GIPS Compliance Drops Among Asset Managers – According to Spaulding Group Survey

February 27, 2013

iStock_000019355253XSmall[1]As I reviewed the results of the latest Spaulding Group survey of investment managers and financial advisory firms around the globe, I was surprised to see that while 78 percent of the firms claim compliance, that number actually represents a drop of nearly 4 percent between 2009 and 2012.

Why would this number decrease in a tough competitive environment, where clients are demanding transparency and compliance to the global standards is viewed as a competitive advantage?  There are a few hypotheses but the most common reason is perceived cost.  The survey suggests investment firms spend an average of $61,000 for GIPS verification.  In the unstable economic period of 2009 -2012, where firms were monitoring and managing margins very carefully, the cost to the companies may have outweighed the advantages.

But, as you read deeper into the survey, it also discusses forward trends in GIPS compliance. In contrast to the decrease in firms that are compliant, the survey revealed an upward trend in firms that plan to verify GIPS compliance in the future.  This echoes what we hear from our clients and prospects.  As GIPS standards become more widely accepted and commercially known they are becoming a “must-have” stamp for investors and consultants.  As global asset managers of all sizes vie for the same piece of the market, GIPS compliance is a growing factor in keeping current clients and gaining new ones.

For an asset management firm to claim GIPS compliance there are a number of factors involved – one key piece is having the right performance measurement tools. At SS&C PORTIA, our clients use PORTIA Perform, a performance and attribution platform to compile, calculate and present performance information effectively and accurately, and with the transparency required by GIPS and regulators to ensure compliance.   

– Michael Savage, Product Manager


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