How to survive a GIPS verification Part 1: Setting up for success
Matt Deatherage, CFA
July 23, 2021
This article is part one of a three-part series on how to survive a GIPS verification. In this series we will discuss how to structure a successful verification, the initial requests made during a verification, and follow-up sample testing. Part one focuses on the approach we have seen firms successfully implement to get through a verification.
Step 1: Find a committed project manager
Probably the single most important thing necessary to get through a verification is having someone on your team that is committed to seeing the project through to the end. Verified firms come in all shapes and sizes. Therefore, there is not a one-size-fits all approach to managing a GIPS verification that works for every firm. Individuals tasked with overseeing verification projects naturally have other responsibilities, so finding time to focus on the verification can be difficult. But finding the right individual to manage the project can make all the difference.
Step 2: Educate your employees & stakeholders on GIPS and the verification process
Regardless of the size of your firm—and since GIPS compliance is achieved at the firm level—you will likely need input from a variety of people to complete your verification. Small and mid-size firms may not need to create a specific GIPS project team, but should still prepare to obtain input from different departments as verifiers regularly request information that requires input from others.
Educating your team about the importance of your firm’s GIPS compliance/verification and explaining how they can or will contribute to this effort is crucial. Getting their buy-in can make or break your timeline, as disengaged individuals are slow to respond to requests for information. We recommend making sure you get everyone on board. If Longs Peak is helping manage your verification, we can put together a training and deliver it to your team.
Step 3: Build your GIPS verification team
For larger firms, it may make sense to create a GIPS project team to help divide and conquer. Again, GIPS is achieved at the firm level, and therefore it will typically require input from various departments, including: performance, operations, client services, and trading, to name a few. Ideally, you’ll want at least one individual that clearly understands how your organization operates, the various departments that may need to be involved and where to access the documentation required.
The most efficient verification teams get together to discuss verifier requests and develop a plan for how the information is gathered, who is responsible for each type of request and who is ultimately responsible for sending the information back to the verifier.
We find that teams who meet regularly and communicate frequently are most successful at sticking to the timeline. Having a designated project manager to act as the primary contact for the verification can simplify communication and ensure the requested information is organized. Ideally, this individual understands the fundamentals of GIPS – but don’t worry, if they don’t, Longs Peak can act as your GIPS guru. And, unlike your verifier, we’re not restricted by independence requirements so we can get as involved as you need.
Step 4: Create a verification project timeline
In our experience, most firms want their verification completed as soon as possible. Setting up a project timeline with specific milestones and clear deadlines will make this goal a reality. Verifications include numerous rounds of data requests to test different aspects of your firm’s GIPS policies and procedures. What’s great is you don’t have to do it yourself – your verifier or GIPS consultant can help you build out a timeline that works for your firm and will include all the critical objectives necessary. Check out this sample timeline to give you an idea of what’s typical.
When building out your timeline, the most important consideration is setting expectations for all parties involved and making sure they are on board with the project plan. Goals and deadlines are difficult, if not impossible to meet without communication. The firms that struggle the most are typically those that fail to transparently communicate expectations and receive buy-in for the project timeline from the start. Therefore, we strongly encourage you to involve all relevant parties (including your team, verifier and any third-party consultants) in setting project deadlines so everyone is aware of critical dates and milestones that need to be achieved.
Timelines should include goal dates for your firm as well as the verifier to hold everyone accountable to the ultimate goal: completing the verification. Tracking progress on the timeline will provide clarity on where the project is getting delayed and if the overall timeline is in jeopardy. Key stakeholders can use the timeline to evaluate the percentage of completion and can give your team a good sense of how close the project is to finish line.
Step 5: Set up recurring calls/meetings to stay on track
As simple as they are, setting up recurring meetings are a great tool to help keep the verification on track. These recurring calls can be internal to discuss the current requests and create action plans on collecting and delivering the needed data, or they can include your verifier to discuss progress, ask questions, and ensure they can correctly interpret the documentation provided. These meetings should have clear agendas to help the team stay on track with the timeline. Here’s a sample agenda we’ve used with our clients.
If nothing else, the recurring calls help build accountability – no one likes admitting they didn’t achieve what they agreed to since the prior meeting. The tighter the deadline, the more frequent these meetings should happen. These discussions can also be used to evaluate if you need to adjust the timeline from initial expectations.
Step 6: Organize data submissions
As mentioned, verifications typically have multiple rounds of requests for various types of testing (here’s a typical verification request for your perusal). Usually, the most efficient way to get through them is to submit everything from each request at once. This helps you stay organized by making sure all documents needed in a given round are provided. However, this is not always achievable and it may not be appropriate, especially in a time crunch or if just a handful of testing items are holding up the rest.
While potentially less desirable, a piecemeal approach at least keeps the sharing of documents moving and although some documents may still be pending, at least the items provided can be reviewed – getting your firm that much closer to the completion of the verification project.
If you are not able to submit everything from the data requests at once, we recommend approaching the verification requests either by the specific type of testing or type of document being requested. Approaching the verification in blocks of smaller requests will allow you to stay organized, reduce overwhelm, and keep the verification progressing. You can ask your verifier to organize their request in this format or if you work with Longs Peak, we can help you organize it in this fashion and help you get through the request at your own pace.
After data from the initial request is submitted to the verifier (details on initial data requests are discussed in more detail in part two of this three-part series) the verifier will then begin sending sample testing requests (the details of which are covered in part three of this three-part series). If this seems overwhelming, it doesn’t have to be. We literally started Longs Peak to make it easier for firms like yours get through this process.
If anything is not clear from a specific verification request or you are unsure if the documentation pulled is sufficient, give the verifier a call and talk through these issues. Open and ongoing communication will keep your verification on track – and help you avoid wasting time on something not needed.
Step 7: Schedule an onsite verification or extended virtual screenshare
One way to expedite the verification project (or to reignite a stalled project) is to conduct the verification onsite. Most GIPS verification firms are willing to travel to their client’s office to do on-site-testing. This is an efficient way to move through a verification as you will have the verifier’s undivided attention to specifically work through testing items and answer questions – plus, they might have your undivided attention too!
Even if an onsite is not feasible, setting up an extended virtual meeting with screensharing capabilities can help move through data with the verifier and address questions as they arise. Screenshare meetings will allow your team and the verifier to review documents together and talk through any questions on the spot. Feedback can be shared during these meetings to ensure what was provided is sufficient to complete a given testing request.
Regardless of your firm’s size or approach to the verification, ongoing communication between all parties involved is critical to efficiently get through a verification. Setting up a project plan and executing on that plan will help you get through the verification as quickly as possible. Seek help from your verifier as questions arise and if you still are struggling, reach out to an independent consultant like Longs Peak to help you get the project to the finish line.
At the end of the day, GIPS compliance is achieved at the firm level and will likely require contribution from a variety of individuals from your business. Getting buy-in from everyone involved is critical to making sure all parties are on board with the plan and understand the end goal.
For more information on data requests and verification testing, check out part two and three of this three-part series. You can email firstname.lastname@example.org or email@example.com with questions or reach out to us on our website if you need help getting through your verification project.