GIPS Compliance in Marketing Materials: Demonstrating Your Competitive Advantage
Chandler Patterson & Jocelyn Gilligan, CFA, CIPM
August 25, 2023
In today’s highly competitive financial landscape, your company must stand out and demonstrate its commitment to transparency and accuracy. One powerful tool at your disposal is the Global Investment Performance Standards (GIPS®).
We know how complicated it can be to become GIPS compliant and that’s exactly why we built Longs Peak – to do the heavy lifting for firms and simplify the verification process. By allowing us to tackle the behind-the-scenes work, we’ve helped hundreds of firms become compliant at a much faster rate than if they’d handled it internally – giving them the opportunity to quickly leverage their GIPS compliant status in their marketing and messaging.
By becoming GIPS compliant and incorporating GIPS compliance into your marketing materials, such as factsheets and pitchbooks, you can strengthen your credibility and trustworthiness among clients and prospects.
Understanding GIPS Compliance & Its Benefits
Before delving into marketing, let’s review the fundamentals of GIPS compliance. The GIPS standards are a globally recognized set of ethical principles that provide a standardized framework for calculating and presenting investment performance to prospective investors.
By complying with the GIPS standards, you demonstrate that your performance results are genuine, comparable, and fairly presented. Moreover, GIPS compliance promotes transparency and instills confidence in potential investors, enhancing your marketability.
Highlighting Your Firm’s GIPS Compliance
After going through all the hard work to become GIPS compliant, it is important to share that status with the world so you can reap the benefits of your efforts! By including information about your firm’s GIPS compliance in your marketing, you instantly communicate your dedication to adhering to global best practices.
Trust is so important in the investment industry. By explaining how your firm is going above and beyond regulatory requirements to ensure your investment performance is presented in a fair and transparent manner helps demonstrate your firm’s trustworthiness and can help you stand out in an oversaturated landscape of options.
Tailoring the Message to Different Audiences
With any marketing effort, it’s important to consider your target audience. Understanding the needs, preferences, and concerns of that audience allows you to speak directly to their interests, fostering stronger connection and engagement.
When mentioning GIPS compliance, keep in mind that retail investors may be less familiar with the Standards and therefore may need more information to understand the benefits. Institutional investors tend to know about the Standards and likely need less explanation. By employing language that resonates with the target audience, you not only capture their attention but further build credibility and trust.
Advertising Your Firm’s GIPS Compliance
Now that we have emphasized the importance of highlighting your firm’s GIPS compliance in your marketing materials, it is important to consider how this should be done. When mentioning GIPS compliance, there are some very specific disclosures that must be included. It is important that your firm does not state or imply that your firm is GIPS compliant without these disclosures.
Firms mentioning GIPS compliance in their marketing have the option either to follow the GIPS Advertising Guidelines or to attach a GIPS Report for the relevant composite or fund being marketed. You can download our checklists of what disclosures to include when following the GIPS Advertising Guidelines or when creating GIPS Reports.
For any marketing piece that includes a GIPS Report, we encourage firms to create a standalone page for the GIPS Report. The GIPS standards have specific requirements for reporting errors on the GIPS Report, so you want to limit information on that page to only what’s required and avoid the potential of having to report errors that could have been avoided if the information was kept separate.
Using Visuals to Enhance Understanding
GIPS Reports and their required disclosures tend to leave marketing teams feeling creatively stifled. But the goal of a good marketing presentation is to be engaging and digestible. Graphs, charts, and infographics can help convey complex performance data with clarity and impact.
Visual representations can be especially effective in illustrating return data and depicting how your strategies have outperformed benchmarks (i.e., growth of dollar line chart) over time. However, always ensure that the visual representations are aligned and never conflict with the information presented within the GIPS Report.
Incorporating Risk Statistics
Of course, no investment performance presentation is complete without discussing risk. There are a variety of risk statistics that can (and should) be used to demonstrate how each strategy you manage performs relative to risk. If you want to learn more about what risk statistics to include, you can read about the most common ones we see here.
Showcasing the Competitive Advantage
Beyond GIPS compliance, highlight the distinct features that set your investment strategies apart from the competition. Emphasize your expertise, team capabilities, and successful track record. While GIPS compliance is a powerful differentiator, showcasing your unique approach to investment management will further position your firm as a top choice for potential investors.
By incorporating GIPS compliance into your marketing materials, you signal a commitment to transparency, accuracy, and investor protection. Emphasize the benefits of GIPS compliance, use visuals to enhance understanding, incorporate a discussion about risk and spotlight your competitive advantage. With these strategies in place, your marketing materials will become powerful tools for attracting and retaining investors, ultimately propelling your company to new heights of success.
Are you ready to leverage the power of GIPS compliance in your marketing materials? Schedule a call with one of our partners to elevate your credibility with investors and gain a competitive edge. Let us help you get started!