The Adoption of Universal Advisor Performance Standards Will Broaden the Base of Advisors Who Can Report Performance to both Clients and Prospects
BrightScope, a leading provider of independent financial information and investment research, and The Spaulding Group, a global leader in investment performance measurement products and services, today jointly announced the release of a new white paper, "Universal Advisory Performance Standards," highlighting the need for an industry consensus performance standard for financial advisors.
Today's technology allows consumers to quickly and easily search for and compare mutual funds, 401k plans, mortgages, and many other types of financial products online, but when it comes to financial advisors there is not an efficient way to select one based on performance.
"Over time, we envision that every financial advisor will want and need to disclose the performance of their investment selections on behalf of clients," said Mike Alfred, the CEO and co-founder of BrightScope. "As the leading performance measurement firm in the money management industry, The Spaulding Group's expertise is perfectly complimentary to BrightScope's vision, and together we're confident we can unify the industry around this new standard."
Currently many advisors and broker-dealers do not calculate and do not disclose performance to the general public, making it difficult for prospects to select the right advisor and challenging for the best advisors to grow their practice. As a result, the act of selecting an advisor has been limited to personal recommendations, and what little information consumers can find on the SEC and FINRA websites.
"BrightScope Advisor Pages has done a good job to bring transparency into the marketplace, however since there is no clear guidance or industry standard, many advisors refrain from reporting performance out of fear they might run afoul of SEC and FINRA advertising regulations," said David Spaulding, President of The Spaulding Group, Inc."When there is a single standard created specifically for the money management industry, individuals will understandably assume that it applies to them, when it may not. As a result, there can be confusion as well as the use of something that is less than appropriate. By introducing a new standard, specifically designed for financial advisors, we should see increased reporting; it will also allow investors to make a more informed decision on which professional is best qualified to serve them."
To further support universal standards, BrightScope and The Spaulding Group have founded the Committee for a Universal Advisor Performance Standard. Inaugural advisors to the committee include John Rekenthaler, Vice President of Research at Morningstar; Ric Edelman, Chairman and CEO of Edelman Financial Services LLC; James Edmonds, Executive Director at Morgan Stanley Smith Barney; Joseph Klimas, Vice President of Portfolio Research & Consulting Group at Natixis; Franklin Tsung, President of Appcrown; Christopher L. Davis, President of Money Management Institute and Steven W. Stone, Partner at Morgan, Lewis & Bockius LLP.