Within the Global Investment Performance Standards (GIPS(R)), recommendations are to be considered “best practice.” But what exactly IS “best practice?” I did a quick Google search and found some interesting definitions:

• The practice that produces superior performance – probably not what the EC (Executive Committee) has in mind
• A superior method or innovative practice that contributes to the improved performance of an organization under given context, usually recognized – again, not really what they have in mind
• The methods and achievements of the recognised leader(s) in a particular field – much closer, I’m sure, but is there evidence that this is the case? For example, the soon-to-be-added recommendation to “provide each existing client, on an annual basis, a compliant presentation of the composite in which the client’s portfolio is included” is, to my knowledge, not being done today by very many firms at all. While this might be a desirable definition, many would argue that it doesn’t apply (who are the recognized industry leaders who do these things?)
• The most desirable or most effective level of activity, which becomes a standard to which other practices are compared – again, I think this would be a desirable definition, but does it really apply? This may be the best so far, though. At least it’s one that can be built upon for GIPS purposes.

The GIPS standards glossary has many terms defined, but “best practice” isn’t among them.This wouldn’t be an easy undertaking but is, I think, a desirable one. I’d argue that the best practice would be to include “best practice” in the glossary, if it’s going to be used! Clearly others agree, thus the plethora of alternative definitions.