During any Data Migration concerning a System Conversion, the last thing anyone thinks about is the claim of GIPS compliance.  However, in true Performance Measurement fashion, it is best to first investigate all of your business needs, and then work your way backwards.  In the end, the claim of GIPS compliance is the ultimate business need, therefore, this should be the first thing your firm should consider.  Below are some GIPS considerations to think about prior to engaging in any system conversion.

During any conversion, a 'cut-off' date will need to occur as to when your firm will stop using the old system data, and to begin to use the new system data.  Typically there is a parallel time frame of which both systems are running simultaneously.  However, at some point in time your new Portfolio Accounting System will need to officially start as the defining books and records system.  Some firms think that choosing the Go-Live date will be much less of a headache during non-quarter-end time period (ie April or November).  This not the case when factoring in GIPS, for converting at year-end (ie December 31st), is the most prudent choice.

Pros for a year-end conversion date:

• During your Verification process, the firm will be requested to provide support for its composites. If your firm converts at a non-year end, your firm will have 2 systems from which to pull data from and most likely, the old system will no longer be accessible.

• For documentation & disclosure purposes, it is much easier to document that '2018 was the start of the new system', rather than 'data through May 2017 was in the old system and June 2017 started the new system'. Years after the conversion, no one is going to be able to remember the Month & Year your firm converted.

• Year-end reporting will be much easier when creating your GIPS Composite Report (not to mention marketing materials, client statements, one-off reports, etc) when your firm only has 1 system from which to pull data.

• After the Go-Live date, your firm will be busy enough with year-end reporting, let alone trying to learn how to use a new system. This will allow your firm almost 1 year of preparation prior to your next round of year-end GIPS-based reporting.

The #1 GIPS compliance killer is a portfolio accounting system conversion.  Remember that GIPS Requirement 1.A.25 states that a GIPS compliant firm must be able to support all individual/account level and composite level returns that are contained within a GIPS Composite Report.  When converting the data, the firm must make the business decision as to what specific data it wishes to import into the new system.  Some record keeping options are:

• Maintain access to your legacy system in order to retrieve the historical data in perpetuity

• Create a data warehouse that will contain all of the legacy system information

• Convert every piece of data (securities, transactions, holdings) from the legacy system into the new system

There are many options to choose, and several factors involved in this decision (cost, time, manpower), and all must be weighed carefully.  But always remember, if you are converting to a new system, remember to include the capture of the historical data as part of the overall conversion project.

Some firms are old enough to which they may have already gone through a previous system conversion.  During that previous conversion, it is possible that only the returns and market values were loaded from that previous legacy system into the newer system.  Therefore, while the firm has the return information, it may or may not have kept all of the books and records associated with supporting those previously converted returns.  It is important for your firm to investigate whether or not your firm has gone through a previous historical conversion, and determine the impacts, if any, with regards to being able to support your firm's claim of compliance.