GIPS Verification and the SEC Marketing Rule: What Investment Advisers Need to Know

For many investment advisers, GIPS verification and SEC Marketing Rule obligations can feel like separate compliance frameworks. The GIPS standards are a voluntary global standard administered by CFA Institute, while the Marketing Rule is a United States federal regulation under the Investment Advisers Act. In practice, they increasingly overlap because both affect how investment advisers calculate, present, substantiate, and explain performance in marketing materials (CFA Institute GIPS overview, SEC Marketing Rule FAQ).

How the SEC Marketing Rule Governs Performance Advertising

The Marketing Rule applies to most SEC-registered investment advisers and covers advertisements that include performance results, testimonials, endorsements, third-party ratings, and many other forms of adviser marketing. For performance advertising, the rule requires advisers to avoid misleading presentations, show only net performance (or alongside gross performance when gross returns are used), present required time periods for most composites or portfolios, and maintain support for factual claims (SEC Marketing Rule FAQ, 17 CFR 275.206(4)-1).

The SEC’s April 2024 risk alert made the issue more urgent by identifying deficiencies such as advisers advertising gross performance without net performance, omitting required time periods, presenting misleading extracted performance, and lacking adequate policies and procedures for marketing review (SEC April 2024 Marketing Rule Risk Alert).

How GIPS Verification Supports Marketing Rule Compliance

GIPS verification can help because it requires disciplined performance policies, composite construction, annual performance presentation, and net-of-fees disclosures. CFA Institute’s reconciliation paper explains that a GIPS-compliant firm using composites can often satisfy the Marketing Rule’s related-performance concept because composites include all portfolios that meet the composite definition (GIPS and SEC Marketing Rule reconciliation PDF).

Key Differences Between GIPS and the SEC Marketing Rule

Still, GIPS compliance does not automatically equal Marketing Rule compliance. The two frameworks diverge in several important areas, including gross return calculation, required advertising time periods, model-fee treatment for certain non-fee-paying accounts, and hypothetical performance distribution. EY notes that advisers need to understand where GIPS reports may need to be supplemented or adapted to be used as Marketing Rule advertisements (EY SEC Marketing Rule and GIPS analysis).

Why GIPS Verification Is Not an SEC Approval Stamp

The practical takeaway is that a GIPS verification report is a credibility asset, not an SEC approval stamp. GIPS verification tests whether the firm’s policies and procedures are designed to comply with the GIPS standards and have been implemented on a firm-wide basis, but it does not replace a review of each advertisement under the Marketing Rule’s prohibitions and performance-presentation requirements (GIPS and SEC Marketing Rule reconciliation PDF, 17 CFR 275.206(4)-1).

Checklist: Aligning GIPS Materials with the SEC Marketing Rule

Investment advisers should use this checklist when aligning GIPS verification and SEC Marketing Rule:

• Confirm that every advertisement showing gross performance also shows net performance with equal prominence and for the same time period.
• Confirm that 1-, 5-, and 10-year returns, or since inception returns, where applicable, are included when required.
• Document how GIPS composite definitions align with the Marketing Rule’s related-portfolio requirements.
• Review whether GIPS gross returns deduct transaction costs or underlying fund fees and whether marketing disclosures clearly explain the methodology.
• Apply the required model-fee treatment when Marketing Rule requirements differ from the firm’s GIPS presentation approach.
• Avoid broad public use of hypothetical or back-tested performance unless the intended audience and supporting materials satisfy the rule’s restrictions.
• Ensure marketing materials do not imply SEC approval, GIPS Standards endorsement, or verifier endorsement beyond the scope of the verification report.
• Maintain written policies and procedures specific to performance advertising review.

If you want help applying this checklist to your own GIPS composites and performance marketing, request a proposal from TSG. We’ll review your current GIPS verification, performance materials, and SEC Marketing Rule exposure and outline a tailored engagement to close any gaps.

When Performance Certification Is the Right Alternative

For firms that are not ready for full GIPS compliance, independent Performance Certification can still provide valuable assurance regarding performance methodology, track record integrity, and marketing credibility. That is especially relevant for firms seeking access to TAMPs (turnkey asset management programs), model marketplaces, and third-party distribution platforms that require independent performance validation (TSG Performance Certification).

Turning Performance Reporting into a Business-Development Asset

The firms that handle this intersection well will be able to use performance reporting as a business-development asset while reducing regulatory risk. Firms that treat GIPS reports and Marketing Rule materials as interchangeable may face avoidable regulatory review issues, misleading-presentation risk, and lost credibility with institutional prospects.

How Can We Help?

Whether you are exploring GIPS compliance for the first time, preparing for an initial verification, or simply questioning whether your current verifier is providing the level of expertise, responsiveness, and strategic value your firm deserves, TSG can help. As one of the world’s leading investment-performance consulting and GIPS verification firms, we support organizations ranging from emerging managers to some of the largest asset managers and asset owners globally. Our team combines deep technical expertise with practical business insight to help firms strengthen credibility, improve performance reporting, reduce regulatory risk, and turn compliance into a competitive advantage. Contact TSG today to discuss your goals and learn how our GIPS verification, performance consulting, and performance certification services can support your organization.