I thought it fitting to offer some suggested resolutions for the coming year.
1. I resolve to become more educated about my profession by reading more about performance and risk measurement. There are countless resources available. The Journal of Performance Measurement(R) offers the most up-to-date thinking from the industry’s leading experts. An annual subscription is quite reasonable, and the journal can be shared with your colleagues. There are also many books that have been published in recent years; it seems as if almost every year there’s a new offering. The Spaulding Group has published several, with more planned.
2. I resolve to get involved more with the industry. There are many ways to do this, including joining a local society and offering to serve on committees. GIPS(R) (Global Investment Performance Standards) has many committees that are often looking for new recruits: considering putting your name forward. By participating you’ll not only grow personally, but will help our industry. The Performance Measurement Forum is also a great way to interact with other performance measurement professionals, and a way to improve yourself as well as your firm.
3. I resolve to become certified. The CFA Institute’s CIPM (Certificate in Investment Performance Measurement) program is a great way to become recognized for your expertise (as well as to strengthen it along the way). It also benefits the industry. By the way, The Spaulding Group offers training and other tools to help you be successful.
4. I resolve to get some training for me and my team. The Spaulding Group offers a variety of training classes. They are quite affordable, and are held in various locales. In addition, for firms that have several folks they want trained, we offer inhouse training, which is even more cost effective.
5. I resolve to get our firm compliant with GIPS. Granted, most institutional asset managers are claiming compliance, but there are many that still don’t, as well as managers that serve other segments of the market. Plus, asset owners can now claim compliance, which is a worthy goal. Our firm can help.
6. I resolve to question why we spend so much money each year on GIPS examinations. Many firms habitually have their verifier conduct composite examinations, without ever stopping to ask “why do we do this?” I have written and spoken at length on this subject, and hold that while the money to achieve and maintain compliance, as well as to have verifications done are investments, the money spent on examinations are generally costs. Investment firms try to wisely invest their clients’ money; why not do the same with your own money? Ask “why are we doing this?” A few of our clients have them done, and feel they have benefits, which is obviously great, but most do not. Try skipping a year and see what happens. If your verifier has never tried to talk you out of examinations, perhaps it’s time to consider a change!
7. I resolve to ensure we’re providing our clients with meaningful information. Is it time for an inventory or review of what you give to clients? I don’t favor reporting standards, but do favor improving what can be improved. Most asset managers fail to provide their clients with money-weighted returns, to accompany their time-weighted ones; in addition, reports often include statistics that don’t apply. Perhaps it’s time for an independent review of what you’re doing.
8. I resolve to attend at least one performance measurement conference in 2014. Great! And why not make it the industry’s leading one? The Spaulding Group’s Performance Measurement, Attribution & Risk (PMAR) conferences do something that no other industry conference does: offer its attendees a risk-free option. Because we’re not a conference company hosting a performance conference, but rather a performance company hosting a conference, we know the topics that are most important and the speakers with the experience, expertise, enthusiasm, and energy to discuss them. Plus, we guarantee that not only will you learn a lot, you’ll also have fun! Our North America conference is in Philadelphia, PA in May, while our European will be in London in June.
9. I resolve to improve our risk measurement and management. The greatest area of need in our industry today is risk measurement and management. What statistics do you provide? How do you calculate them? What else can you offer? Plus, what controls do you have in place for managing risk? The 2008 market downturn’s poor returns are no longer part of your five-year numbers, but the lessons learned about risk can’t be forgotten. What steps have been taken since then to ensure you’re doing a better job?
10. I resolve to continue to find ways to improve myself, my department, my company, and what we do for our clients. In general, you should try to constantly improve; what some have called constant and never ending improvement. Reading, learning, experiencing, listening, getting input from others, and sometimes just spending quiet time in reflection can help.
11.* (a bonus) I resolve to ensure we spend our firm’s money wisely. I mentioned above the notion of questioning having examinations done. But perhaps think about your verification in general: are you getting what you deserve? Do you have to deal with constant turnover over folks doing the verifications, individuals who are in need of training (which you get to provide), who can’t answer your questions, and who seem to take forever to get the job done? Are you forced to repeat the same steps four times a year because your verifier insists upon quarterly? Does your verifier provide “value added” support, such as monthly webinars? If not, perhaps you should consider a change.