I’m conducting a review of a service provider’s performance measurement system. The issue of as-of adjustments came up and they explained that their clients prefer not to see their returns revised because they’d then have to explain why they’re different. Is it that they don’t want to see change? I guess to some extent, this is the case. The client summarized this by saying that they’re clients:
“want consistency over accuracy.”
Their clients
“don’t want to explain the differences.”
I do consider this unfortunate, because we can liken it to the ostrich who buries their head in the sand; they don’t want to know what’s really going on.
I wonder how common this is? The GIPS(R) (Global Investment Performance Standards) now require compliant firms to have an error correction policy. Firms can, of course, choose a very high level as being “material,” which could obviate any need for making corrections. But what’s wrong with correcting something that’s been updated? Surely firms know that there can be errors! Oh, well. Perhaps there’s something to be said for consistency … just not sure what it is.