Performance Perspectives Blog

Not GIPS compliant? How about a non-GIPS verification?

by | May 12, 2017

Let’s face it, the Global Investment Performance Standards (GIPS(R)) are extremely popular, and thousands of asset managers throughout the world have adopted them. And, most of these firms get annual GIPS verifications. Both compliance and verifications are de facto requirements for many, especially in the institutional space.

However, not all managers are able to comply, and in some cases, even if they can, they have chosen not to. But, they can still benefit from having their results verified. The Spaulding Group refers to this as “non-GIPS verifications.” And, we have done them for many of our clients. In most cases they’re done annually, but in at least one case, we actually do them quarterly! Our proprietary non-GIPS verifications provide an independent “sign off” that many managers long for.

Advantages of having a non-GIPS verification done

GIPS verifications must be done in accordance with the GIPS requirements, which are fairly detailed. Non-GIPS provides some flexibility, however.

  • For example, they don’t have to be done at the “firm” level: you can choose what strategies you want verified.
  • They don’t have to be done against actual accounts! We’ve done them for model and back-tested results, too!
  • Non-GIPS verifications don’t have to be done for all of your strategies. Perhaps you only want them for a subset: that’s fine!

What are the benefits of a non-GIPS verification?

In the post-[Bernie] Madoff era, many prospects want some assurance that what you’re showing them has validity. And while GIPS isn’t designed to detect fraud, there is an expectation that the verifier is doing their work “without having blinders on.” That is, that they make some effort to ensure that what’s being reported is legitimate.

If you are not claiming compliance, however, what can you offer? A non-GIPS verification probably “fits the bill!” It allows you to tell your prospects that a knowledgeable, independent, third party has come in, conducted thorough tests, and concluded that what you’re showing is accurate.

Want to learn more about non-GIPS verifications?

If you think you and your organization could benefit from having a non-GIPS verification performed, please contact Patrick Fowler at 732-873-5700 or via his email, PFowler@SpauldingGrp.com. Or, go here!

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