Uncertainty—the arch-nemesis of Wall Street—has taken center stage.
Over the past quarter, we have gone from record stock market highs to lows and back again, driven by concerns over tariffs.
The street is back to questioning whether AI is a bubble. Meanwhile, the long-awaited significant IPO activity appears to be stalled, while SPACs are returning.
The news drivers are inconsistent at best, fueling prolonged unease and putting more pressure on CFOs to reassure investors.
During earnings season, CFOs have a tremendous opportunity to instill investor trust and confidence with one simple but often overlooked strategy—authentic communication.
Authentic communication is about being truthful and transparent. It’s about ensuring that the audience—in your case, investors—have reason to trust you. And not only that they believe you, but they believe in you.
Investors want to be confident in your ability to make sound decisions. Unnerving times are prime opportunities for CFOs to demonstrate how vital they are to their companies. While the CEO holds the cards to the future, the vision must be more than grand hopes, dreams and ambition. It must be grounded in the metrics, particularly profitability or the path to profitability.
Additionally, corporate governance and leadership skills matter. If there is any doubt in your competency, especially your integrity, no amount of profitability, revenue growth or acquisitions will overshadow the negative impact of a lack of trust.
Building Trust
Warren Buffett said it best: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Clear, consistent and proactive communication builds trust. And trust builds a reputation.
Given its significance, why is it challenging for leaders to be direct in investor communication?
For starters, it is generally difficult to decipher what needs to be shared and how to explain it. Uncertain times exacerbate the situation. And of course, nobody enjoys being the bearer of bad news.
While every company has a unique story, the fundamentals of how to build trust with authentic communication remain:
Communicate early and often. For public companies, earnings calls are obviously when the CFO needs to communicate. Go above and beyond that. Make it a practice to communicate with key investors regularly. Foster relationships with them and consider them a genuine part of your team. If you’re a private company, enact a quarterly practice of presenting earnings to the board. Get into the habit. It will force you to look at the whole picture of your business while preparing you for the scrutiny a publicly traded company faces.
Get out in front. Take the opportunity to make yourself known to the public. Reveal your personal and professional values. Don’t hide behind earnings calls and press releases. Get out in front. Use forums like LinkedIn and earned media to express what’s happening in your industry. While you can’t share confidential information, you can explain your view on industry trends. Additionally, it is valuable for you to be a visible voice in corporate announcements beyond strict financials.
Face the facts. When you’re preparing for material updates, don’t filter yourself. Resist the urge to focus on what you will say and what investors will think about it. Look at the facts. Then, evaluate what the facts mean. You cannot message yourself out of a problem or into an aspiration.
Identify the unknowns. Remember, you don’t need to have all the answers. You need to be clear on what you know and are working to accomplish. In a recent Pursuit Perspectives podcast, we spoke with Alexandra Canal, on-air correspondent at Yahoo! Finance, about what executives can do to reassure investors. She noted that companies that share, even if it’s not ideal information, send a message that they are confident in their strategy. The tariffs present an opportunity to implement this. Demonstrate proficiency in calculating a strategic plan that factors in risk and opportunity, known and unknowns.
Answer the “why.” Once you have all of the information organized, analyze it. What are the implications of the analysis? Create context on why the facts matter. Practice authentic communication with the CEO. Guide the CEO to course-correct when needed, using the data as evidence of what’s working and what needs to change. Together, bring any solutions to the forefront.
Anticipate investor feedback. Based on the information available, anticipate what investors may need and want to know. And where they may be uncomfortable and need reassurance. What concerns might your investors have? What might surprise them, negatively or positively?
Be the voice of reason in a town hall meeting, board meeting or public-facing earnings call as you communicate confidently, consistently and clearly. That approach will pay dividends in sustaining investor trust and confidence. It will cement your positive leadership reputation and showcase the true power and necessity of the strategic CFO role.
