How to Update your GIPS Policies & Procedures for GIPS 2020
Managing Partner
May 20, 2020
15 min
If you are an investment firm or asset owner that complies with the GIPS standards you are required to make some modifications to yourGIPS policies and procedures (“P&P”) to address changes made to the 2020edition of the Standards. The extent of these updates depends on:
- whether your organization plans to adopt any new optional policies,
- whether you have pooled funds to add to the current list of composites, or
- if your organization plans to change any calculation methodologies now allowed under the new standards.
Like other GIPS requirements, consistent application and adequate documentation are critical to ensuring these updates and changes are applied correctly and consistently.
GIPS 2020: Minimum Requirements for all GIPSCompliant Organizations
There are some required GIPS policies & procedure updates that will impact all organizations claiming compliance. At a minimum, all firms and asset owners must address the following in their P&P:
Terminology
What was previously called “Compliant Presentations” are now called “GIPS Reports” in the 2020 GIPS standards. Likely, the term “CompliantPresentations” is used throughout your P&P, which needs to be replaced with“GIPS Reports” to be in sync with the language of the updated standards.
Demonstrate that GIPS Reports are Distributed
It has always been a good idea to maintain a log documenting the distribution of GIPS Reports to help support that your firm met the requirement of providing them to prospective clients; however, it was not previously required. The 2020 edition of the GIPS standards now requires firms to demonstrate how it made every reasonable effort to provide a GIPS Report to prospective clients that are required to receive one.
The most common way to do this is by maintaining a log of the distribution in a spreadsheet or by noting the distribution in your firm’s CRM system. If noting distribution in your CRM, it is important to populate this in a way that can easily be extracted into a report. Your GIPS verifier is now required to test this so you will need to be able to produce a report demonstrating that your firm is distributing GIPS Reports to prospective clients.
In addition, you must now update your P&P to document the process for how this is maintained. Although each firm will need to document this differently to accurately describe their process (i.e., the system in which it is maintained and who is responsible for maintaining it), below is an example of how this may be documented:
Each time a GIPS Report is distributed, the firm’s SalesAssociate is responsible for logging the distribution on the firm’s CRM system.This documentation will include who received the GIPS Report, the version of the GIPS Report they received, the method of delivery, and the date it was delivered. This information may be extracted from the CRM system by the SalesAssociate if requested by a verifier, regulator, or if needed internally.
Error Correction Procedures
In the 2010 edition of the GIPS standards, if a material error was discovered in a compliant presentation, correction and redistribution was required with a disclosure of the change to “all prospective clients and other parties that received the erroneous compliant presentation.” In addition to these, the 2020 GIPS standards specifically call out providing corrected GIPSReports to your current GIPS verifier as well as any former verifier or current client that received the GIPS Report containing the material error.
Currently, most firms’ policies relating to material errors are likely limited to the action they take to redistribute to current prospective clients. We recommend updating this language to specifically address the need to provide the corrected presentation to verifiers and clients who received the erroneous presentation as well. An example of how this may be documented is provided below:
Our firm will determine an identified error is material if the error exceeds the materiality thresholds stated in the Error Correction Policy: Materiality Grid. If this occurs, we will correct all affected GIPS Reports, include a disclosure of the change, and make every reasonable effort to provide a corrected GIPS Report to:
- Prospective clients that received the GIPS Report t hat had the material error;
- Clients and any former verifiers that received theGIPS Report that had the material error; and
- Current GIPS verifier.
Verifier Independence
Verifiers are prohibited from testing their own work and, therefore, cannot help their clients by writing policies, calculating performance, creating GIPS Reports, etc. To help ensure this independence is maintained, firms that are verified are now required to gain an understanding of their verifier’s policies for maintaining independence and to consider their verifier’s assessment of independence to ensure there are no conflicts.
To comply with this, firms must request that their verifier provide documentation describing the measures they take during the verification process to ensure independence is maintained. The procedures for requesting and assessing this needs to be described in the firm’s GIPS policies &procedures. Below is an example of what this might look like:
Our firm has engaged XYZ Verification Firm as an independent third-party verification firm to verify our claim of compliance. Each year, prior to the start of the annual verification, we request the independence policy statement from the verification firm. If there are no changes from the prior year, this confirmation is requested in writing. Any potential threats to independence, either in fact or in appearance, are discussed with the verifier to resolve immediately.
GIPS Report Updates
We will discuss all the changes relating to GIPS Reports in a separate blog; however, some of those changes will require updates to your firm’s GIPS policies and procedures, which we do want to discuss here.Presenting annual internal dispersion and three-year annualized ex post standard deviation is not new; however, it is new that firms are required to disclose whether gross-of-fee or net-of-fee returns are used in these calculations. We recommend adding language to your P&P that makes it clear whether you will use gross-of-fee or net-of-fee returns. Including this in yourP&P will help you ensure the calculation is consistent with the disclosure you will be adding to your GIPS Reports. An example of how this could be worded is as follows:
Composite internal dispersion is measured using the asset-weighted standard deviation of annual gross-of-fee returns of those portfolios included in the composite for the full year. The three-year annualized ex post standard deviation measures the variability of the composite gross-of-fee returns and benchmark returns over the preceding 36-month period.
While either gross-of-fee or net-of-fee returns are acceptable, at Longs Peak we generally recommend that our clients use gross-of-fee returns so the presented volatility relates specifically to the implementation of the strategy and is not affected by management fees (which may differ by account, be paid at different times, etc).
Additionally, there is a new requirement to update GIPSReports with the prior year’s information within 12 months of the period ending. In other words, statistics for the period ending December 31, 2020 must be added to your GIPS Reports by December 31, 2021.That will be plenty of time for most firms, but to ensure this is done, we recommend adding a procedure to your P&P document simply explaining that the reports must be updated within12 months after the end of each annual period.
GIPS 2020: Changes for Firms with Pooled Funds
Firms that have pooled funds will have a few additional changes to make to their GIPS policies & procedures.
Terminology
Most firms will have language in their P&P referring to “prospective clients.” In the 2020 GIPS standards, the term prospective client refers specifically to a prospective separate account investor while the term “prospective investor” is used when referring to a prospective pooled fund investor. Firms need to review their P&P language and make updates to define both terms and ensure they are using the appropriate term depending on the context of what is being described.
List of Pooled Funds
Firms have always been required to maintain a list of composite descriptions, but now the same is needed for each pooled fund the firm manages. For each limited distribution pooled fund, a description needs to be included (similar to what was done historically for composites). Broad distribution pooled funds need to be listed, but no description is required.
If you are unsure whether a pooled fund is considered broad distribution or limited, broad distribution pooled funds are defined in the glossary of the 2020 GIPS standards as “A pooled fund that is regulated under a framework that would permit the general public to purchase or hold the pooled fund’s shares and is not exclusively offered in one-on-one presentations.Limited distribution pooled funds are simply defined as any pooled fund that does not meet the definition of a broad distribution pooled fund.
Pooled Fund Inception Date
Pooled fund performance must be reported back to the pooled fund’s inception date. How the inception date was determined must be documented in the firm’s GIPS policies & procedures. Inception date could be based on when investment management fees are first charged, when the first investment-related cash flow takes place, when the first capital call is made, or when committed capital is closed and legally binding. Whatever criteria is used to determine the inception date must be clearly described in the P&P to ensure an appropriate inception date is used for each pooled fund managed by the firm.
Error Correction Thresholds
If language used to document error correction materiality thresholds is specific to composites, this will need to be modified to incorporate thresholds for statistics reported in GIPS Pooled Fund Reports as well. If the same thresholds are appropriate for both composites and pooled funds (e.g. composite and pooled fund performance can have the same threshold and composite and pooled fund assets can have the same threshold) then this maybe as simple as changing “Composite” to “Composite/Pooled Fund” throughout this section.
Additionally, if your firm is now presenting money-weighted returns and other related multiples for closed-end funds, you will need to add thresholds to your policy for these statistics as well.
Changes for other Optional Policies
The 2020 GIPS standards offer some more flexibility to ensure theyare as meaningful and useful as possible to all types of investment firms and asset owners. If any of these policies are utilized, additional changes will berequired to describe their use in your firm’s GIPS policies & procedures.Examples of these optional policies include, but are not limited to:
Carve-Outs
If a firm decides to utilize carve-outs with allocated cash, the new carve-out composite will need to be documented in the current list of composites. In addition, the firm will need to implement policies and procedures as to how they allocate cash, how they identify appropriate asset buckets to carve-out from existing accounts, which accounts have asset groups that need to be carved-out to meet the new composite definition, and document other composite related policies applied to the carve-out composite.
Portability
Historically, GIPS compliant firms meeting the portability requirements were required to link the historical performance record to the ongoing performance. The 2020 GIPS standards change this to make linking optional. When portable track records exist, firms need to document in theirP&P 1) whether the historical track record meets the GIPS portability requirements and 2) whether they are electing to link the historical performance record or choosing to not link it.
Estimated Transaction Costs
The GIPS standards define “gross-of-fees” as the return on investments reduced by transaction costs. Historically, firms complying with the GIPS standards were prohibited from estimating transaction costs; the use of actual transaction costs was required. The 2020 GIPS standards now allow estimated transaction costs to be used in cases where actual transaction costs are not known.
Using actual transaction costs is straightforward for traditional portfolios that pay transaction costs in the form of commissions oneach trade. The issue most commonly arises with wrap accounts that pay transaction costs as part of a bundled fee.
Historically, firms were not able to present returns gross-of-fees for their composites containing wrap accounts because they wereunable to determine the actual transaction costs. Most firms instead present“pure gross” returns, which are gross of the entire wrap fee and are requiredto be labelled as supplemental information.
Allowing estimated transaction costs will give firms managing wrap accounts the option to estimate the portion of the wrap fee that is for transaction costs and reduce returns by this estimated figure.
If estimated transaction costs are utilized, the firm must disclose in their GIPS Reports how these estimated transaction costs aredetermined. Similarly, the process used to determine the estimated transaction costs and the methodology utilized to reduce the returns by the estimated transaction costs needs to be documented in the firm’s P&P.
Model Management Fees
Previously, GIPS compliant firms using model investment management fees (rather than actual fees) to determine net-of-fee results were required to use the highest investment management fee. This was generally interpreted as the highest fee from the composite’s fee schedule or the highest fee-paying portfolio in the composite, whichever was higher. In the 2020 GIPS standards, firms using model management fees are required to use a fee that is“appropriate” to the prospective client. While the model fee doesn’t specifically have to be the highest fee, the resulting returns still need to be equal to or lower than the results that would be calculated if actual management fees were used.
If your P&P already describes using the highest management fee and you will continue to use the highest fee then no change is needed. If you will implement a new process other than highest fee, then it is important to update your P&P to describe how the model fee will be determined and applied. This description needs to include how you will confirm that the net-of-fee returns using the model fee are not higher than they would be if the actual investment management fees were used.
Presenting Advisory-Only Assets
Firms that have Unified Managed Accounts (“UMA Accounts”) or other similar arrangements where they are simply providing a model to be implemented by another party generally are not able to include these accounts in their total firm assets. These accounts are considered “advisory-only” because the manager is only providing the model and has no responsibility to implement the strategy or monitor the portfolios on an ongoing basis.
This type of arrangement has become increasingly popular over the last decade. Given the popularity of these relationships, many firms now have a large amount of advisory-only assets that they would like to report.Because of this demand, the 2020 GIPS standards have provided guidance outlining the proper way for firms to present these assets separate from their total firm assets. Firms electing to present these assets must make it clear how they intend to report them in their GIPS Reports.
Historically, many firms documented in their P&P something like, “all accounts deemed to be advisory-only, hypothetical, or model in nature are excluded from total firm assets” to make it clear that they were not including anything in total firm assets that was prohibited. Firms now electing to separately present advisory-only assets must add an additional statement describing how they will be presented. For example, “Some of the firm’sstrategies are offered through UMA platforms on an advisory-only basis. Thes assets are presented separately from the firm’s composite assets and total firmassets and will be labelled ‘Advisory-Only Assets’.”
Presenting Money-Weighted Returns
Historically, time-weighted returns were required with two specific asset class exceptions: Private Equity and Real Estate (when RealEstate was managed in a Private Equity-like fund). The 2020 GIPS standards have now removed the asset-class specific requirements. Instead, firms may now present money-weighted returns for any asset class as long as the firm has control over the external cash flows and the composite or pooled fund has at least one of the following characteristics:
- Closed-end
- Fixed life
- Fixed commitment
- Illiquid investments are significant portion of strategy.
For firms meeting this criteria and electing to present money-weighted returns, the P&P must be updated to 1) note that the criteria was met, 2)indicate the election to present money-weighted returns, and 3) outline the methodology utilized to calculate the money-weighted return and other related multiples that must be presented in conjunction with the money-weighted return.
Other Considerations for GIPS Policies &Procedures
When going through your firm’s GIPS policies & procedures to make the required changes for the 2020 GIPS standards, this is a great opportunity to review the document as a whole to ensure everything is still relevant, applicable and accurate. One of the most common deficiencies regulators write in examinations is that policy and procedure documents do not reflect actual practices of the firm. We recommend a comprehensive review be conducted annually. Check out GIPS Compliance Actions for the New Year for a step-by-step guide to this review .
Questions?
If you have a situation that we didn’t cover here that is specific to your firm or for more information on GIPS Policies and Procedures, the changes to the GIPS standards for 2020, or GIPS compliance in general, reach out to us today (or contact Matt Deatherage at matt@longspeakadvisory.com or Sean Gilligan at sean@longspeakadvisory.com).
Popular Post
The Case for Pursuing GIPS® Compliance Before You Think You Need It
July 1, 2026
15 min
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.
That assumption is understandable. And it is costing firms real opportunities.
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
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.
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.
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
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.
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.
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
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.
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.
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.
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.
What if you are not ready to commit to full compliance yet?
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
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.
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?
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.
On Verification: You Can Wait
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.
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.
Verification is worth having. It just does not need to happen on day one.
The Longer You Wait, The Heavier the Lift
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.
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.
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.
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.
A Practical Framework for Implementing the GIPS® Standards
June 3, 2026
15 min
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.
What many firms struggle with is not the “why,” but the“how.”
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.
Whether working independently or with external GIPS support,becoming GIPS compliant is significantly more manageable when approachedthrough a structured process.
At a high level, implementing the GIPS standards comes down to four major phases:
- Define the firm and scope the universe of portfolios
- Build policies and procedures
- Construct composites and calculate performance
- Create GIPS Reports and establish ongoing monitoring controls
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?
Phase 1: Define the Firm and Scope Your Universe
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.
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.
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.
For larger organizations with complex legal structures or ones that operate under multiple brands, the analysis can become significantly more complex.
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?
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.
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.
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.
Phase 2: Build Your GIPS Standards Policies & Procedures Manual
The next step is building the firm’s GIPS standards policies and procedures manual, often referred to as the GIPS standards “P&P.”
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
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.
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.
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.
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.
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.
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.
Phase 3: Construct Composites and Calculate Performance
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.
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:
- Identify every portfolio that meets the composite definition
- Determine the correct dates each portfolio should be in and out of the composite
- Asset-weight the portfolio-level monthly returns to produce composite-level performance
- 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.
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.
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.
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.
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.
Phase 4: Create GIPS Reports and Go Live
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.
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.
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.
Ongoing Maintenance: Where Most Firms Struggle
Getting to compliance is an achievement. Staying there requires consistent operational discipline.
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.
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.
Should You Get Verified
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.
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.
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.
Final Thoughts
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.
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.
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.
What Good GIPS Compliance Governance Looks Like in Practice
March 19, 2026
15 min
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.
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.
So, let’s simplify this.
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.
Start with the Right Mindset: Governance Is About Sustainability
At its core, GIPS compliance exists to answer one question:
Can this firm consistently calculate, maintain, and present performance fairly and accurately—regardless of growth, staff changes, or market stress?
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.
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.
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
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.
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.
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.
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.
3. Formalized Review and Oversight
Good governance includes independent review, even if it’s internal.
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.
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.
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.
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.
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.
There is no “right” way to manage this, but in either case, having a clear process for tracking and reporting performance errors is key.
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.
Why was that composite redefined?
Why was this benchmark changed?
Why was this model fee selected?
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.
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.
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.
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.
What Good GIPS Compliance Governance Really Buys You
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.
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
November 19, 2025
15 min
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.
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.
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.
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:
· 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.
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.
Importantly, these expectations do not come from prescriptive formulas within the rule. They stem from:
1. The “fair and balanced” requirement,
2. The Adopting Release, and
3. SEC exam findings that view inconsistent methodology as potentially misleading.
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.
To help firms void these pitfalls, speakers highlighted several expectations:
· 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.
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:
· 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.
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:
· 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.
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.
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.
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.
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.
Across all sessions, a common theme emerged: clear methodology and strong internal processes are becoming just as important as the performance results themselves.
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.
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
October 30, 2025
15 min
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.
That’s where the GIPS® standards come in.
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.
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.
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.
In short, GIPS compliance doesn’t just make your reporting more accurate—it makes your firm more credible and discoverable.
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.
That’s where Longs Peak comes in.
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.
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.”
Real Firms, Real Impact
We’ve seen firsthand how GIPS compliance can transform firms’ growth trajectories.
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.
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.”
These are just two examples of what happens when compliance meets clarity—firms gain time back, confidence grows, and new business doors open.
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.
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.
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.
Because when compliance works efficiently, it doesn’t slow your business down—it helps it reach further.
Ready to turn compliance into a growth advantage?
Let’s talk about how we can help your firm simplify the complex.
📧 hello@longspeakadvisory.com
🌐 www.longspeakadvisory.com
Recommended Post
Every so often we hear it: "Oh, you're one of the performance software tools."
It's an understandable assumption. We work in the same world as the software providers: composites, Global Investment Performance Standards (GIPS®), performance data, and the systems that produce all of it. From the outside, it can look like we're all selling the same thing.
We aren't. And if you're deciding how to support your performance and GIPS compliance work, the difference is worth understanding.
The short version: Longs Peak is a team of people who do the work with you, or for you. We're not a platform you log into. Behind the scenes, our tools help our team deliver faster, more consistent service. But no number leaves our hands without a real performance expert standing behind it.
Software Gives You a Capability. Someone Still Has to Run It.
A software provider hands you a tool. A good one can be powerful, and those systems offer a ton of capabilities. But once the tool is installed, the work to run it lands on your desk.
Someone on your team still has to load the data, set up and maintain the composites, review the results, chase down the account that looks off, and know the GIPS standards well enough to make the judgment calls. Software can calculate a return. It can't decide whether a new account belongs in a composite, explain why a number moved, or figure out what to do when a custodian changes its data feed.
What We Actually Do
At Longs Peak, we get our hands dirty, so you don't have to. In practice, that means:
- We manage your composites. Membership decisions, inclusion and exclusion, periodic updates, and the returns that come out the other end. We work alongside members of your team to get those questions answered and make the updates for you. The work gets done by a person who does it every day.
- We act as your GIPS expert. When a new strategy launches, a policy needs revisiting, or a gray area comes up, you have someone who knows the standards and has seen the situation before.
- We dig into your data. We look for outliers, accounts that are breaking composite rules, and other anomalies, before they end up in your reported performance and get caught in verification. Not only do we help identify potential issues, but we work with your team to help create the paper trail to provide an explanation if questioned by a verifier.
- We help with system issues. When your system isn't producing what you need, we get inside it and help work out why.
- We design the output. Once the data work is done, we turn it into beautifully designed, client-ready factsheets and reporting. And we understand this information from a performance, compliance, and design perspective.
- We help you communicate what matters most. For your prospects or a board of directors: which statistics support your story, and which just add noise? Those are communication choices, and we help you make them.
None of this is advice delivered from a distance. We maywork with you as a remote team, but we're not remotely hands-off. We work insideyour data, your systems, and your deadlines, the same way a colleague down thehall would. And when something needs fixing, we roll up our sleeves and fix it,so it’s off your plate and your to-do list.
Ways to Work With Us
Every firm is set up differently, so we don't force a single model.
- Fully outsourced. We run composite management on your behalf, start to finish. For firms without a dedicated performance team, this is often the cleanest answer.
- Part of your team. We work alongside your people, taking on the pieces that are heavy, specialized, or just hard to staff. To your colleagues, we're simply part of the performance team.
- Your GIPS expert on call. Your team runs the day-to-day, and we're there for the questions, reviews, and judgment calls that need someone who has seen it all before.
- Your marketing team. Your data is done and ready to be put to work. We turn it into polished factsheets and reporting for prospects, consultants, and boards, and help you decide which parts of your story deserve the spotlight.
Many clients start in one place and shift as their needs change. That flexibility allows us to grow alongside you and offer as much or little support as you need.
Why This Matters
Most firms don't struggle with GIPS compliance because they misunderstand a requirement. They struggle because the knowledge lives in one person's head, the team is stretched thin, or a system issue has been quietly sitting in the queue for months.
Software doesn't fix any of those problems. People do. Having an experienced team involved reduces key-person risk, frees your own staff for higher-value work, and means fewer surprises when verification or a regulatory review comes around.
A Question Worth Asking
If the person who runs your performance work were out for a month, who would pick it up? And if the honest answer is "we'd figure it out" or you simply don’t have an answer, it may be time to think about who else should be in the room.
We're happy to talk through where you are today and what kind of support would actually help. No software demo required. Email us at hello@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.
If you manage money for institutional clients, you've probably heard some version of this sentence: "We can't consider your strategy unless you're GIPS compliant." For a lot of investment managers, that's the moment the Global Investment Performance Standards (GIPS®) stop being an abstract industry term and start being a business requirement.
This guide covers what GIPS compliance actually is, who needs it, what it takes to get there, and how to keep it running once you do. Wherever a topic deserves a deeper dive, we've linked to the longer article that covers it. Think of this as the map, with the detailed trail guides linked along the way.
What Is GIPS Compliance?
GIPS compliance means a firm calculates and presents its investment performance according to the GIPS which is a set of ethical, standardized rules for performance reporting created and administered by CFA Institute. At their core, the GIPS standards rest on two principles: fair representation and full disclosure.
In practice, that means a GIPS compliant firm can't cherry-pick its best-performing accounts to show a prospect. It has to group similar portfolios into composites, present the full history honestly, disclose the assumptions behind the numbers, and apply the same rules consistently across the entire firm.
GIPS compliance is voluntary. No regulator requires it. But it has become the closest thing the investment industry has to a common language for performance. This is often why so many institutional investors, consultants, and platforms require it before they'll even take a meeting.
Who Needs to Be GIPS Compliant?
Any investment manager who wants to compete for institutional business should take GIPS compliance seriously. That includes:
- RIAs and asset managers pursuing institutional mandates (pensions, endowments, foundations, OCIOs)
- Firms seeking placement on model delivery platforms, SMA platforms, or consultant databases
- Managers responding to RFPs where GIPS compliance is a stated requirement
- Firms that simply want a more defensible, standardized way to calculate and present performance — even without external pressure to do so
According to eVestment, roughly two out of three searches run by institutional investors and consultants in their database exclude firms that aren't GIPS compliant. If your strategy to scale your firm includes institutional or consultant-driven channels, GIPS compliance isn't optional in any practical sense, it's the price of admission.
That said, don't mistake GIPS compliance for a purely institutional tool. Even firms with no institutional ambitions benefit from the discipline it offers: consistent calculation methodologies, documented policies, and a defensible and repeatable process for measuring performance. That rigor tends to pay off internally long before a prospect ever asks for it. And every additional firm that complies strengthens the credibility of the standards industry-wide, which benefits compliant firms and investors alike. The question worth asking isn't whether GIPS compliance is relevant to your business, it's whether now is the right time to embark on the path to become GIPS compliant.
(Note: this guide focuses on investment managers. If you're an asset owner — a pension, endowment, or foundation — evaluating your own internal performance reporting, our asset owner GIPS compliance page covers considerations specific to that role.)
Is GIPS Compliance Required?
No. GIPS compliance is a voluntary standard, not a law or regulation, and the SEC doesn't require it. That part isn't where firms gettripped up.
What's worth understanding is how close many firms already are to GIPS compliance without ever setting out to pursue it. The SEC Marketing Rule requires advertised performance to be fair and balanced, substantiated, and — in most cases — presented net of fees. Those requirements weren't written to mirror the GIPS standards, but in practice they've pushed firms toward much of the same discipline: consistent calculation methodology, defensible net-of-fee treatment, and documentation that can withstand scrutiny.
That means a lot of SEC-registered advisers may already have some of the infrastructure GIPS compliance requires before they've ever considered pursuing it formally. If you're already calculating net returns consistently, applying one methodology across accounts rather than picking whatever looks best, and keeping documentation to back up what you advertise, the remaining work (constructing composites, writing the GIPS standards policies and procedures, and assembling GIPS Reports) is often a smaller lift than firms assume, especially if you hire a consultant like Longs Peak to help!
The frameworks aren't identical, and there are places where they diverge. The GIPS standards permit either gross- or net-of-fee presentation, while the SEC Marketing Rule requires net returns whenever gross is shown; when local law or regulation is stricter than the GIPS standards, firms follow the stricter rule and disclose the deviation. We've written a full breakdown of how that reconciliation works, including sample disclosure language, in Navigating GIPS Compliance When Local Laws Conflict. But those are details to reconcile, not reasons to start from scratch.
How to Become GIPS Compliant: The Building Blocks
GIPS compliance rests on four core components, and implementation generally means building them in this order.
1. Define the firm and scope the universe of portfolios. Compliance is claimed on a firm-wide basis, never at the composite, product, or portfolio level. Before anything else, a firm must define itself: which legal entities, offices, and business lines are included, and how the firm is held out to the public. This sounds simple but is often the most consequential decision in the entire process, especially for firms with multiple brands or affiliated entities. Once that's settled, inventory every account, pooled fund, and mandate that falls within the definition.
2. Build the GIPS standards policies and procedures manual (the "P&P"). This is the operational rulebook: how discretion is defined, how composites are constructed, how cash flows are handled, how errors get corrected. A strong GIPS standards P&P reflects what the firm actually does, not what looks good on paper. Documenting it now, before it's tested by a real-world edge case, saves a lot of pain later.
3. Construct composites and calculate performance. Discretionary portfolios with similar strategies are grouped into composites so performance is presented at the strategy level rather than as a cherry-picked account or model portfolio. Composite construction is typically where firms spend the most time, since it requires historical data review, judgment calls about discretion, and reconciliation across systems. Then asset-weight returns and calculate the required statistics for at least five years of compliant history(or since inception, if younger).
4. Create GIPS Reports and file the compliance notification. The GIPS Report is the compliant, disclosure-rich presentation of a composite's performance that must be given to every prospective client. It includes required statistics, fee treatment, and disclosures that give context to the numbers. Once GIPS Reports are complete, the firm files the GIPS Compliance Notification Form with CFA Institute, a final required step before compliance can be claimed, and one that must be renewed annually.
5. Verification (optional, but a good idea). An independent third party can test whether a firm's policies and procedures are designed appropriately and applied consistently firm-wide. It's not required, but it's widely expected in institutional circles (more on this below).
We've written a full phase-by-phase walk through, including the judgment calls that tend to trip firms up (like defining discretion and handling historical composite membership), in A Practical Framework for Implementing the GIPS Standards.
How long does this take? For most firms with a simple, straight forward structure, implementation can be complete in less than one month. For moderately complex firms or simple firms with longer track records, implementation often runs somewhere between three and six months from kickoff to a completed GIPS Report. Firms with complex legal structures, long historical track records, or messy underlying data should expect it to take longer. The upfront investment in earlier phases (firm definition and policy development) as well as the commitment from your team is what usually determines the timeline.
How much will it cost? One of the questions we hear most often is "what does it cost to become GIPS compliant?" The honest answer is that it depends on a lot of inputs. Two firms of similar size can land in very different places depending on how many composites and accounts they manage, how many years of history must be reconstructed, how complete existing records are, how clean the underlying data is, and how much back-and-forth it takes to resolve open questions along the way. Because of that, we scope every engagement individually rather than pricing it off a flat rate card. The factors below are the ones that most reliably move the estimate up or down. Thinking through them ahead of time makes for a much more productive first conversation.
What tends to drive cost:
Composites and accounts in scope: How many strategies need to be reported on, and how many underlying accounts roll up into them? Being larger doesn’t always mean it will cost more, but we typically find that more accounts or composites often means more work to determine their proper placement.
Years of history involved: Are you reconstructing several years (or since inception) of past performance or are you a brand-new firm just getting started? This becomes a bigger factor the longer the track record (which is often tied to data quality).
Quality of existing records: How complete and well-organized is your historical composite membership documentation? This is often the biggest swing factor. We regularly see firms come in confident that their data is clean, only to find once we're in the weeds that it isn't. Being honest about this up front, even where the answer is "we're not totally sure," helps the entire engagement team start with the same expectations rather than discovering the real scope midstream.
Verification plans: Do you intend to pursue verification alongside (or shortly after) the buildout? This adds coordination and review on top of the compliance work itself.
Existing GIPS compliance experience: Are you starting from a blank page or do you already have some policies, procedures, or a prior composite performance to build on? The more existing foundation you have, the better.
Responsiveness and internal bandwidth: How quickly will your team turn around data requests and answer questions? This affects the timeline most directly, but slow back-and-forth does add real hours too.
We like to meet firms where they are. That might mean managing the full project or helping with the pieces that are most challenging or resource-intensive. We can usually find a way to add value even when a full-scope engagement doesn’t make sense. It’s also worth keeping in mind that some larger providers of managed services have minimum fees or engagement sizes, which may make them less practical depending on your needs and budget. If you’re still unsure if this is the right time, check out our post The Case for Pursuing GIPS Compliance Before You Think you Need It.
Do You Need to Be Verified? No. Verification is voluntary under the GIPS standards. A firm can claim compliance without ever being verified.
That said, verification is generally worth pursuing, particularly for firms competing for institutional mandates where GIPS compliance is treated as table stakes. Verification provides independent assurance that a firm's policies and procedures are designed in line with the GIPS standards and applied consistently — which carries real weight with consultants and prospects performing due diligence. It also tends to create useful internal discipline, since the expectation of independent review keeps processes tighter throughout the year.
If you're earlier in your compliance journey or working within budget constraints, it's reasonable to build a solid compliance foundation first and pursue verification once the timing makes sense. For a detailed walkthrough of what the process actually involves, see our series, How to Survive a GIPS Verification.
GIPS Compliance and the SEC Marketing Rule
For US-registered investment advisers, GIPS compliance doesn't happen in a vacuum — it has to coexist with the SEC Marketing Rule. The two frameworks overlap in some places (both care about fair, substantiated, non-misleading performance) and diverge in others (fee treatment, required disclosures, what counts as an advertisement).
Firms that manage this well tend to build one governance framework that covers both — rather than treating GIPS compliance and marketing rule compliance as separate workstreams run by different teams. We cover what that coordination looks like in practice, including how GIPS Reports, factsheets, and pitchbooks should stay consistent with each other, in What Good GIPS Compliance Governance Looks Like in Practice.
Common Mistakes Investment Managers Make
After helping firms through this process for over a decade, the same handful of issues come up again and again:
- Treating GIPS compliance as a one-time project. Compliance is a firm-wide standard maintained continuously — not a binder that gets built once and shelved.
- A "department of one." When all GIPS compliance knowledge lives with a single person, the firm is one departure away from a serious continuity problem.
- Policies that don't reflect reality. A GIPS standards P&P that describes an idealized process — rather than what the firm actually does — creates real exposure during verification or a regulatory exam.
- Weak documentation of judgment calls. Decisions about discretion, composite redefinitions, or benchmark changes need a paper trail, not just an outcome.
- Underestimating the data work. Composite construction is as much a data reconciliation exercise as it is a compliance exercise. Firms that skip a thorough historical review often find problems later — usually during verification, which is the most expensive time to find them.
Maintaining Compliance: It Doesn't End at "Go-Live"
Becoming compliant is a milestone. Staying compliant is the actual job. The most common breakdowns aren't dramatic, they're small process gaps that compound: a portfolio added to a composite late, a significant cashflow handled inconsistently, or a new strategy launched without a composite decision being made.
The firms that stay clean build GIPS compliance into their regular monthly or quarterly performance cycle, assign clear ownership, and review their policies at least annually. We go deeper on what strong day-to-day governance looks like, including how to structure oversight without over-engineering it, in What Good GIPS Compliance Governance Looks Like in Practice.
The Business Case for GIPS Compliance
Compliance work rarely gets exciting attention internally, but the payoff is concrete. Firms that pursue GIPS compliance typically gain:
- Access to platforms, consultant databases, and institutional searches that require it as a baseline
- Credibility with allocators who use GIPS compliance as a proxy for operational rigor
- Consistency across performance, marketing, and compliance teams that often didn't exist before
- A cleaner foundation for scalability, since the process tends to surface and fix data issues before they become bigger problems
We've watched this play out directly with clients expanding into model delivery platforms and formalizing composite reporting for the first time. For real examples of how compliance translated into new business relationships, see From Compliance to Growth: How the GIPS Standards Help Investment Firms Unlock New Opportunities.
Frequently Asked Questions
What is GIPS compliance? GIPS compliance means a firm calculates and presents investment performance according to the Global Investment Performance Standards (GIPS®), a voluntary, globally recognized set of ethical standards administered by CFA Institute.
Is GIPS compliance mandatory in the United States? No. It's voluntary. The SEC does not require GIPS compliance, though many institutional investors, consultants, and platforms require it as a practical condition of doing business.
Who administers the GIPS standards? CFA Institute owns and administers the GIPS standards, including the GIPS Handbook, Guidance Statements, and the Q&A database that firms rely on for interpretive guidance.
How long does it take to become GIPS compliant? Most firms with a straightforward structure can complete implementation in three to six months. Firms with complex legal structures, long track records, or significant data cleanup will typically need more time.
What is a GIPS Report? A GIPS Report is the standardized, disclosure-rich presentation of a composite's or pooled fund's performance that a GIPS compliant firm must provide to every prospective client or investor.
Is verification required? No, verification is optional. However, it's widely viewed as a meaningful credibility signal, particularly for firms pursuing institutional business, and many allocators expect it in practice.
Can smaller firms become GIPS compliant? Yes. Firm size doesn't determine eligibility. Smaller firms often benefit from outsourcing implementation and ongoing maintenance to a consultant rather than building an internal GIPS compliance function from scratch.
Does GIPS compliance replace the need to follow the SEC Marketing Rule? No. They're separate obligations. A firm can be GIPS compliant and still need to independently satisfy SEC Marketing Rule requirements, particularly around net-of-fee presentation and substantiation of claims.
How Longs Peak Helps
Becoming and maintaining GIPS compliance touches every part of a firm: performance, operations, compliance, and marketing. That's a lot to coordinate on top of running the business.
At Longs Peak, we specialize in guiding investment managers through the entire journey. We help write policies and procedures, construct and maintain composites, prepare GIPS Reports, and manage the verification process alongside your chosen verifier. We've helped more than 250 firms and asset owners get there, and we stay with our clients well past go-live to keep compliance running smoothly year after year.
If you're weighing whether GIPS compliance makes sense for your firm, or you're already compliant and want a second set of eyes on how it's being maintained, let's talk.
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 managers assume that losing an allocation comes down to returns. Underperform the benchmark, underperform peers, and the mandate goes elsewhere. That happens, but it's not usually the reason a manager gets cut from a search after the numbers already looked competitive.
More often, it's something in how the performance was presented that made an allocator hesitate. A number that didn't match across two documents. A risk statistic nobody could explain. A question in due diligence that the manager couldn't answer cleanly. None of these are calculation errors. They're trust problems, and trust is what allocators are ultimately seeking when they write a check.
Here are the performance problems we see that cost managers allocations most often, and none of them start with the returns themselves.
The Numbers Don't Match Across Documents
An allocator pulls up your factsheet, your pitchbook, and your GIPS® Composite Report, and the composite's five-year return isn't quite the same in all three. Maybe it's a rounding difference, or the factsheet reflects a different "as of" date. The allocator doesn't know that, and they aren't going to assume the best. Inconsistency reads as carelessness, and carelessness in performance reporting raises an obvious question: what else isn't being checked?
This is why we push firms to treat marketing and GIPS compliance as one coordinated process rather than two departments working from different source files. Every document that leaves the building should trace back to the same underlying data.
This matters even more now that due diligence itself is being automated. Operational due diligence teams and consultants are increasingly running AI tools that cross-check pitchbooks, factsheets, DDQs, and regulatory filings against each other, flagging contradictions that used to slip through manual review. A rounding difference or a stale figure that a person might have missed a few years ago is exactly the kind of inconsistency these tools are built to catch instantly. Clean, consistent marketing materials aren't just good practice anymore — they're what it takes to pass a review that may happen before a person ever looks at your numbers.
Performance That Looks Selected, Not Reported
Showing your best-performing account, your best-performing period, or a composite with an unusually small number of accounts invites the question every allocator is trained to ask: what am I not being shown? Due diligence teams know that everyone can't be top quartile. The SEC Marketing Rule's anti-cherry-picking provisions exist because this pattern is common enough that regulators built rules around it, and sophisticated allocators are watching for it. If your performance can be read as overly flattering rather than representative, assume a diligence team will read it that way.
Wanting to lead with your best numbers is an understandable impulse. But diligence teams are trained specifically to spot it, and selective disclosure, even when every number in it is accurate, tends to read as a bigger warning sign than an honest, complete track record would. The stronger story is discipline: the periods where you held to your stated mandate and didn't deviate even while returns lagged. That's a harder story to tell than "we outperformed," but it's the one that actually holds up, because it shows you didn't drift toward whatever was working elsewhere just to keep pace. Chasing returns outside your stated process isn't skill, it's strategy drift, and allocators are trained to spot that just as readily as cherry-picked out performance.
Our advice: resist the instinct to lead with your best examples, and show the scenarios that build trust instead. We recommend showing the ones that demonstrate you stuck to your stated mandate, policies, and procedures, especially when the outcome wasn't your best quarter. Discipline under pressure is a more durable credential than a strong one-off time period, and it's the kind of evidence that holds up long after that number is forgotten.
Statistics You Show But Can't Explain
A page full of risk statistics doesn't build confidence on its own. It invites a follow-up question, and if the manager can't explain what a downside capture ratio of 85% says about the decisions actually made in the portfolio, the statistic becomes a liability instead of an asset. Allocators aren't just checking whether the numbers are favorable. They're checking whether the manager understands their own portfolio well enough to explain it. Statistics presented without interpretation signal that the second answer is “no.”
Likewise, a page of portfolio characteristics that have nothing to do with how the strategy is actually run are not doing you any favors. If you're not making decisions at the sector level, a sector breakdown doesn't tell an allocator anything about your process. If you don't manage individual position sizing, a top-ten holdings list is not adding value.
Your factsheet should be a roadmap for the conversation you want to have, not a checklist of everything other managers include. Every number on it should be something you can explain: how it got there, what decision it reflects, and what it says about how you manage money. A statistic that's only there because everyone else shows it likely isn't helping you if it doesn’t demonstrate active decision making. It's inviting a question you may not have a good answer to.
It's the same logic as a good resume. One padded with every certification, hobby, and unrelated past role doesn't read as impressive, it reads as overwhelming and maybe irrelevant, and it makes the reader work harder to find what actually matters to the job at hand. A factsheet works the same way. The strongest ones include only what's relevant to the case being made and make it easy to connect every line back to it.
No One Can Explain Why a Decision Was Made
This is the one that costs managers the most, and it's rarely about the numbers at all. An allocator asks why a composite was redefined, why a benchmark changed, or why a particular account was excluded, and the answer is a shrug or "that's how we've always done it." Undocumented decisions create the impression that performance is being managed reactively rather than governed intentionally. Firms that can point to a clear, contemporaneous record of why a judgment call was made close that conversation quickly. Firms that can't do this will leave the allocator wondering what other judgment calls haven't been documented either.
The Common Thread
None of these problems are really about whether the strategy performed well. It comes down to whether the story behind the numbers holds up consistently under scrutiny. Allocators aren't just buying returns. They're also buying confidence that what they're being shown today will still be true, and still explainable, a year from now.
The fix isn't more disclosure for its own sake. It's making sure everything across your performance reporting tells the same, well-documented story before an allocator ever has the chance to ask why it doesn't.
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.
