebrated in Indian communities irrespective of religious faith and social groupings any ventures initiated on the day are expected to grow and bring prosperity. The effect which this festival can have on gold prices is a reminder to PR practitioners working in financial markets that it is important to understand cultural realities and belief systems as well as financial rules and regulations, for both can affect behaviour in financial markets.
Feedback
How many other countries or cultures can you think of which have specific beliefs, special days or festivals which might influence the way people invest? How would you take this into account when planning an annual PR programme for an investment firm?
One of the most important considerations for a PR practitioner in retail financial markets is that financial products and services are intangible. It can be hard to compare complicated products, which are structured and priced in different ways. It can also be hard to assess risk and uncertainty when buying long-term savings products as it may be years before customers know if their purchase will deliver on its promises. For this reason, much of the PR in retail financial markets focuses on three es choice editing, third party endorsement and financial education.
The first e choice editing is a necessary service in highly-competitive retail financial markets where there is overwhelming choice. In these markets, savers and investors often turn to choice editors (FSA & Henley Centre, 2005) to help them decide what to buy. PR practitioners often develop campaigns which help to differentiate financial brands. This way, potential customers can discern the different names when leafing through personal finance pages or when watching and listening to money programmes on TV or radio, or surfing the internet. For many consumers, preferred choice editors are family, friends and peers. Social media has dramatically changed the power of choice editing: for example, when Spanish bank, Santander, raised fees on its popular 123 bank account in the UK, users on sites such as NetMums announced they would be ditching the product, urging others to do the same. In this environment, financial communicators often generate positive case studies reflecting real customers genuine experiences with a financial product or service. These case studies may appear on websites, via social media, in magazine features, company brochures, on money programmes or in the personal finance press. In certain markets, PR practitioners also liaise with price comparison websites which have established themselves as professional choice editors one-stop shops where consumers access powerful databases to learn all they need to know about available products and services, at a glance.
Third party endorsement obtaining credibility for a financial brand from an outside source ADDIN EN.CITE Ehrlich20041414146Evelyn EhrlichDuke FanelliThe Financial Services Marketing Handbook: Tactics and techniques that produce results2004PrincetonBloomberg Press(Ehrlich & Fanelli, 2004) is a second activity supported by PR in retail financial markets (and is equally important in wholesale markets too.) Third party endorsement goes a step further than choice editing as it is effectively a recommendation or seal of approval from authoritative experts or well-known, trusted individuals. PR practitioners may aim to get third party endorsement from respected journalists, commentators or independent experts who are in a position to make positive remarks about a financial product or service or a companys shares. Third party endorsement can also be achieved when a financial brand, product or service receives commendations in respected industry surveys, awards and league tables. PR practitioners sometimes get involved in writing and submitting award entries and applications for organisations wishing to be considered among the best brands in surveys and rankings.
Financial education is the third e of PR activity in retail financial markets; it involves explaining how financial products and services work, clarifying associated risks and simplifying complex terms. Although financial institutions have a vested interest in educating consumers, much of the financial education in financial centres is carried out by government departments, regulators and Non-Governmental Organisations (NGOs) which have a broader remit to improve financial capability. Through international forums such as the Global Partnership for Financial Inclusion (gpfi.org) launched by the G20 countries in 2010, many countries now have a national strategy for financial education and capability. Agencies associated with such initiatives use PR to promote financial education via websites, radio and television, workshops, school and workplace programmes.
box 22.2
What skills and education do you need for PR in financial markets?
While some practitioners move into PR after working in banking, financial journalism or other parts of financial services, many do not. Whatever your background, you will be required to understand aspects of financial markets well in order to explain them to your relevant stakeholders.
Read avidly - The business and financial media are a useful place to start learning how finance works. For any PR practitioner just starting out in financial markets, global newspapers such as The Economist, The Financial Times and The Wall Street Journal are useful sources, as are television channels such as Bloomberg, CNBC and specialist financial programmes on other channels. There are also a plethora of useful websites, including the business section of HuffingtonPost, and TheFinanser.com, a daily blog.
Study broadly - For those still at university, courses in economics and economics history are worthwhile foundations for understanding how finance works. If you havent studied for years, there are many easy-to-read books on economics and globalisation including Niall Fergusons The Ascent of Money, more campaigning titles such as Anne Pettifors Just Money, or the global south perspective of Supriya Singhs Globalization and Money.
Attend training courses - Once you are on the job, in-house PR roles often provide training opportunities in your companys specialist field. PR agency practitioners may also have access to training budgets. In some countries, PR professional bodies have specialist financial divisions which occasionally provide training and seminars. However, it can be more productive to find specialist training providers offering financial courses tailored to the needs of non-financial professionals.
Become financially literate - Financial literacy will be important in establishing your credibility and will help you to do your job well. Some practitioners must understand balance sheets and company accounts thoroughly. Others need to understand the basic formulae used to calculate pension products, together with bond yields and interest rates. Some PR practitioners gain further credibility by earning specialist qualifications, opting to become qualified financial advisers, studying for the Investment Management Certificate (IMC), becoming Chartered Financial Analysts (CFA) or even Chartered Management Accountants (CMA).
Know the relevant rules of your market Whether you represent a life insurer, a general insurer, a bank, building society, hedge fund, investment manager, a stock broker or a listed company, you must know the appropriate rules and regulations of the market in which you operate. In addition, if you are employed in an in-house role you may be required to pass tests on anti-money laundering and anti-fraud measures, and/or to understand rules on staff share dealing before you are allowed to represent your organisation.
Media in financial centres
The explosion in financial services which took place across many Western economies in the 1980s helped drive the growth of specialist financial media in the larger financial centres. Some of these media organisations have very recognisable names and global reach, others are national media houses with strong business and finance coverage, while a third group consists of specialist financial titles. In the first category are the global business and financial media organisations catering to more financially-educated publics from CNBC to Bloomberg, Reuters and Dow Jones, to the Financial Times and Wall Street Journal and their associated websites. These media houses have their headquarters in the US and Europe, but they disseminate news to even the smallest financial markets. They also wield substantial influence over market players, for example, helping to drive share prices up and down, or giving greater visibility to bond market trading, which is not well-covered in the general business media.
The second category of financial media organisations tend to be regional or national in focus. In Europe, news outlets such as LAgefi, Borsen Zeitung, Diario Economico, Les Echos, Expansion, Het Financieele Dagblad, Finanz und Wirtschaft and Il Sole 24 Ore are among the important contacts for PR practitioners operating in continental financial centres. In Asia-Pacific, important outlets include the Australian Financial Review, The Financial Express (India), Khaleej Times and the South China Morning Post to name just a few. Asia-Pacific is a rapidly-evolving area for financial media: China, for example, has now admitted certain global media organisations such as Reuters (which translated its name into the Chinese characters for penetrating, thorough and transparent), together with Chinese outlets such as Xinhua.
mini case study 21.2 Survey research in personal finance
Personal finance brands increasingly use social media to maintain direct contact with their marketplace. Yet traditional media remains a crucial form of third party endorsement.
However, maintaining visibility in traditional media is challenging. Newsrooms in many traditional media houses are shrinking. Yet countless financial brands compete for attention with me too stories about new products and services. Journalists who understand finance often avoid press offices, preferring intermediaries or pundits able to paint a broader picture of the market, and name-and-shame providers who rip-off customers.
Meanwhile, mainstream news editors can find financial stories dull and boring, preferring stories that either entertain. Editors also favour stories that align with audiences (typically middle class) interests worries over pensions, high taxes, lack of job security, fear of crime and holding on by a thread the idea that the middle class is in peril, argues Kendall (2005) is a key framing device for news.
So how does a retail financial institution find traction in the media? The survey remains a tried-and-tested communications tool. Some finance brands commission a mammoth annual survey. Others spread their budget over a series of surveys linked to seasonal stories. The most-cited surveys provide news hooks appealing to various audience segments by lifestyle or demographics. Journalists may scoff at their proliferation, but surveys continue to provide fodder for traditional and digital media alike.
Look at the surveys listed in Table 21.1. What market segments are represented? How does each survey relate to the sponsors product or service range?
Some regional and national titles have journalists covering finance as part of a broader remit to cover business news. Consequently, they may avoid forensic coverage of finance so as to avoid boring their audience (Doyle, 2006; Hilton, 2008). Editors may encourage storylines centred around personalities, events and intrigues, for example bankers bonuses. National media may also make business and financial news accessible by using expert commentators to explain and interpret financial news in an interesting manner, sometimes stirring up public controversy as a consequence (Doyle, 2006). Dedicated money programmes on TV and radio, and supplementary sections in newspapers act as choice editors (FSA & Henley Centre, 2005), helping consumers to navigate the range of personal finance opportunities on offer. Some media houses and individual journalists and columnists are quite influential, able to sway customers to surrender insurance policies or funds or to avoid financial products or company shares altogether. Other journalists adopt a campaigning stance, helping mum and dad shareholders the least powerful players in financial markets to avoid taking precarious risks in order to make money with their life savings (Pixley, 2005).
A third and final media segment in financial markets is the specialist financial trade press. These specialist media titles include scores of weekly and monthly magazines targeting financial professionals. Specialist magazines are generally funded by advertising employment and career ads seeking to attract the worlds best financial talent, ads for products and services and ads showcasing firms performance and achievements. Specialist titles cover every financial topic imaginable from investment, life insurance and pensions to banking, mortgage products and credit cards; from private equity and corporate finance to commodities and real estate; and from financial technology to debt and equity capital markets. Specialist titles take a more in-depth and informed approach to financial stories than the generalist media, and will often champion a particular set of industry interests: Hedge fund publications, for example, often tackle the prospect of increased hedge fund regulation across international jurisdictions.
TABLE 21.1: Surveys promoted in the media by personal finance brands
Personal finance brandRegionSurvey namePress release headlineBanamex/IBBY MexicoMexicoFirst national survey on digital media consumption and readingBanamex and Ibby Mxico present the first national survey on digital mediaBNP ParibasFranceAnnual BVA/Cetelem SurveyMarseille: First stage of Cetelem Tour de France (Consumers living in the PACA region are resourceful when tackling projects)Credit Suisse SwitzerlandAnnual Worry BarometerUnemployment, immigration, and pensions are the key concerns of the Swiss public...HSBC BankUnited KingdomThe Value of EducationUK parents struggle to send children to university abroadManulife Investment ManagementCanadaManulife Bank of Canada Debt SurveyMore than a third of Canadian homeowners find housing in their area unaffordableOld MutualSouth AfricaOld Mutual Savings and Investment MonitorKick-off a foolproof new savings plan this festive seasonRabobankNetherlandsDutch Housing Market QuarterlyMore than 300,000 households to move out of negative equity in 2015 and 2016 as house prices riseScotiabankCanadaGlobal Auto ReportDriving in Luxury: upscale vehicles lead sales gains in Canada and across the globeScottish WidowsUnited Kingdom200 Years of Women and FinanceMargaret Thatcher voted most influential woman of the past 200 yearsSun Life InsuranceUnited KingdomAnnual Cost of Dying ReportSunLife's 9th annual Cost of Dying report reveals the cost of a basic funeral has risen for the 12th year in a row...TD AmeritradeUSA2015 Self-Employed SurveyMillennial entrepreneurs have an independent streak ... and the financial support of their familiesTravelexUnited KingdomNew Years Eve Around the WorldPrice of Partying: New Years Eve in London proves most expensiveUBankAustraliaUBank/Galaxy SurveyMost Australians dont know their mortgage interest rateWells FargoUSAAnnual How America Buys and BorrowsDiverse consumers overwhelmingly optimistic about financial future
While financial markets and the financial media may have expanded, media cost-cutting has forced journalists to produce more copy with fewer resources. Financial journalists have therefore built a symbiotic relationship with PR practitioners to fill the resource gap. As a result, the financial media often has higher levels of PR content than in other sectors (Davis, 2007). Journalists and PR practitioners build relationships with each other through face-to-face meetings and telephone discussions, with PR practitioners providing story ideas and access to spokespeople. Prominent PR tools include press releases and announcements, along with backgrounders, fact sheets, research, commentary, financial graphs, case studies, biographies, infographics and images. PR practitioners also organise events with journalists in mind, including company results presentations, product launches, briefings, press trips and site visits as well as off-site corporate entertaining.
However, changes in media ownership mergers and downsizing have influenced the way PR practitioners interact with the financial media. Increasingly, journalists have less time to meet face-to-face, while changing technology means that journalists and PR practitioners interact more and more through websites and social media. In the UK, home to several financial centres, websites such as Headlinemone or Gorkana bring journalists and PR practitioners together to post news items or request case studies and contacts. Headlinemoney is an online information resource used extensively by the UKs money media, including financial journalists, in-house PR practitioners and PR firms. PR practitioners post company stories and other information on the site for journalists to access. Journalists, meanwhile, post requests for personal finance case studies seeking, for example, homeowners who have locked into a fixed rate mortgage or pensioners whose retirement products are performing below expectation.
The global financial crisis
Since Western financial markets were deregulated in the 1980s, reducing government authority, there have been many high profile financial crises resulting in a loss of public trust in financial services. The implications of these successive crises for public relations are two-fold: Firstly, there is the question of whether PR played a role in helping these crises to evolve this question is still to be meaningfully debated. One author describes this glaring oversight as the elephant in the room (Callaghan 2003). Veteran PR practitioner, George Pitcher goes further, placing blame squarely at the feet of the public relations industry as the silver-tongued mountebank that has sold a perceived value as a fundamental value for a generation (2008: 69) . Pitcher singles out Financial PR as complicit in contributing to a message that was only ever about boom and to hell with the bust (2008: 69). Instead of debating its potential role in triggering crises, the PR profession has generally responded to crises by moving forward and setting things to rights (Bourne, 2013). Typically, this takes the form of PR campaigns mounted to rebuild trust in respective areas of finance. Such approaches raise a second question: Is it either rational or ethical to rebuild trust in the financial sector if its weaknesses are not corrected? In the years since the global financial crisis, this question remains as salient than ever (see also chapter 15 for discussion on PR ethics).
In 2007, a global credit crunch a freeze of lending in capital markets helped trigger a global financial crisis the following year. The crisis progressed in different phases, exposing endemic weaknesses within the global financial system, with attendant implications for PR in financial markets. Debt and derivatives products had been relatively hidden from public view what financial editor, Gillian Tett (2009: 6) refers to as the iceberg problem, whereby mainstream media refrained from covering debt capital markets because they were too technical and dull. PR practitioners struggled to find journalists willing to talk about debt capital markets, and debt market players were content to avoid the limelight. During the crisis, communicators operating on the factory floor, or wholesale financial markets, had to defend the growing complexity of innovative but risky financial products with daunting names such as Collateralised Debt Obligations (CDOs). Yet the post-crisis era yielded no noteworthy PR campaigns to simplify the language of wholesale finance or to increase transparency. Instead, trade bodies in various financial centres mounted public educations campaigns to promote financial services economic role and contribution.
For PR practitioners in retail financial markets, negative public perception of banks and other financial institutions topped the list of post-crisis challenges faced by PR practitioners in affected markets (Makovsky & Company, 2012). Banks helped to trigger the financial crisis through an inappropriate appetite for high-risk products. Despite this, many large banks received hefty taxpayer bailouts in affected countries. Banks were then further implicated in fresh scandals including money laundering and manipulating the Libor price-setting mechanism. Yet banks and their PR departments appear to have been let off the hook. In the UK, for example, the financial regulator dropped a major inquiry into banking culture, opting instead to deal with individual cases arising. At the global level, international institutions promised to reform the International Financial Architecture, although little changed. However, some international institutions such as the International Monetary Fund (IMF) were themselves forced to increase transparency, engaging in PR activity to inform stakeholders of their progress (Shafik, 2013). (See Explore 21.2).
Explore 21.2 Official voices of global finance?
Visit the websites of the following institutions and explore their media centres. Can you determine what their key messages are? Are those messages easy to discern, simple to understand? Who are their primary stakeholders? How do their various missions overlap?
Bank for International Settlements - HYPERLINK "http://www.bis.org/list/press_releases/index.htm" http://www.bis.org/list/press_releases/index.htm
Financial Stability Board HYPERLINK "http://www.financialstabilityboard.org/list/fsb_press_releases/index.htm" http://www.financialstabilityboard.org/list/fsb_press_releases/index.htm
International Monetary Fund - HYPERLINK "http://www.imf.org/external/news/default.aspx?pr" http://www.imf.org/external/news/default.aspx?pr
Global Financial Markets Association - HYPERLINK "http://www.gfma.org/news/?newsType=Press+Releases" http://www.gfma.org/news/?newsType=Press+Releases
World Federation of Exchanges - HYPERLINK "http://www.world-exchanges.org/news-views/press-releases" http://www.world-exchanges.org/news-views/press-releases
Perhaps the most crucial issue for PR in financial markets, arising from the global financial crisis, is the issue of global inequality: Globalisation was once heralded at the new knight to fight poverty (Koku & Acquaye, 2011: 354), yet after decades of market freedom, an astounding volume of wealth is now controlled by a small proportion of the worlds citizens, many of whom are successful bankers, hedge fund managers and other financial professionals. A complex global debate persists, with PR playing a visible role in promoting different viewpoints.
In one corner of this debate are groups promoting greater equality by enabling more people to access financial services. Ninety percent of people in developing countries lack access to financial services from institutions, either for credit or savings, further fuelling a vicious cycle of poverty (Hinson, 2011: 320). NGOs such as Accion (accion.org) actively employ PR to promote financial inclusion. Interestingly, financial institutions have adopted this same agenda to promote their products and services in developing markets.
In another corner of the debate over global inequality are activist groups campaigning against financial capitalism, and the damage wrought on many lives. In the summer of 2011, the Occupy movement staged sit-ins, teach-ins and other street-based activity, using PR techniques to crystallise support around the world. The Robin Hood tax campaign is an example of single issue financial activism, which has used PR in campaigning for a tax on transactions by big banks, to be rerouted to fight poverty. The Jubilee movement has campaigned for the cancellation of unjust or unpayable debts since the 1990s. After the Global Financial Crisis, the group launched the Rolling Jubilee, eliminating almost US$15 million worth of debt in a year (Ross 2013). Jubilees latest campaign raises awareness of the next looming financial crisis one of household debt (See Figure 21.2).
Summary
This chapter has provided a broad view of the different ways public relations is conducted in financial markets, on behalf of many special interests some opposing, some overlapping. PR in the world of finance will continue to evolve and change as new financial centres emerge, and as technology and increased regulation transform financial communication. For students and researchers in the field of PR, this opens up many interesting avenues for research. There is potential to analyse the changing narratives of pilloried institutions such as banks in the era since the global financial crisis. Too few studies deconstruct the work done by PR practitioners in less visible parts of financial markets; the geographies of PR in emerging financial centres might be once such area. Aspiring researchers might uncover more hidden forms of PR activity such as financial lobbying. It is equally important to explore the use of PR by less well-resourced organisations such as consumer groups and community finance. Meanwhile, financial markets offer varied career opportunities and PR specialisms for those keen to enter the world of finance. The ever-changing nature of financial markets is undoubtedly part of its appeal for those who take up the challenge of communicating about finance and its role in shaping the way we live.
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