GIPS: Standard 8. Advertising Guidelines

If your firm is claiming GIPS compliance, there are guidelines for that. If performance is being presented, there are guidelines for that, too.

If your firm has followed both sets of guidelines, then you'll be ready to advertise that fact, letting investors know that your firm holds itself to this higher standard. It's a good thing to advertise. But how? Well, first consider what an advertisement is. It's anything written or in electronic form designed for prospective clients; at least two at a time. What sort of thing do you think would be excluded from this definition?

No, an email is written words in electronic form; since it's going to many potential investors, then that's advertising.

No, a few is more than one, and visitors are potential clients. This sounds very much like an advertisement.

Right. "All employees" means it's an internal thing, so that's not advertising. But mass emails, newsletters, other ads all designed to be seen by potential clients count as advertising.

Following the GIPS advertising guidelines aren't going to put you on the wrong side of the law. CFA Institute would never do that. So when there's a conflict between the GIPS advertising standards and local statute, what do you think is the best course of action?

No, if there's a conflict between the law and the standards, and you follow the standards, then you must be breaking the law. Again, the CFA Institute won't put you in that position. When there's a conflict, follow the law.

Of course.

There are several required elements (13 in total) of GIPS advertising guidelines. Many are straightforward: disclose the definition of the firm, the currency used, composite returns and description, the GIPS compliance claim, whether returns are presented net of fees, benchmarks, and a few conditional disclosures. It's fine to add more than what is required, but then there's a question of prominence; perhaps some parts are in big text in the center of the page, and other stuff is in smaller print at the bottom. What do you think might be misleading?

No, that's okay; the required information is what is really important for compliance anyway.

Exactly. Sure, your firm probably has some good things it wants to get across, and that's okay; but the extra stuff can't be more prominent in the advertisement than the required information. As with many other parts of GIPS standards, the goal is full and fair disclosure. Get all of the required elements in there and don't try to hide anything from prospective clients. Let your performance speak for itself.

No, that sounds perfectly fair, and that's allowed by GIPS advertising standards.

To summarize: [[summary]]

A mass email to private investors

A report that goes to all employees each week

A firm newsletter that just a few visitors see each month

Follow the law

Follow the standards

Placing required information in a _larger_ font size than additional information

Placing required information in a _smaller_ font size than additional information

Placing required information and additional information in the _same_ font size

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