Trust and transparency — almost every client and prospect is looking for these qualities in an advisor. After spending years building wealth, an investor wants to know that his or her retirement portfolio is in good hands.

Like parents doing research before selecting a day-care facility, investors inevitably ask about an advisor’s track record. But they don’t usually have the financial background to know which metrics to look at or what questions to ask.

Recently, I met with a doctor who was a prospective client. He had met with another advisor who showed him marketing materials about past performance, as is usual. All the charts seemed to only go up, not down. Doctors know that improvement is never a straight line, either with patients or market performance. He apparently decided that he didn’t really trust the first advisor’s data.

Over the years, I’ve heard this same story told many different ways. Many of the prospects were less financially savvy than the doctor was, but it doesn’t take an expert to know when something’s too good to be true.

Smart investors want to know that the information they are given about performance is accurate, comprehensive and reliable. That’s why the advisors in our network follow the CFA Institute’s Global Investment Performance Standards in presenting performance information to clients and prospects.

The CFA Institute designed the standards so clients and prospects would feel confident in the data their wealth managers provide.

Hypothetically, say an investor meets with a firm and is given information about an advisor’s historical performance. Suppose the materials show consistent performance over the past 16 months, but leave out the prior two years of negative performance. While it’s entirely possible that the past 16 months are indicative of the future, and came about because of a change in personnel or strategy, I believe that an investor should have access to the broader spectrum of information.


Global Investment Performance Standards requires firms to provide full disclosure of their performance over a five- or 10-year timeline, and it mandates that returns are presented in both gross terms and after fees.

Verification takes place annually, via an audit, so investors can feel confident in a claim of compliance.

Firms that are fewer than five years old must show performance since inception, and performance metrics are audited to ensure that predictive simulations are not misleading or backtested.

Adhering to the guidelines provides an incentive for firms to strengthen internal risk-control mechanisms and set performance benchmarks, among other actions designed to increase stability and heighten investor confidence. The advisors in our network believe clients feel more secure knowing that these standards are in place.

For smaller RIAs, it can be expensive and difficult to meet these guidelines. But there are ways to ease the burden, like partnering with another firm or tucking in under a larger one. Based on my experience, I maintain that being compliant with Global Investment Performance Standards will go a long way in making investors feel confident.

All advisors relying on active portfolio management should consider how he or she could meet the CFA Institute’s guidelines.

Geoff Frazier is president of Global Financial Private Capital, a wealth management firm based in Sarasota, Fla., with $5.2 billion in AUM.

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