Senior management in Financial Services firms have a responsibility to ensure their employees have sufficient knowledge and understanding of the Regulatory environment they are working in. This knowledge helps in emphasising the need for compliance with policies and procedures in order to protect the firm and the individual from failing to “do the right thing”.
The Global Investment Performance Standards (GIPS®) are a set of voluntary, ethical principles that guide investment firms on how to calculate and present their investment performance.
Firms across the industry are challenged not only by becoming GIPS compliant but also by maintaining such compliance. We can assist your firm with overcoming these challenges by helping build and improve upon your framework for compliance as well as by providing firm-wide verifications and performance examinations.
GIPS compliance by the numbers
Number of consultants
That expect to require alternative asset managers to comply with the GIPS standards
Number of consultants/investors
that believe more pension funds, foundations, endowments and other asset owners will claim compliance with the 2020 GIPS standards
Number of consultants/investors
that exclude managers from searches some or all of the time if they do not claim GIPS compliance
We assist firms with developing the roadmap and building the framework to claim GIPS compliance. Our pre-compliance consulting addresses:
- calculation methodologies
- policy and procedures development
- composite membership guidelines
- a thorough review of your marketing and advertising disclosures
Our independent verifications are designed to assess whether your firm is adhering to the GIPS standards. Our firm-wide verification services will confirm:
- Whether your firm has complied with all the composite-construction requirements of the GIPS standards on a firm-wide basis
- Whether your firm’s processes and procedures are designed to calculate and present performance results in compliance with the GIPS standards
Third-party verification brings credibility to the claim of compliance and supports the overall guiding principles of full disclosure and fair representation of investment performance. Many asset managers find that consultants and institutional investors require GIPS-compliant firms to be verified before moving forward in any searches.
We provide comprehensive, focused performance examinations of specific composite track records. Our examinations could include:
- Whether composite calculations are in compliance with the GIPS standards
- Whether the composite’s compliant presentation includes all of the required statistics and disclosures of the GIPS standards
A firm cannot claim that a particular composite has been examined unless a performance examination has been completed. A performance examination can only be conducted by a verifier after, or in conjunction with, a firm-wide verification.
Why claim GIPS compliance?
- Provides additional credibility in presenting performance numbers in the marketplace
- Reinforces existing client relationships and opens doors to consultants and potential clients
- Fosters comparability of investment results
- Often required in order to be considered for institutional mandates
- Demonstrates commitment to best practices and industry standards
- Facilitates a solid operational foundation for performance calculation and advertising
As February quickly moves into March, firms are looking to begin or finalize the updates needed for the GIPS Reports so that they can market 2020 performance results. Below is a checklist to help determine if your firm has considered all the items needed to ‘flip the switch’ over to the 2020 GIPS standards.
FINRA's release of Regulatory Notice 20-21 allows the use of IRR for investments or funds that have been fully realized but further requires utilizing the calculation methodologies of the Global Investment Performance Standards (GIPS) for investment programs/funds that include both realized and unrealized holdings.
There is just one week to go until Regulatory Horizon 2021 | Navigating Evolving Risks, our free-to-attend European based conference for financial services firms is running from 2-4 March. We outline five reasons why this event is worth adding to your calendar.
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Join us Thursday, March 11 at 11:00 am EST for a live webcast on FINRA Priorities and Hot Topics to learn more about how the recently released priorities may impact you and your compliance program.
The role of the Compliance Officer is a mandatory position in all firms in the Financial Services Industry. They play a major role in assisting Senior Management to ensure that appropriate and effective systems and controls are in place to achieve and maintain compliance with the applicable Rules. While the nature of the Compliance Function is likely to differ from one firm to another, this course provides an easy to follow breakdown of what the Regulator expects of a Compliance Officer and explains, in practical terms how the regulatory expectations and those of Senior Management can be achieved.