We, that is, TSG, are (or should it be, is?) wrestling with a situation where a client may not be consistent in their pre-2011 adoption of “stub periods” for their GIPS(R) (Global Investment Performance Standards) composites (recall that until 1 January 2011, showing stub period performance in your composite materials was an option; and some might argue, not even permitted!). And so this begs the question: “must they (be consistent, that is)?”
The standards expect consistency, but is this in everything a firm does? I would hope not. Surely asset managers should be granted some degree of flexibility, and not be castigated for an occasional, though intentional, lapse.
The Standards shouldn’t be seen as constantly putting up challenges before firms that wish to comply. Surely, it must be challenging and demanding, but not in a silly, nonsensical, unnecessary way.
And while I am the first to criticize those verifiers who “work with their clients” in such a way that they ignore clearly articulated and defined rules (and as a result, put their clients at risk), where the rules haven’t been overly prescriptive, let not the verifier be the one to introduce new and unnecessary hurdles. Your thoughts?