How to Survive a Verification Part 3: Verification Testing

There is a common assumption among boutique investment managers that the Global Investment Performance Standards (GIPS®) are built for the largest firms in the industry — that compliance is something you pursue once you've reached a certain scale, a certain client type, or a certain level of institutional credibility.

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That assumption is understandable. And it is costing firms real opportunities.

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The GIPS standards have no AUM threshold to get started. There is no minimum number of clients or composites required before a firm can claim compliance. And increasingly, the institutional marketplace is not waiting for firms to reach some undefined moment of readiness before asking for it. If you are newer to the GIPS standards and want a foundation for what they are and why firms pursue them, start with our post What Are the GIPS Standards?

The Market Has Already Decided

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The gatekeepers of institutional capital such as consultants, outsourced CIO platforms, model delivery networks, and institutional allocators, have been quietly raising the bar on performance reporting standards for years. GIPS compliance has shifted from a differentiator to a baseline expectation in many of these channels.

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According to eVestment, two out of three manager searches conducted by investors and consultants on their platform exclude firms that are not GIPS compliant. That means boutique managers without a compliance claim are not being passed over, they are simply not being seen. As we explored in From Compliance to Growth, GIPS compliance has effectively become the price of admission for firms seeking to expand into institutional channels.

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The question is not whether your firm will eventually need it. For most managers with institutional ambitions, the answer to that question is already yes. The real question is when you choose to pursue it, and whether you make that choice on your own terms or in response to a mandate you cannot afford to lose.

What Compliance Actually Builds Inside Your Firm

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The benefits most managers focus on are external. Things like the credibility signal, the access to channels, the due diligence box that gets checked. Those benefits are real. But some of the most meaningful returns from GIPS compliance are internal.

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Implementing the GIPS standards requires firms to formalize processes that often exist informally. Composite definitions. Discretion criteria. Benchmark selection rationale. Fee policies. Error correction procedures. For many boutique managers, the implementation process is the first time these decisions have been documented and applied consistently across the firm.

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That discipline matters beyond GIPS compliance itself. A firm with clean, documented performance infrastructure is better positioned for regulatory examinations, investor due diligence, and operational due diligence reviews. It demonstrates to sophisticated allocators that the firm is run with the same rigor they apply to their own oversight responsibilities. And for firms that are not primarily focused on institutional distribution, this operational foundation has standalone value, the kind of infrastructure that supports sound governance regardless of who is asking. For more on what a well-governed GIPS compliance program looks like once it is in place, see What Good GIPS Compliance Governance Looks Like in Practice.

The Single Best Argument for Starting Now

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Here is the point that does not get made often enough: the smaller your firm and the shorter your track record, the easier it is to become compliant. That ratio flips quickly as you grow.

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Retroactively constructing composites across a large number of separate accounts is genuinely difficult work, particularly when no framework existed at the time to assign accounts to composites at inception, or to move accounts between composites as investment objectives changed, client restrictions were added or removed, or mandates evolved. Working through that history portfolio by portfolio, period by period, requires both detailed documentation and sound judgment. It is one of the most time-consuming phases of any GIPS compliance implementation, and the complexity compounds with every account and every year of history added.

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A firm with 30 separate accounts and a two-year track record faces a very different implementation project than the same firm a few years later with 500 accounts and a five-year track record. The strategy, the clients, and the investment process may be nearly identical, but the administrative burden of reconstructing historical composite membership correctly is not.

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The firms that find implementation most manageable are the ones that started before the project grew into something unwieldy. The firms that find it most painful are the ones that waited until an institutional prospect made it urgent.

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What if you are not ready to commit to full compliance yet?

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That is a legitimate position. But there is a practical middle path worth considering: even if a firm does not want to claim compliance with the GIPS standards today, building out the composite structure and creating policies and procedures for managing those composites now is a worthwhile investment. That framework does not require a formal compliance claim to be useful. Additionally, it can be carried directly into a full GIPS compliance program when the time is right, dramatically reducing the effort required at that stage.

The Real Costs

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Becoming GIPS compliant requires real work, and it is worth being direct about what that entails. At a high level, implementation comes down to four phases: defining the firm, building a GIPS standards policies and procedures manual, constructing composites and calculating performance, and creating GIPS Reports with ongoing monitoring controls. We walk through each phase in detail in A Practical Framework for Implementing the GIPS Standards.

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In terms of ongoing commitment, firms should expect monthly composite management, annual GIPS Report updates, periodic policies and procedures reviews, and distribution tracking. For a lean team, owning all of this internally is often not realistic. The good news is that outsourcing to a GIPS compliance consultant is a well-established path for boutique managers and one that many firms in our client base have taken successfully. The total cost of compliance for a focused, well-organized firm is frequently lower than managers expect, particularly when implementation is approached while the firm's history and account universe are still manageable.

Is This the Right Time for Your Firm?

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Not every firm is at the same point in this decision. Managers with the strongest case for pursuing GIPS compliance now include:

• Firms actively pursuing institutional mandates or seeking coverage from investment consultants
• Managers on model delivery platforms or building toward that distribution channel
• Firms planning meaningful growth over the next two to three years
• Any manager whose clients or prospects have already raised the question
• Firms that simply want to build a best-in-class performance reporting foundation, regardless of where their distribution strategy stands today

The case is lower urgency for firms focused exclusively on high-net-worth or retail clients with no near-term institutional ambitions; however, there is still value in building a sound performance reporting structure, and the sooner it is established, the easier the work will be.

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On Verification: You Can Wait

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Verification is independent, voluntary, and valuable. It is also not required to claim compliance with the GIPS standards, and for cost-conscious boutiques, it is a reasonable place to exercise flexibility.

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A firm can become GIPS compliant today and gain all the operational benefits and the ability to make the compliance claim and defer pursuing verification until there is specific demand for it. When an institutional prospect or consultant asks whether the firm is verified, that is the right moment to add it. The compliance foundation built now makes that future engagement faster and less disruptive. For a detailed walkthrough of what the verification process involves, see our series How to Survive a GIPS Verification.

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Verification is worth having. It just does not need to happen on day one.

The Longer You Wait, The Heavier the Lift

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GIPS compliance is not an initiative that gets easier with time. Every year a firm grows its account base, extends its track record, and adds complexity to its operations without a compliance framework in place is another year of history that will eventually need to be organized, documented, and reconstructed.

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The managers who find implementation most straight forward are not the ones with the most resources. They are the ones who started early enough that the project was still proportionate to the size of the task.

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If your firm is headed toward institutional distribution (most boutique managers we work with are), the best time to build this infrastructure is before you need it. The second best time is now.

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Longs Peak Advisory Services specializes in GIPS compliance and investment performance consulting for investment managers and asset owners. We have helped over 250 firms implement and maintain compliance with the GIPS standards. If you are evaluating whether now is the right time for your firm, we would be glad to talk through it. Reach out athello@longspeakadvisory.com.

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.

Most firms that decide to pursue compliance with the Performance Standards (GIPS®) already understand why it matters. They know institutional investors and consultants often expect it. They understand the credibility that comes from standardized, transparent performance reporting. And they recognize that a strong performance reporting process can improve internal consistency well beyond marketing.

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What many firms struggle with is not the “why,” but the“how.”

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The GIPS standards can be especially intimidating at first glance. There are detailed requirements, technical terminology, and a long list of considerations that touch everything from performance, to operations, compliance, and marketing. For firms approaching GIPS compliance for the first time, it is easy to feel like they need to solve everything at once.

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Whether working independently or with external GIPS support,becoming GIPS compliant is significantly more manageable when approachedthrough a structured process.

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At a high level, implementing the GIPS standards comes down to four major phases:

1. Define the firm and scope the universe of portfolios
2. Build policies and procedures
3. Construct composites and calculate performance
4. Create GIPS Reports and establish ongoing monitoring controls
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The order matters more than many firms realize. When the foundation is built correctly at the beginning, the downstream work becomes significantly easier. For a broader overview of what the GIPS standards are and why firms choose to comply, see our earlier post, What Are the GIPS Standards?

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_{Phase 1: Define the Firm and Scope Your Universe}

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Before constructing composites or calculating returns, firms first need to define the “firm” for the purpose of claiming compliance with the GIPS standards. This sounds simple, but it is often one of the most important decisions in the entire implementation process.

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The GIPS standards require compliance on a firm-wide basis. Firms cannot selectively apply compliance to only their best-performing strategies or business lines. The firm definition determines which portfolios fall within the scope of compliance and ultimately impacts composite construction, total firm assets, disclosures, and marketing claims.

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For smaller organizations, this step is often straightforward. The legal entity, branding, regulatory registration, and operational structure are usually aligned. In those situations, the firm definition may be relatively easy to document.

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For larger organizations with complex legal structures or ones that operate under multiple brands, the analysis can become significantly more complex.

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The following questions should be considered:

• How is the firm held out to the public?
• Do affiliates or subsidiaries share investment personnel or investment decision-making?
• How are the various entities registered and branded relative to one another? 
• How are investment strategies actually managed across entities?
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The answer to these questions matters because the firm definition affects everything that follows. For complex organizations, it is worth investing real time here and involving compliance and legal teams before any other work begins.

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Once the firm is defined, the next step is performing a full inventory of assets (or portfolios) that fall within the defined firm. That includes discretionary accounts, non-discretionary accounts, pooled funds, terminated portfolios, and any other assets managed by the firm over the entire period for which the firm will claim compliance.

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One of the most common implementation mistakes is discovering late in the process that certain portfolios were overlooked or incorrectly categorized. Taking the time upfront to fully scope the universe of portfolios prevents significant cleanup work later on.

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Phase 2: Build Your GIPS Standards Policies & Procedures Manual

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The next step is building the firm’s GIPS standards policies and procedures manual, often referred to as the GIPS standards “P&P.”

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The GIPS standards require firms to document the policies and procedures used to comply with all applicable requirements. But beyond satisfying the standards themselves, strong documentation creates consistency across operations, compliance, marketing, and portfolio management teams. Your GIPS standards P&P becomes the operational blueprint for how your firm calculates performance and maintains GIPS compliance. When drafted thoughtfully, ongoing maintenance becomes manageable. Firms that rush this phase often find themselves cleaning up problems indefinitely.

A well-designed P&P typically addresses the following:

• Firm definition
• Definition of discretion
• Composite construction rules
• Treatment of significant cash flows and composite minimums
• Calculation methodologies
• Fair valuation hierarchy
• Error correction procedures
• Books and records retention
• GIPS Report distribution policies
• Benchmark selection and changes
• Fee schedules and policies for the use of actual or model fees
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The definition of discretion deserves particular attention. Under the GIPS standards, discretion is not the same thing as having legal discretion documented in the investment management agreement. A client may impose restrictions that prevent full implementation of the strategy, and if those restrictions are significant enough, the portfolio should be classified as non-discretionary under the GIPS standards. Firms should establish objective criteria that can be applied consistently across portfolios and clearly document those criteria within their P&P. This determination has a direct impact on composite construction, as only portfolios deemed discretionary maybe included in composites, while non-discretionary portfolios must be excluded.

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Calculation methodology should also be clearly addressed within the P&P. Firms should define how external cash flows are handled, the methodology used to asset-weight portfolios within composites, and whether any composites are subject to minimum asset levels or significant cash flow policies. For a more detailed discussion of large cash flow policies versus significant cash flow policies—and why both matter—see our post Large vs. Significant Cash Flows: What’s the Difference? These methodologies should be clearly documented.

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Finally, firms often do not devote enough attention to developing their error correction policy during implementation. The GIPS standards require firms to establish materiality thresholds in advance that determine what actions must be taken when an error is identified. The time to think through that process is before an error occurs, not in the middle of responding to one.

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We often find that this is the phase where firms realize that implementing GIPS compliance is not just a performance reporting exercise. It frequently exposes inconsistencies in operational workflows, account coding, historical records, or portfolio classifications. That is not necessarily a bad thing. It allows you to intentionally strengthen processes and reporting before those issues surface in higher-stakes situations such as verification, a regulatory examination, or investor due diligence.

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One of the biggest hidden benefits of the GIPS compliance implementation process is that it forces firms to formalize processes that may have evolved informally over time. Many firms come out of the GIPS compliance implementation process with cleaner data, stronger internal controls, and more consistency across teams.

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The key is to make the policies practical. The best GIPS standards P&Ps are not written purely for regulators or verifiers. They are designed to reflect what the firm actually does in practice and to provide internal teams with a framework they can follow consistently.

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Phase 3: Construct Composites and Calculate Performance

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Once your policies and procedures are in place, firms can begin the process of constructing composites and calculating performance. This is the phase most firms typically associate with GIPS compliance because it is where the visible performance reporting work happens. At this point, much of the difficult decision-making should already be complete. Composite construction is next and while that may sound straightforward conceptually, this is the phase where most firms get stuck in the implementation process.

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Under the GIPS standards, discretionary portfolios must be grouped into composites based on similar investment mandates. The goal is to ensure firms present strategy-level performance fairly and consistently instead of selectively highlighting individual account results. The construction process typically has four steps:

1. Identify every portfolio that meets the composite definition
2. Determine the correct dates each portfolio should be in and out of the composite
3. Asset-weight the portfolio-level monthly returns to produce composite-level performance
4. Calculate all required composite-level statistics, including internal dispersion and the three-year annualized ex-post standard deviation of both the composite and the benchmark

It sounds simple, but it’s not always easy. The data work alone is substantial. Before anything meaningful can be built, the underlying portfolio-level data must be reviewed to ensure it is reconciled and accurate. That foundation matters because everything downstream depends on it.

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The historical composite membership analysis adds another layer of complexity. Strategies evolve. Clients add or remove restrictions. Portfolios change mandates. When building a composite with a ten-year history, the question is not simply which portfolios belong in the composite today. Itis which portfolios belonged in the composite during each period in the historical record, and why. Working through that analysis portfolio by portfolio and period by period requires both strong documentation and sound judgment.

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The good news is that there are tools available to help firms identify historical performance outliers to help test if composite inclusion was accurate. When a portfolio within a composite posts a return that deviates meaningfully from its peers during a given period, that deviation can be identified for further research. Was there a client-imposed restriction during that period that prevented full implementation of the strategy (i.e., making it non-discretionary)? Or was the deviation driven by a large cash flow, different starting position, security-specific activity, or simply the normal variation expected across portfolios managed within the same strategy? The answer determines whether the portfolio appropriately belongs in the composite for that period, and the wrong conclusion in either direction can undermine the integrity of the track record.

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It is also important to be direct about the limits of technology in this process. Software can identify anomalies, efficiently perform calculations, and output results once the inputs are correct, but no system makes judgment calls. Determining how composites should be defined, how discretion should be applied, what constitutes a significant restriction, and how to evaluate edge cases in historical membership all require experienced professionals who understand both the investment strategies and the GIPS standards. The policies documented in Phase 2 provide the framework but applying that framework consistently across real portfolios and real historical circumstances requires thoughtful human judgment at every step.

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Perhaps most importantly, composite construction should not be treated purely as an operations exercise. If composites are built solely around how data happens to be structured within the portfolio accounting system, without input from the investment team and without alignment with sales and marketing, the result may be operationally convenient but commercially ineffective. Bringing together operations, performance, investment professionals, and sales and marketing teams early in the process is essential. That collaboration is what ultimately produces results that are not only GIPS compliant, but also meaningful, defensible, and aligned with how the firm communicates its investment approach.

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Phase 4: Create GIPS Reports and Go Live

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The final phase of becoming compliant is creating the GIPS Composite Report(s). The GIPS Report is the firm’s external-facing proof of compliance and is a presentation that must be provided to every prospective client. Getting to this stage is what most people think of as going live, but in practice it is a milestone, not the finish line.

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GIPS Reports require more than simply presenting returns in a table. Firms must include required statistics, disclosures, benchmark information, and firm-level details necessary for prospective clients to properly interpret the results. The disclosures are especially important because they provide context investors need to understand how the performance was calculated and what the results represent. They are very specific and must be in sync with what is documented in the P&P and what was performed to construct the composites. For more specifics on what is required, see our previous post, How to Update Your GIPS Reports for the 2020 GIPS Standards.

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Once the GIPS Reports are complete and all requirements have been met, the final administrative step to claiming compliance is submitting the GIPS Compliance Notification Form to CFA Institute. This must be filed before compliance can be claimed, and it must be renewed annually.

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Ongoing Maintenance: Where Most Firms Struggle

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Getting to compliance is an achievement. Staying there requires consistent operational discipline.

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The most common breakdowns in ongoing maintenance are rarely dramatic failures. More often, they are small process gaps that compound over time. Portfolios that should have been added to composites were omitted or added late. Significant cash flows were not handled in accordance with the composite’s policy. A new strategy was launched without formally determining whether it warranted the creation of a new composite.

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To avoid these breakdowns, firms should incorporate GIPS compliance procedures into their regular monthly or quarterly performance processes rather than treating compliance as an annual reporting exercise. Clear ownership should be assigned internally and firms should establish a recurring compliance calendar that includes monthly composite reviews and annual GIPS Report updates. The GIPS standards policy manual should also be reviewed at least annually to confirm it continues to reflect how the firm actually operates. For a deeper look at what effective ongoing governance looks like in practice, see our post What Good GIPS Compliance Governance Looks Like in Practice.

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Should You Get Verified

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Verification is not required. Firms that are early in the process sometimes view this as a bigger decision than it needs to be. If a firm chooses to pursue verification, it must be performed by an independent third party, but the decision itself is entirely voluntary.

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That said, verification is generally worthwhile, particularly for firms competing for institutional mandates where GIPS compliance is often considered table stakes. According to eVestment, two out of three searches conducted in their database by investors or consultants exclude firms that are not GIPS compliant, so the marketing benefit can be meaningful. Verification also provides an added level of assurance that the firm’s policies and procedures have been designed in accordance with the GIPS standards and implemented consistently across the organization. Operationally, it can create valuable discipline as well, since the expectation of independent review encourages firms to maintain strong processes throughout the year.

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For firms that are newer to compliance or navigating budget constraints, the best path is often to first establish a solid compliance foundation and then pursue verification when the timing makes sense. We have also worked alongside nearly every major verifier in the industry and can provide practical insight into how different firms approach the process, what working styles may align best with your organization, and how to evaluate which verifier may be the best fit for your needs. For a more detailed walkthrough of the process, see our series on How to Survive a GIPS Verification.

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Final Thoughts

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Becoming GIPS compliant can feel overwhelming at the start, especially when going through it for the first time. But it does not have to be. For firms that approach implementation as a structured operational framework — rather than a collection of isolated technical requirements —typically find the process much more manageable.

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The goal is not simply to produce a compliant presentation. The real value comes from building a repeatable, transparent, and defensible framework for calculating and presenting investment performance.

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When implemented thoughtfully, the GIPS standards do more than support marketing efforts. They help firms improve consistency, strengthen controls, and communicate performance results with greater credibility and transparency. And in an environment where investors continue to demand greater transparency and comparability, those operational improvements can provide a meaningful competitive advantage, strengthening both credibility and investor confidence.

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If you’ve been around the Global Investment Performance Standards (GIPS®) long enough, you know that governance is one of those topics everyone agrees is important, but far fewer firms can clearly explain what good governance with the GIPS standards actually looks like day to day.

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Most firms don’t fail at GIPS compliance because they misunderstand a technical requirement. They struggle because ownership is unclear, decisions are informal, or key knowledge lives in one person’s head. When that person leaves (or when the firm grows) things start to break.

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So, let’s simplify this.

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Below is a practical, real-world view of what good governance looks like when complying with the GIPS standards—not in theory, not in a policy document that no one reads, but in how well-run firms actually operate.

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Start with the Right Mindset: Governance Is About Sustainability

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At its core, GIPS compliance exists to answer one question:

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Can this firm consistently calculate, maintain, and present performance fairly and accurately—regardless of growth, staff changes, or market stress?

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The GIPS standards are built on the principles of fair representation and full disclosure, but governance is what turns those principles into repeatable behavior. Good governance doesn’t mean more paperwork or compliance headaches. It means clear accountability, documented decisions, and controls that actually get used.

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1. Clear Ownership (It’s Rarely Just One Person)

One of the most common governance risks we see is a “GIPS compliance department of one” where critical knowledge, decisions, and processes are concentrated with a single individual. While this can work in the short term, it creates challenges around continuity, oversight, and scalability as the firm grows or changes.

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Good governance starts by clearly defining:

• Who owns GIPS compliance overall
• Who performs monthly/quarterly/annual tasks
• Who reviews and approves key inputs/outputs
• Who resolves judgment calls
• Who ensures it also complies with other relevant regulations  

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In practice, this often looks like:

• A GIPS compliance committee or designated governance group
• Representation from performance, compliance, operations, and senior management
• Defined escalation paths for gray areas (e.g., discretion, composite changes, error corrections)

When a firm isn’t large enough to support a formal committee, outsourcing to a GIPS compliance consultant or a provider of managed services can be an effective alternative. These individuals can help you design policies, create procedures, and essentially manage governance for you.

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But even if you are big enough, having an independent third party on your GIPS compliance committee can provide an objective, well-informed perspective formed by experience across many firms and a deep understanding of what works well in practice.

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2. Policies and Procedures That Reflect Reality

Every GIPS compliant firm has GIPS standards policies and procedures (GIPS standards P&P). Well-governed firms actually use them.

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Strong GIPS compliance governance means your GIPS standards P&P:

• Include procedures your firm actually follows instead of only stating policies
• Reflect how performance is really calculated
• Clearly document firm-specific elections and judgments
• Are updated when the business changes (for new products, systems, asset classes)

Think of your GIPS standards P&P as the firm’s operating manual for performance, not a static compliance artifact. If someone new joined your performance team tomorrow, they should be able to follow your policies and procedures to calculate performance and arrive at the same results. If not, governance needs work.

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3. Formalized Review and Oversight

Good governance includes independent review, even if it’s internal.

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In practice, this often means:

• Secondary review of composite membership decisions
• Review of significant cash flow thresholds and discretion determinations
• Approval of new composites and composite definition changes
• Oversight of error identification and correction

This is where governance protects firms from subtle but costly mistakes, especially those that show up during verification and increase complexity and scope of these engagements. In an ideal situation, these internal reviews should catch issues before they become problems.

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As a provider of managed services, Longs Peak helps firms identify performance outliers, accounts that are breaking composite rules, and other data anomalies. This review significantly reduces the risk of erroneous data ending up in your performance and later caught in verification. If you are not able to do this internally, we strongly recommend outsourcing this effort.

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4. Governance Extends to Marketing and Distribution

One area that has been increasingly important is the intersection of GIPS compliance, the SEC marketing rule, and how you manage the distribution of marketing materials.

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Well-governed firms:

• Control who can distribute GIPS Reports and how they are distributed
• Ensure Marketing understands what is and is not an advertisement that meets the requirements of the GIPS standards
• Coordinate GIPS compliance requirements with broader regulatory rules, including the SEC marketing rule
• Have a clear process for tracking distribution

This alignment helps firms avoid inconsistencies between factsheets, pitchbooks, and GIPS Reports—one of the fastest ways to lose credibility with prospects and regulators.

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Some clients prefer not to mention GIPS compliance at all in their marketing (i.e., on their factsheets and pitchbooks) until a client is clearly interested in one of their strategies. Once they meet the definition of a prospect (as outlined in your GIPS standards P&P), it triggers the requirement to send a GIPS Report and they find this smaller list of prospects easier to maintain. For others, having everything in one document including required GIPS compliance information and disclosures is easier to manage than separate documents.

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There is no “right” way to manage this, but in either case, having a clear process for tracking and reporting performance errors is key.

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5. Documentation of Decisions (Not Just Results)

Here’s a subtle but critical point: Good governance for your GIPS compliance program documents decisions, not just outcomes.

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Why was that composite redefined?
Why was this benchmark changed?

Why was this model fee selected?

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Strong governance creates an audit trail that:

• Supports sound reasoning (which aides in the verification process or even regulatory exams later on)
• Reduces key person risk
• Makes future reviews faster and less stressful

This is especially valuable when firms grow, merge, or experience turnover. Clear documentation allows others to step in seamlessly and continue critical functions without disruption. More importantly, it enables independent parties, such as a regulator or your verifier, to understand, assess, and validate how you are calculating and presenting performance that may not be immediately intuitive.

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6. Governance Is Ongoing, Not a One-Time Project

The best-governed firms don’t “set and forget” their GIPS compliance program. They revisit governance when:

• New strategies launch
• Systems or custodians change
• Regulations evolve
• The firm’s structure changes

In other words, governance evolves with the business—because performance reporting doesn’t exist in a vacuum.

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Even for firms that are not regularly launching new strategies, changing systems or structure, an annual review of your GIPS compliance program and governance framework is critical. This review helps confirm that practices have remained consistent, while also providing an opportunity to reflect on whether you are satisfied with your verifier, assess whether new regulations require updates, and reconsider how composites are managed or described.

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The best time to do this is at year-end so that if you decide something should be changed, you can do that proactively for the upcoming year, rather than having to fix it retroactively.

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What Good GIPS Compliance Governance Really Buys You

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When GIPS compliance governance is working well, firms experience:

• A structured, intentional process for validation of your performance results
• A framework that supports consistency and transparency over time
• Fewer surprises or last-minute scrambles during verification or regulatory review
• Greater confidence from regulators and verifiers that you are following established policies and procedures
• Lower operational and reputational risk

Most importantly, it creates trust internally and externally. Good GIPS compliance governance isn’t about being perfect. It’s about being intentional.

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Clear ownership. Thoughtful documentation. Real oversight. Those are the firms that don’t just claim compliance, they live it.

Key Takeaways from the 29th Annual GIPS® Standards Conference in Phoenix

The 29th Annual Global Investment Performance Standards (GIPS®) Conference was held November 11–12, 2025, at the Sheraton Grand at Wild Horse Pass in Phoenix, Arizona—a beautiful desert resort and an ideal setting for two days of discussions on performance reporting, regulatory expectations, and practical implementation challenges. With no updates released to the GIPS standards this year, much of the content focused on application, interpretation, and the broader reporting and regulatory environment that surrounds the standards.

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One of the few topics directly tied to GIPS compliance with a near-term impact relates to OCIO portfolios. Beginning with performance presentations that include periods through December 31, 2025, GIPS compliant firms with OCIO composites must present performance following a newly prescribed, standardized format. We published a high-level overview of these requirements previously.

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The conference also covered related topics such as the SEC Marketing Rule, private fund reporting expectations, SEC exam trends, ethical challenges, and methodology consistency. Below are the themes and observations most relevant for firms today.

Are Changes Coming to the GIPS Standards in 2030?

Speakers emphasized that while no new GIPS standards updates were introduced this year, expectations for consistent, well-documented implementation continue to rise. Many attendee questions highlighted that challenges often stem more from inconsistent application or interpretation than from unclear requirements.

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Several audience members also asked whether a “GIPS 2030” rewrite might be coming, similar to the major updates in 2010 and 2020. The CFA Institute and GIPS Technical Committee noted that:

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    ·   No new version of the standards is currently in development,

     ·   A long-term review cycle is expected in the coming years, and

     ·   A future update is possible later this decade as the committee evaluates whether changes are warranted.

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For now, the standards remain stable—giving firms a window to refine methodologies, tighten policies, and align practices across teams.

Performance Methodology Under the SEC Marketing Rule

The Marketing Rule featured prominently again this year, and presenters emphasized a familiar theme: firms must apply performance methodologies consistently when private fund results appear in advertising materials.

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Importantly, these expectations do not come from prescriptive formulas within the rule. They stem from:

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1.     The “fair and balanced” requirement,

2.     The Adopting Release, and

3.     SEC exam findings that view inconsistent methodology as potentially misleading.

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Common issues raised included: presenting investment-level gross IRR alongside fund-level net IRR without explanation, treating subscription line financing differently in gross vs. net IRR, and inconsistently switching methodology across decks, funds, or periods.

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To help firms void these pitfalls, speakers highlighted several expectations:

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     ·   Clearly identify whether IRR is calculated at the investment level or fund level.

     ·   Use the same level of calculation for both gross and net IRR unless a clear, disclosed rationale exists.

     ·   Apply subscription line impacts consistently across both gross and net.

     ·   Label fund-level gross IRR clearly, if used(including gross returns is optional).

     ·   Ensure net IRR reflects all fees, expenses, and carried interest.

     ·   Disclose any intentional methodological differences clearly and prominently.

     ·   Document methodology choices in policies and apply them consistently across funds.

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This remains one of the most frequently cited issues in SEC exam findings for private fund advisers. In short: the SEC does not mandate a specific methodology, but it does expect consistent, well-supported approaches that avoid misleading impressions.

Evolving Expectations in Private Fund Client Reporting

Although no new regulatory requirements were announced, presenters made it clear that limited partners expect more transparency than ever before. The session included an overview of the updated ILPA reporting template along with additional information related to its implementation. Themes included:
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     ·   Clearer disclosure of fees and expenses,

     ·   Standardized IRR and MOIC reporting,

     ·   More detail around subscription line usage,

     ·   Attribution and dispersion that are easy to interpret, and

     ·   Alignment with ILPA reporting practices.

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These are not formal requirements, but it’s clear the industry is moving toward more standardized and transparent reporting.

Practical Insights from SEC Exams—Including How Firms Should Approach Deficiency Letters

A recurring theme across the SEC exam sessions was the need for stronger alignment between what firms say in their policies and what they do in practice. Trends included:

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     ·   More detailed reviews of fee and expense calculations, especially for private funds,

     ·   Larger sample requests for Marketing Rule materials,

     ·   Increased emphasis on substantiation of all claims, and

     ·   Close comparison of written procedures to actual workflows.

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A particularly helpful part of the discussion focused on how firms should approach responding to SEC deficiency letters—something many advisers encounter at some point.

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Christopher Mulligan, Partner at Weil, Gotshal & Manges LLP, offered a framework that resonated with many attendees. He explained that while the deficiency letter is addressed to the firm by the exam staff, the exam staff is not the primary audience when drafting the response.

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The correct priority order is:

1. The SEC Enforcement Division

Enforcement should be able to read your response and quickly understand that: you fully grasp the issue, you have corrected or are correcting it, and nothing in the finding merits escalation.

Your first objective is to eliminate any concern that the issue rises to an enforcement matter.

2. Prospective Clients

Many allocators now request historical deficiency letters and responses during due diligence. The way the response is written—its tone, clarity, and thoroughness—can meaningfully influence how a firm is perceived.

A well-written response shows strong controls and a culture that takes compliance seriously.

3. The SEC Exam Staff

Although examiners issued the letter, they are the third audience. Their primary interest is acknowledgment and a clear explanation of the remediation steps.

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Mulligan emphasized that firms often default to writing the response as if exam staff were the only audience. Reframing the response to keep the first two audiences in mind—enforcement and prospective clients—helps ensure the tone, clarity, and level of detail are appropriate and reduces both regulatory and reputational risk.

Final Thoughts

With no changes to the GIPS standards introduced this year, the 2025 conference in Phoenix served as a reminder that the real challenges involve consistency, documentation, and communication. OCIO providers in particular should be preparing for the upcoming effective date, and private fund managers continue to face rising expectations around transparent, well-supported performance reporting.

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Across all sessions, a common theme emerged: clear methodology and strong internal processes are becoming just as important as the performance results themselves.

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This is exactly where Longs Peak focuses its work. Our team specializes in helping firms document and implement practical, well-controlled investment performance frameworks—from IRR methodologies and composite construction to Marketing Rule compliance, fee and expense controls, and preparing for GIPS standards verification. We take the technical complexity and turn it into clear, operational processes that withstand both client due diligence and regulatory scrutiny.

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If you’d like to discuss how we can help strengthen your performance reporting or compliance program, we’d be happy to talk. Contact us.

From Compliance to Growth: How the GIPS® Standards Help Investment Firms Unlock New Opportunities

For many investment managers, the first barrier to growth isn’t performance—it’s proof.
When platforms, consultants, and institutional investors evaluate new strategies, they’re not just asking how well you perform; they’re asking how you measure and present those results.

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That’s where the GIPS® standards come in.

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More and more investment platforms and allocators now require firms to comply with the GIPS standards before they’ll even review a strategy. For firms seeking to expand their reach—whether through model delivery, SMAs, or institutional channels—GIPS compliance has become a passport to opportunity.

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The Opportunity Behind Compliance

Becoming compliant with the GIPS standards is about more than checking a box. It’s about building credibility and transparency in a way that resonates with today’s due diligence standards.

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When a firm claims compliance with the GIPS standards, it demonstrates that its performance is calculated and presented according to globally recognized ethical principles—ensuring full disclosure and fair representation. This helps level the playing field for managers of all sizes, giving them a chance to compete where it matters most: on results and consistency.

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In short, GIPS compliance doesn’t just make your reporting more accurate—it makes your firm more credible and discoverable.

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Turning Complexity Into Clarity

While the benefits are clear, the process can feel overwhelming. Between defining the firm, creating composites, documenting policies and procedures, and maintaining data accuracy—many teams struggle to find the time or expertise to get it right.

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That’s where Longs Peak comes in.

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We specialize in simplifying the process. Our team helps firms navigate every step—from initial readiness and composite construction to quarterly maintenance and ongoing training—so that compliance becomes a seamless part of operations rather than a burden on them.

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As one of our clients put it, “Longs Peak helps us navigate GIPS compliance with ease. They spare us from the time and effort needed to interpret what the requirements mean and let us focus on implementation.”

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Real Firms, Real Impact

We’ve seen firsthand how GIPS compliance can transform firms’ growth trajectories.

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Take Genter Capital Management, for example. As David Klatt, CFA and his team prepared to expand into model delivery platforms, managing composites in accordance with the GIPS standards became increasingly complex. With Longs Peak’s customized composite maintenance system in place, Genter gained the confidence and operational efficiency they needed to access new platforms and relationships—many of which require firms to be GIPS compliant as a baseline.

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Or consider Integris Wealth Management. After years of wanting to formalize their composite reporting, they finally made it happen with our support. As Jenna Reynolds from Integris shared:

“When I joined Integris over seven years ago, we knew we wanted to build out our composite reporting, but the complexity of the process felt overwhelming. Since partnering with Longs Peak in 2022, they’ve been instrumental in driving the project to completion. Our ongoing collaboration continues to be both productive and enjoyable.”

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These are just two examples of what happens when compliance meets clarity—firms gain time back, confidence grows, and new business doors open.

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Why It Matters—Compliance as a Strategic Advantage

At Longs Peak, we believe compliance with the GIPS standards isn’t a cost—it’s an investment.

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By aligning your firm’s performance reporting with the GIPS standards, you gain:

• Access to platforms and institutions that require GIPS compliant firms.
• Credibility and trust in an increasingly competitive landscape.
• Operational efficiency through consistent data and documented processes.
• Scalability to support multiple strategies and distribution channels.

Simply put: compliance fuels confidence—and confidence drives growth.

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Simplifying the Complex

At Longs Peak, we’ve helped over 250 firms and asset owners transform how they calculate, present, and communicate their investment performance. Our goal is simple: make compliance with the GIPS standards practical, transparent, and aligned with your firm’s growth goals.

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Because when compliance works efficiently, it doesn’t slow your business down—it helps it reach further.

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Ready to turn compliance into a growth advantage?

Let’s talk about how we can help your firm simplify the complex.

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📧 hello@longspeakadvisory.com
‍🌐 www.longspeakadvisory.com