After after-tax

The GIPS EC (Executive Committee) has proposed to eliminate after-tax standards from GIPS(R). This is understandable given that (a) there are two country-specific versions (the U.S. and Italy), (b) GIPS is a global standard and there is a desire not to have any country-specific rules, and (c) the prospect of having a generic version of after-tax that would apply to any country seems like a monumental challenge. That being said, I voiced opposition to the elimination of these rules because exceptions should be made. I expect, however, that these rules will disappear.

And so, this raises a question: what happens when they're gone? Managers of taxable accounts should ideally provide after-tax results to clients and prospects. What are they to do when there are no rules? No guidance has yet to be offered.

My recommendation: firms that wish to provide after-tax returns to clients and prospects should include a brief description of how they were arrived at and offer to provide more details upon request. Ideally, U.S. firms should use the rules that exist today. However, they will most likely be free to adopt whatever approach they wish. They should be consistent in their application of such rules and, again, provide information on their approach. I expect the EC will publish guidance as we move forward. I'll keep you posted.