GIPS® Advertising Guidelines

It is hard to believe year-end reporting was completed just 3 months ago, and 2019 double-digit returns were something to be celebrated.  It feels like the last 3 months have lasted the equivalent of 12 months. While first quarter 2020 was challenging for most firms on many levels, prospective investors are looking to asset managers for what to do now, how did the firm do during 1Q20 and what else does the firm bring to the table?   It is a great time to show prospects and clients the firm’s commitment to industry best practices along with first quarter performance updates. 

For firms that claim compliance with the GIPS® Standards, there is a good, often under-utilized way to show quarterly performance while also highlighting the firm’s claim of compliance.  The GIPS Advertising Guidelines were streamlined in 2020 and provide firms an option to present performance with important key disclosures, but without pages of disclosures. 

There are other nuances to the GIPS Advertising Guidelines that can be very helpful.  The first is that the GIPS Standards definition of a prospective client or investor states that the client or investor must express interest in a composite strategy or pooled fund AND is qualified to invest in that composite strategy or pooled fund.  This means that just because you provide marketing materials following the GIPS Advertising Guidelines, you do not have to also provide a GIPS Report UNLESS the recipient becomes a prospective client or investor.  Only then do you need to provide a GIPS Report.  Secondly, marketing materials that follows the GIPS Advertising Guidelines do not have to adhere to the firm’s error correction policies.  Error Correction only applies to GIPS Reports.  Additionally, there is no requirement in the GIPS standards to keep track of who has received a GIPS Advertisement.  We believe that this is a great time to take a second look at the GIPS Advertising Guidelines as a way to show the firm’s commitment to best practices as well as 1Q20 performance. 

Can a firm claim compliance without adhering to the GIPS advertising guidelines?  According to a 2013 Q&A there are only two ways for a firm to state that they are compliant with the GIPS Standards, either in a GIPS Report or in an advertisement that adheres to the GIPS Advertising Guidelines. Watch our first episode of A Verifiers Perspective in 5 minutes to get up to speed on the GIPS Advertising Guidelines.  You can also email us at team.cascade@cascadecompliance.com for samples of each of the four different ways to show performance in adherence with the GIPS Advertising Guidelines.

At Cascade, it’s our mission to help clients with GIPS® best practices and provide guidance, clarity and expert accountability for the investment industry.

GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

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