More on reporting standards, guidance, principles

I have had the opportunity to engage in conversation with several folks over the past month or so regarding the CFA Institute's "Principles for Investment Reporting." I remain generally opposed; actually, perhaps more so.

For a document that promotes "transparency," it hardly lives by that principle, given its own lack of transparency (who are its members?).

At no time have the views of the public been solicited regarding the content of the principles.

Interestingly, although the document is intended for the asset management firm's clients, the committee, as I understand it, has no members that work for a pension fund, foundation, endowment, etc. How can you ensure you're providing the right principles without seeking the input from these very persons?

In a recent conversation regarding its "five principles," one, in particular, garnered a lot of attention: "Client preferences are reflected in the investment report." Think about it, how difficult will it be to be able to check off this principle? Are asset managers expected to solicit feedback regarding their performance from their clients? What if the firm decides they can't justify the expense to modify their reports to meet their "client preferences"? This principle, while sounding quite attractive and perhaps even reasonable, will no doubt open up a huge "can of worms."

The industry has yet to be asked if they think this is a good idea; and yet, whenever we've surveyed the market, we have found general opposition to anything that looks like a reporting standard.

I am unclear as to what "principles" are supposed to be; guidance would, I believe, be more welcome. And, I think avoiding having managers feeling obligated or compelled to say that they "comply" would be preferred.