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CIPM: What Does it Mean?Damien Laker CIPM, CompoundingHappens.com8th June 2008Wikipedia contains only one definition for the acronym CIPM: Comité international de poids et mesures. Perhaps some people in the investment performance measurement business are also aware that CIPM is a new professional certification (the Certificate in Investment Performance Measurement). Judging by the results of a Google search, this has not been a particularly hot topic on the internet. That is a pity, because there are some good reasons why the CIPM program merits attention. In brief, the CIPM program is a course of study that develops and tests the candidates’ knowledge of investment performance analysis. CIPM certificate holders engage in continuing professional development. Candidates and certificate holders in the CIPM program are subject to the same code of professional ethics as Chartered Financial Analysts. There are perhaps two good reasons why CIPM has not been the acronym on everybody’s lips. One reason is that the program was originally called CGIPS (Certificate in GIPS). This name seemed to suggest that the course was only about GIPS (the Global Investment Performance Standards). So the name was quickly changed to CIPM. Another reason that we haven’t heard very much about CIPM may be that candidates and certificate holders are issued with a 9 page memorandum setting out things that they may or may not say about CIPM. For example, it is permissible to say: “I enrolled in the CIPM program to obtain the highest credential in the global investment performance profession.” However, it is not permissible to say “I am a CIPM” (rather, one should say “I am a CIPM certificate holder”). These rather technical rules possibly discourage relaxed conversation about people’s experiences with the CIPM program. From a candidate’s perspective, both levels of the CIPM study program comprise 10 modules of study. The assessment for each module consists of a three-hour multiple-choice examination. This examination is more difficult than one might expect: the proportion of candidates passing each level tends to hover around 50%. Operating cumulatively, the two levels of examinations cull-out about 75% of those who initially enrol. However, we understand that there is no numerical target for the proportion of candidates who pass each exam. Rather, the assessment process is tailored so that candidates will pass if (and only if) they demonstrate an appropriate level of knowledge. To obtain the CIPM Certificate, a candidate must be able to show that they have a certain level of experience working in the investment performance analysis field. Going forward, they are required to participate in continuing education, and to file a Professional Conduct Statement (PCS) annually. A large portion of the syllabus (43%) is devoted to the GIPS standards. 13% of the course is devoted to ethics and professional standards. The remaining 44% covers performance measurement, attribution, and evaluation. A risk in constructing the syllabus this way is that people might consider it to be “neither fish nor fowl”: not exclusively devoted to GIPS, but yet emphasising GIPS so much that the other topics receive relatively cursory treatment. One way or another, the industry will no doubt provide feedback about the syllabus to the CFA Institute. Various people might have different quibbles about the current structure of the CIPM program, but one issue is paramount. The CIPM program is fundamentally about establishing investment performance analysis as a properly-conducted profession. This is an enormous step forward from the status quo ante, where investment performance analysis tended to be an administrative function, often carried out by people with no training and little experience. If the CIPM program is successful in establishing the principle that investment performance analysis is a highly skilled profession, it will have contributed enormously to the advancement of the investment management industry. This, in turn, will provide a great public benefit. GIPS, CFA, and CIPM are registered trademarks of the CFA Institute. The author of this article is a CIPM certificate holder. |
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