Most GIPS compliant firms are aware of the requirement to provide their compliant presentations to prospective clients, but it can be a little confusing how to reference GIPS in other materials.
It is important to remember that you should never just casually reference your firm’s GIPS compliance without considering what disclosures are required to accompany that claim of compliance. Specifically, if you are creating an advertisement (any material meant for a broad audience, generally designed to attract people to become prospective clients of your firm), you have the following three options:
- Don’t mention GIPS at all.
- Mention GIPS and include a compliant presentation with all required GIPS disclosures.
- Mention GIPS and follow the more abbreviated requirements of the GIPS Advertising Guidelines.
Why do some GIPS Compliant firms avoid mentioning GIPS?
One reason firms choose not to mention GIPS in an advertisement is due to space constraints or the logistics of fitting the required disclosures without looking awkward. For example, firms often try to keep factsheets to one page. If including the claim of GIPS compliance and related disclosures would push the presentation to a second page then the firm may elect not to mention GIPS.
Unfortunately, another common reason GIPS compliant firms choose
The Two Options When Mentioning GIPS
Option 1: Include a Compliant Presentation
Compliant presentations include all statistics and disclosures for a composite that are required to be provided to your firm’s prospective clients. While this document is most often used in a one-on-one setting with prospective clients, it can be attached to advertisements that mention GIPS as well.
In some cases, it can be easier to attach the compliant presentation rather than trying to incorporate the advertising disclosures directly into the advertisement. For example, if emailing a newsletter (considered a type of advertisement) and your firm wants to mention GIPS in the letter, you could include the compliant presentation as an attachment to the email rather than trying to fit the advertising disclosures into the newsletter itself. Making a reference to the attached GIPS compliant presentation may be cleaner than adding disclosures directly into the newsletter itself.
Also, many firms looking to add a reference to their GIPS compliance on their website (also considered a type of advertisement) will simply add a link to their compliant presentations rather than putting the advertising disclosures directly on the website. This way, you can simply add a link to the detailed information for each composite rather than adding disclosures referencing who to contact to receive a copy of the disclosures, etc., which is required by the GIPS Advertising Guidelines.
Option 2: Follow the GIPS Advertising Guidelines
Following the GIPS Advertising Guidelines allows a firm to mention GIPS in an advertisement with a more abbreviated set of disclosures than what is required for a compliant presentation. This is the most common option firms follow when they want to mention GIPS in a print ad or press release where attaching a compliant presentation would not be feasible.
The disclosures required by the GIPS Advertising Guidelines are different depending on whether performance is included in the advertisement or not. If you elect to follow the GIPS Advertising Guidelines, we recommend that you use our Required Disclosures for GIPS Compliant Advertisements checklist. This list can greatly assist in helping your firm confidently reference GIPS compliance in all of your advertisements.
Want to learn more?
If you have questions about the GIPS standards, we would be love to talk to you. Longs Peak’s professionals have extensive experience helping firms become GIPS compliant as well as helping firms maintain their compliance with GIPS on an ongoing basis. Please contact us or email Sean Gilligan directly at firstname.lastname@example.org.
Sean P. Gilligan, CFA, CPA, CIPM is the Managing Partner of Longs Peak Advisory Services, LLC. He has 20 years of experience in the investment industry and he specializes in GIPS compliance and investment performance consulting. Visit our website or contact us for more information on our firm and services.