(August-2002) Asset managers voluntarily verifying performance

Asset managers are taking it upon themselves to verify their performance figures independently ahead of an anticipated time a few years down the track when it will be mandatory to comply with performance presentation standards.

Professional services consultant PricewaterhouseCoopers’ (PwC) recent survey of the asset management industry has found that 69 per cent of asset managers already undergo independent verification of their performance statistics.

In the third annual survey of its kind, PwC found that 100 per cent of its respondents were compliant with at least one performance presentation standard or were looking to become so in the future.

But despite switching on to the marketing advantages of being compliant, PwC says Australia is behind the rest of the world when it comes to complying with these sorts of standards.

“In Australia, asset consultants are starting to ask investment managers whether their performance has been presented in accordance with performance presentation standards — compliance is considered to be a marketing advantage. Elsewhere in the world, compliance is a marketing imperative,” PwC Asia-Pacific leader of investment performance measurement Jim Power says.

Power adds that in the US, managers might be excluded from requests for proposals if their performance is not compliant.

He says the Australian market is likely to follow this trend, and that managers currently not complying have fallen behind.

Globally, there is a set of standards called GIPS — Global Investment Performance Standards — of which a local version will be adopted in Australia later this year.

“Australia’s adoption of a local version of GIPS will allow asset managers to present their performance in international markets in a way that can be readily measured against the performance of their competitors,” he says.

Some of the other findings of the survey were that compliance with performance standards has almost doubled over the past two years to 61 per cent of respondents, while non-complying respondents said they intended to comply soon.

However, only a small number of asset managers published information about their compliance to performance standards on their web sites, with only nine per cent confirming this. This compares internationally with 60 per cent of global managers.