Meeting GIPS Marketing Requirements to Help Win Business

By Julia Reyes, Partner at Ashland Partners & Co., LLP

Compliance check mark on blackboard

Firms often view compliance with the Global Investment Performance Standards, or GIPS, as a major challenge and a tedious chore, but in the end it yields a big benefit: it allows you to market your track record with complete confidence in the integrity of your performance calculations. Many firms, however, may not be aware that the standards include marketing requirements, and even GIPS-compliant firms often struggle to navigate those requirements.

For example, any firm that chooses to claim compliance with GIPS is required to make a “reasonable effort to provide a compliant presentation to all prospective clients.”[1]  You need to provide the compliant presentation the first time you meet with a prospect and once every 12 months thereafter as long as they are an active prospect. So how do you know whether it’s been 12 months since you sent a compliant presentation to a specific prospect? If you’re working with multiple prospects at any given time, tracking each one can be onerous.

One manageable approach is to get on an annual schedule of distributing a compliant presentation to all prospects. Compile a list of current prospects at year-end and send each one an updated compliant presentation at that time. Maybe you first delivered the presentation to a prospect nine months or one month prior, and they’re getting another compliant presentation earlier than the 12 months required. This will allow you to comply with the requirement without spending hours tracking each prospect individually and provide your most current year-end statistics.

Another question firms often ask: When does an interested party become a prospect?  GIPS defines a prospect as any person that (a) expresses interest in and (b) qualifies to invest in one of the firm’s composite strategies. In institutional marketing, the distinction is usually straightforward.  The institutional investor drives the process by putting a specific mandate out to bid, making it by definition a prospect. Working with high net worth or private clients is a bit trickier. The marketing cycle is often slower and initial meetings may cover only general information about the firm and the individual. A good rule of thumb is to provide the compliant presentation when you start getting into the details, and it’s clear that the potential client is both interested and qualified. Having said that, some firms feel that trying to parse between initial conversations and details is too much work, and they will provide a compliant presentation early in the process. Either approach is acceptable under GIPS requirements.

Compliance should take an active role in reviewing the firm’s marketing presentations.  Once approved, make compliant presentations available in a central location in a read-only format for stronger version control. Discourage employees from keeping versions of any presentation on their individual drives or desktops.  If that is not possible, send an email to the marketing team any time there is an update, making them aware of the change and advising them to trash or file any older versions.

Once marketing material is reviewed and available, develop a process to track dissemination. A CRM system is good for this purpose, but if that isn’t feasible, set up a manual tracking process.  In either case, label the approved marketing materials with version numbers and note which version and to whom each is disseminated.

When in doubt, it never hurts to simply include a current GIPS-compliant presentation with any marketing correspondence. And you can always ask your GIPS verifier for guidance.

New to GIPS or just starting to think about it? Ashland Partners and SS&C Advent have a white paper that can help you get started.

[1] Global Investment Performance Standards Handbook, 3rd Edition 2012, Provision 0.A.9.

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Posted in Advisors, Asset Managers, Compliance, Wealth Management

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