Key Takeaway

• The biggest trap: “We’re an asset owner, so we’re automatically Chapter B.”
• Scope mismatch happens when branding implies broad compliance but the defined entity is narrow.
• “GIPS compliant strategy” language creates risk—firm compliance is entity-wide, not product-only.
• Distribution discipline isn’t admin; it’s part of fair representation in practice.
• Waiting to think like a verifier causes last-minute panic and expensive rework.

Most GIPS chapter-selection errors don’t happen because someone didn’t read the standards.

They happen because someone read the standards through the wrong lens—usually a legal lens (“what entity are we?”) or an operational lens (“who does performance reporting?”), instead of the GIPS lens (“what role are we presenting performance in, and to whom?”).

Below are the mistakes that show up repeatedly in real implementations—especially in markets where GIPS is still emerging and teams are building credibility infrastructure in parallel with growth.

Mistake #1: “We’re an asset owner, so we’re automatically Chapter B.”

This is the most common and most expensive assumption—because GIPS 2020 specifically warns you away from it.

Under GIPS 2020, asset owners that compete for business must comply with the GIPS Standards for Firms (in that competitive context).

So the moment you are presenting performance to win mandates, attract third-party capital, or market investment management capability, you’ve stepped into Firm-style obligations—even if you also report to an oversight body as an asset owner.

What to do instead:

Write one sentence in your scope memo:

“For GIPS purposes, we present performance as (i) a manager for external mandates, and (ii) an asset owner for oversight reporting.”

That sentence often prevents months of rework.

Mistake #2: Defining the entity based on corporate structure—not how you’re “held out”

GIPS is allergic to artificial boundaries.

Teams often define a “firm” narrowly because it is convenient—then market performance broadly under a group brand. That creates a mismatch between what the market thinks the claim covers and what the claim actually covers.

And since firm compliance is entity-wide (not composite-by-composite), any mismatch between your marketing footprint and your defined firm boundary becomes a credibility risk.

What to do instead:

Before you lock the firm definition, ask:

• How do prospects experience us (website, pitch decks, client contracts)?
• Are we marketed as one investment manager or multiple independent entities?
• Does the performance story cross subsidiaries?

If the answer is “yes,” you need a scope decision that matches reality.

Mistake #3: Treating “GIPS compliance” like a label you can apply selectively

You’ll see this in two forms:

1. “We want our flagship strategy to be GIPS compliant.”
2. “We want to claim GIPS compliance for our institutional business, but not our private clients.”

That’s not how GIPS compliance works for firms. Compliance is not achieved at the composite level. It’s achieved at the firm level.

What to do instead:

If leadership isn’t ready to align the firm-wide policies, procedures, and reporting discipline, then the organization should avoid compliance language until it is ready—and focus on building the system first.

Mistake #4: Confusing “performance reporting” with “marketing performance presentation”

This is subtle, and it’s why performance teams sometimes choose the wrong chapter.

They assume:

“We report performance to internal stakeholders, so we must be in the Asset Owner chapter.”

But internal reporting doesn’t determine the framework. The intended use and audience of the performance presentation does.

If the same performance is used in marketing materials or mandate pursuits, that shifts the relevant obligations toward the Firms framework and GIPS Reports.

What to do instead:

Separate your deliverables:

• governance/oversight reporting packages, and
• external marketing presentations and GIPS Reports.

Even if the numbers come from the same source system, the compliance logic is different.

Mistake #5: Treating report distribution as a “later” problem

Teams love to build composites and templates first. Distribution feels like admin.

But the Firms standards embed expectations around providing GIPS reports to prospective recipients and updating them at least annually for prospects (and making every reasonable effort to provide them in relevant contexts).

That means distribution is not a back-office detail. It’s part of fairness.

What to do instead:

Decide early:

• Who is a “prospect” in your CRM?
• What triggers report delivery?
• Who logs the delivery evidence?
• What is your update cadence and control process?

This also becomes crucial evidence if you pursue verification later.

Mistake #6: Ignoring the “Verifier lens” until the last month

Even if verification is not required for compliance, it changes the seriousness of your program—because it demands that your claim be supportable.

GIPS verification is performed by an independent third party and is intended to provide additional confidence in the claim. Verifier qualification and independence are emphasized in the 2020 framework.

So when teams ignore the verifier lens, they often:

• under-document policies and procedures
• lack evidence trails for key decisions
• make scope decisions verbally (then forget why)
• fail to keep report versions and distribution records

What to do instead:

From week one, treat your GIPS program as if someone will test it—even if that testing happens later.

Mistake #7: Letting “terminology drift” create an accidental compliance claim

This is common in marketing content:

• “GIPS-aligned”
• “GIPS verified performance” (when only the firm is verified, or when nothing is verified)
• “Our returns are GIPS compliant” (compliance is not at the return line-item level)

Even when the intention is innocent, loose language can cause prospects to infer a compliance claim you didn’t intend to make—and then ask for evidence you can’t provide.

What to do instead:

Create a short “approved language” block that marketing must use, and a short “do-not-use” list. Make it part of brand governance.

Mistake #8: For asset owners—treating “total fund” as obvious when it isn’t

Asset owners often discover late that “total fund” is not one clean number.

It can involve:

• multiple pools
• external manager structures
• legacy mandates
• transition accounts
• excluded assets (sometimes for valid reasons, sometimes for convenience)

The Asset Owner framework is designed for oversight reporting and requires a defensible definition of the asset owner boundary and total fund reporting.

What to do instead:

Document total fund composition decisions early, including inclusions/exclusions and the rationale.

The “why these mistakes matter” sentence

Each mistake above creates the same end-state risk:

Your chapter choice and your performance story drift apart.

And when they drift apart, two things happen:

• Prospects lose confidence, or
• Verification readiness becomes a scramble.

Next, we’ll prevent that by translating the standards into execution. Not a 60-item checklist—just five critical checks that should be true before you build anything.

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