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CFA Centre Levels Field for Investors

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The CFA Institute wants your clients to see investment performance for separately managed accounts (SMA) or wrap fee accounts calculated in a uniform way, “net-of-fees” in presentations. Starting January 1, 2006, the CFA Centre, the policy and think tank arm of the CFA Institute, in Charlottesville, Virginia, will require investment firms that use its Global Investment Performance Standards, (GIPS) to calculate performance of these accounts uniformly– in a way that states fees explicitly. Participation is voluntary, but there is pressure on investment firms to comply so that investors have an easier time comparing performance and fees. Performance can also be stated “gross of fees” in the same presentation as “net-of-fees” and would include a “current fee schedule appropriate to the presentation,” says Alecia Licata, the CFA Centre’s director of investment performance standards.

For advisors, the new disclosures will provide a “level of confidence,” according to Licata, that SMA or wrap products they recommend to clients come from firms that “have complied with ethical standards,” regarding performance and fee disclosures. The CFA Institute has scheduled a conference on October 25-27, in Philadelphia, for those who want to learn more. Details about the new standardsare available