Sarah Keohane Williamson is the CEO of FCLTGlobal, a nonprofit coalition of global pension funds, sovereign wealth funds, asset managers, private equity firms, and major corporations that champions long-term capital allocation across the investment ecosystem. In her new book, The CEO’s Guide to the Investment Galaxy (Wiley, September 2025), Williamson draws on her extensive experience and research to demystify today’s diverse investment community landscape. She offers CEOs and business leaders actionable strategies to understand different investor motivations, resist short-term pressures, and align capital decisions with long-term growth.
In a conversation with McKinsey’s Tim Koller, Williamson discusses her new book, her leadership of FCLTGlobal, and her mission to foster long-term thinking in both investors and companies.
Tim Koller: Thanks for speaking with us and congratulations on your new book. What prompted you to write it?
Sarah Williamson: For roughly the last decade, at FCLTGlobal, we have been working on the connections between investors and companies. One of the things we’ve learned is that company leaders and investors have different time frames, different incentives, and sometimes even different languages. In short, there’s often a disconnect between investors and companies.
Let’s say you’re the CEO of a company. Perhaps you’ve come up specializing in a particular area of the business, or maybe ran a big division, and then took over the company. Now, all of a sudden, it’s time to deal with the investment community. But it’s not clear who’s who.
Companies and investors need to understand each other, but most investment books are just written for the investors. This book is an investment book that’s written for businesspeople.
Tim Koller: What are the most important misconceptions or deficits of understanding that you see among CEOs about the investment community?
Sarah Williamson: The most important one is that CEOs tend to believe their shareholders are “on their team” and that they want their company to succeed over time. Unfortunately, it’s not quite that simple.
Some shareholders are retail shareholders, and so they probably are on the company’s team, in that they just want to see the stock go up. But then there are index managers, who tend to own shares in a majority of companies. They might want the company to do well, but they might want their competitors to do well, too. And then there are active managers. If they’re overweight, maybe they really do want the company to succeed. But maybe they’re underweight, which means they don’t want the company to succeed. These are the sort of things that drive CEOs crazy because it’s unclear who’s really rooting for them and who’s not.
Tim Koller: Should CEOs and CFOs strive to figure out which investors are on their team?
Sarah Williamson: Absolutely, and then they should spend the time with ones who either are or could be on their team. Investors play very different roles in the market, and they can influence companies in different ways.
Tim Koller: I love the title of chapter two in your book, “Building great companies with short-term investors is a challenging mission.” How do companies overcome the fact that they are going to have a lot of short-term investors in their stock?
Sarah Williamson: The first step is encouraging long-term investors. The second is not playing into the hands of the short-term ones. The latter requires the classic things: Don’t give quarterly guidance, don’t do the things that really attract short-term investors, which is, of course, because they’re trading. The other thing is, frankly, don’t listen to them.
What matters to the real economy is not so much the stock price or its volatility. It’s how management reacts to it. And I know it’s easy for me to say, but CEOs need to not react to volatility in their stock. The volatility could be the result of a hedge fund trade or someone trading a factor. These investors are trading not because of a worry about the company itself but because of what it represents in a portfolio.
What matters to the real economy is not so much the stock price or its volatility. It’s how management reacts to it.
If the CEO responds by saying, “We need to cut our marketing,” or “We need to cut our R&D,” that creates a problem. It’s the classic issue of separating the signal from the noise. If it’s short-term trading around news, factors, or something else, that’s noise.
Tim Koller: That sounds like it puts some burden on the investor relations team to figure out what’s going on so that they can educate the CEO. Is that something you would support?
Sarah Williamson: That’s right. Here’s how I think about it: If you ask almost any CEO what their customer strategy is, they would have a really good answer for you. There is the same need for an investor strategy. Which investors do you want to have, and therefore which investors are you going after? Which investors do you care about? Which investors do you spend time with?
There’s a tendency to say, “The market wants this, or the market wants that.” But “the market” is not all one thing. It’s important to look under the hood and ask, “Who do we care about?”
It’s also important to be very careful about the sell side. You have to remember that the sell side is, by definition, not a shareholder. When I hear, “Our investors think such and such,” I ask: “Are you talking about an investor or a sell-side analyst?” The book refers to sell-side analysts as weather forecasters, which is not meant to be derogatory. Weather forecasters take in all the available data and try to predict the future. That’s what the sell side does. But they’re not shareholders, and every company, every CEO, every board has a fiduciary duty to their shareholders. They do not have a fiduciary duty to the sell side or the financial press.
Tim Koller: If you’re the CEO, how do you get the board to support focusing on long-term fundamentals and not on what the press and the sell-side analysts are saying? Have you seen people do that effectively?
Sarah Williamson: Some people do it very effectively, and the primary way they do it is they have a long-term road map. They try to control the narrative rather than being responsive. They know what their strategy over the next several years is, and they communicate it.
They repeat it in the sell-side meetings, with the shareholders, and with the board. Sometimes, CEOs are hesitant to broadcast their long-term plans because they think that something might change. I always say that they’re better off setting a long-term plan and then explaining that there was a change due to a big event, such as COVID-19 or a geopolitical issue. An investor will understand that the plan needs to change in response. What they won’t understand is an opaque, black box.
Tim Koller: Do you have any advice for how a CEO should go about identifying the right investors or attracting investors they don’t have right now?
Sarah Williamson: The first question is, who really owns the stock? And then, who are the investors you wish owned your stock? If one of the big, long-term institutional investors owns it and another one doesn’t, well, why not? You want to go talk to them. There are also investors who may not be household names, but it’s not too hard to figure out who they are.
It’s extremely important to talk to the people who actually make the buy and sell decisions. Though the sell side is important in terms of the press, it’s not as important as it used to be in terms of who’s making buy and sell decisions. Those are portfolio managers, who are very important because they’re knowledgeable. As a general rule, the ones who start with an index and over- or underweight are making decisions at the margins. Whereas the ones who start with a blank piece of paper and build a portfolio—like a Warren Buffett, for example—would be much more knowledgeable about a company.
Tim Koller: How should the CEO and maybe the CFO spend their time with investors?
Sarah Williamson: They have to follow the law of whatever country they’re operating in—that’s the baseline, of course. Then, they should spend their time asking interesting questions of the people who know their company and their competitors well.
It would be great to talk to boutique managers who are betting on the company for some reason. It would be helpful to learn why they are or aren’t investing a certain way.
Tim Koller: You say in the book that companies should not issue quarterly guidance. Can you elaborate on that and what they should do instead?
Sarah Williamson: Right. It’s very clear that companies should not issue quarterly guidance. Over the last ten years, the fraction of US companies that do it has reduced from over a third to under a quarter, according to our analysis. Outside the US, it’s virtually unheard of.1
The reason that guidance about future earnings is a detrimental practice is that if I say, “Next quarter, we’re going to earn $1.27 to $1.30,” and then it looks like we’re not, human nature makes company leaders think, “Uh-oh. I’ve promised that we’re going to do this, so I’m going to do something to make it happen.” Companies inevitably do something on the revenue or the cost side to hit the number. If they do that again and again, they’ve gotten themselves on this short-term track.
What they should do instead is have a long-term road map and then talk about how the quarter is a step on that path. Maybe they are hitting what “the street” says, and maybe they’re not. If the street says that the company is going to deliver $1.27, that doesn’t create the same sense of obligation as if the CEO says it. If companies don’t do what the street says they’re going to do, that’s OK. But issuing quarterly guidance puts the burden on the companies and makes them more likely to do something reactive.
Now, in many places, there’s this roundabout pattern where the CFO or investor relations executive hints to the street that they’re going to hit a certain number. They give the street the numbers, but then they let them do the math themselves. And then the CFO puts those numbers in board presentations and says, “The consensus is such and such,” which, of course, the people making up the consensus received from the company itself. Then the company tries to hit that consensus.
It’s really quite nonsensical and a massive waste of time. There’s a common argument that delivering quarterly guidance lowers volatility, that if you tell them what the right number is, they’re more likely to get the number right, and therefore, there will be less volatility. It’s not true. Giving quarterly guidance actually increases volatility.
The best thing to do is to have a long-term road map—let the street say what they’re going to say, report the numbers as they are, and talk about what you’re trying to accomplish over time.
Tim Koller: What does FCLTGlobal do to encourage markets to think and behave in more long-term ways?
Sarah Williamson: We do three main things: build community, conduct research, and get the word out.
We have built a community of companies and investors that care about this. We create opportunities for investors, company leaders, and CEOs to talk to each other about these issues. We get people together, and sometimes that’s when the light bulb goes on.
We do a lot of research. We try to make it very practical, things that people can just really get done. You can see our research on our website.
Last, we share our research and findings and get the word out about being long term. We talk about how it can be done.
We don’t focus on policy recommendations, because we don’t think there’s a real policy solution here. The solution is to fix markets from the inside out.
Tim Koller: How would you assess the progress that you’ve made so far?
Sarah Williamson: I’m very confident in our diagnosis of the issues and what causes them. I would give us a good grade for understanding why short-termism happens. But there is still work to do to change the system significantly. It’s hard because the incentives are built for the short term.
So can we declare victory and go home? No, not yet.
Tim Koller: How can boards do a better job of picking CEOs who are more focused on the long term?
Sarah Williamson: Though I believe there are some things people are born with, a lot of people are driven by incentives. We’ve done a lot of work on CEO compensation and incentives, and I absolutely think boards can align incentives with long-term thinking. One of the recommendations we’ve made for some time is having CEOs who have stock that’s locked up four or five years post their tenure.
