With the finalization of 2020 performance, most marketing departments are completing their presentations. We have compiled pertinent questions from the GIPS Annual Conference to help compliant firms create marketing materials that follow the latest GIPS standards updates.
Must the GIPS Report reference be on the Table of Contents for pitch books or can it be referenced on the performance pages at the beginning of the performance section?
A GIPS Report can be provided in a slide deck with other material and still meet the distribution requirement. What is new in 2020 is that firms are now required to indicate that a GIPS Report is included. According to the Handbook, the disclosure should be prominent and the GIPS standards suggest adding it to the Table of Contents. A firm can indicate the inclusion of a GIPS Reports in the table of contents or applicable page, such as in the footnote of a relevant composite/representative performance page.
What are “one-on-one presentations”?
Common regulatory phrases often take on different nuanced meanings when complying with the GIPS standards. Although “one-on-one” presentations are frequently referenced by regulators, for GIPS compliance, the term is not specifically defined and best backed into as marketing that is not an “advertisement,” a term that is defined in the GIPS standards. One-on-one presentations can be defined as any presentations made for clients (for products they are not already invested in) or prospective clients or investors where there will be contact with the firm representative and an opportunity to ask questions.
While one-on-one presentations can be a one-off presentation made for a specific client, they are more typically a tailored version of general marketing materials. Why does the definition matter? For the SEC – you are permitted to include gross only performance in one-on-presentations, for example, and advertisements require more disclosures. For GIPS compliance, however, it is the opposite: one-on-one presentations require a full GIPS reports be provided to prospective clients or investors, to encourage transparency and discussion, and advertisements get a pass.
If someone asks for a list of composite or pooled fund descriptions and they are not a prospective client, am I required to provide it?
No. The requirement to offer a list of composite or pooled fund descriptions is disclosed on a firm’s GIPS Reports, website, or other marketing materials, which is only required to be provided to prospective clients or investors. If a competitor asks for your list, the firm is within their rights to inquire about their investment needs.
If we don’t know what product a prospect is interested in, can we omit the fee schedule from the GIPS Composite Report?
No, a fee schedule is requiredto be presented on each GIPS Report. However, a firm can have different fee schedules for different types of prospects. For example, an institutional client likely will not fall into the same fee bracket as a high-net-worth client. Furthermore, you can disclose that actual investment management fees vary from client to client after the fee schedule.
We have a fund that is classified as a broad distribution fund but for some institutional investors we want to give them a GIPS report. If we do this, do we have to then give GIPS reports to all investors?
No, you will not have to give all investors a GIPS Report if you only give it to some. Firms are not required to give GIPS Reports for BDPFs because such funds already have stringent regulatory disclosure requirements. Going above and beyond to provide GIPS reports for some BDPF investors does not change this.
Do I have to include the registered mark every time I use GIPS?
Firms must use the registered trademark at the first or most prominent mention of the GIPS standards. Firms must also include the registered trademark disclosure in each document where GIPS is used, and the trademark must be used again in that disclosure: “GIPS® is a registered trademark owned by CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.” For more information on the registered trademark guidelines please click here.
Another item to note is that during the conference, CFA Institute pointed out that references to CFA Institute should not include “the” prior to mentioning CFA Institute. However, references to the GIPS standards should include the word “the”.
What is the best way to meet the new requirement to demonstrate that we are distributing GIPS Reports to prospective clients?
We recommend that firms keep a marketing log. This can be done in a CRM or Excel. Good information to record includes: Name, Date, type of material or composite, who provided the GIPS Report, and how it was provided (email, mail, in person). We have an excel document we are happy to provide firms looking for an easy to implement example.
Firms should also expect their verifiers to request the log and then perform testing based on the information provided.