GIPS provides the industry standard for performance measurement, calculation and presentation. When one believes in the principles, he can't help those beliefs from framing his interpretation of the news.
Yesterday's Wall Street Journal had a small article on the decrease in assets of wealth-management firms. (Personal Finance, D4). To quote, "The 15 largest firms surveyed saw the dollars they manage fall by almost a quarter in 2008..."
As a performance professional and GIPS adherent, my first thought was those 15 need to increase assets under management by 33% to break even. The more important one, though, was to wonder how the calculation was made.
How were the cash flows, presumably negative thanks to client withdrawals, accounted for? How did a 25% decrease in AUM account for the market returns for 2008?
None of this is meant to claim Bank of America Corp.'s Merrill Lynch Global Wealth Management Group and Capgemini Group did not account for this concerns. It is just an example of how the belief in GIPS can inform one's understanding of the printed word.
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