Monday, July 14, 2008
CPA Firm Marketing
"It's easy to see the frayed nerves of credit-crunched investors reflected in the markets. But what changes, if any, will be in store based on the recent pain? A hefty 70% of institutional investors, such as pension funds, want less to do with derivatives and other complex financial products as a result of the past year's credit-market turmoil, according to a KPMG survey to be released Tuesday. ... Ratings agencies got a big thumbs-down in the survey. Only 1% of respondents said they consider rating agencies 'very accurate' in predicting defaults, rendering a key player in the financial system's checks and balances less valuable in investors' eyes. 'Fund managers have huge opportunities to hire world-class people from investment banks' that are shedding talent, says James Suglia, chairman of KPMG's global alternatives advisory committee. Managers also have to improve the ways in which they value derivatives and take responsibility for describing the instruments and their risks in ways investors can understand. Credit-market troubles have harmed returns for 60% of mainstream fund managers, a category that includes retail and mutual funds, the KPMG survey says", WSJ, 1 July 2008.
KPMG might heed Suglia's advice, hire some "world-class people" and assign them to Citigroup's audit. The "world-classers" might understand the economics behind say, SIVs. Could KPMG fit the "world-classers" into its existing compensation structure? Yves Smith (YS) at Naked Capitalism has two related posts worth reading at www.nakedcapitalism.com/2008/07/kpmg-survey-investors-leery-of.html and www.nakedcapitalism.com/2008/07/fools-and-their-money-value-destroying.html, 1 and 2 July 2008. Having read KPMG's survey, YS gives us a link, I conclude it's "Much Ado About Nothing". Its one important point: KPMG's "selling" "world-class people" to other financial institutions. My spin: KPMG is looking to secure business from these people when they land somewhere else or is looking to make joint marketing arrangements with some of the 330 persons surveyed. Hey Mark Olson, you might look into this to see if KPMG is engaging in any prohibited activities.