Plan Sponsors Look Before, Not After "Leap"

October 19, 2000 ( - A recent survey by The Spaulding Group found that while Association for Investment Management and Research (AIMR) standards are used by a majority of larger plan sponsors at the RFP stage, they are reviewed infrequently at best after hiring is complete.

Dave Spaulding, President of the Somerset, New Jersey based firm told “My sense is that plan sponsors tend to look for AIMR adherence before the hiring process. I’m not aware that they do it after, because the standards have to do with presentation of materials to a prospect, not to a client. After I’ve become a client of yours, it’s not that I no longer care whether you’re complying with AIMR, but now you’re going to be giving me individual records and I can assess how you’re doing for me.”

However, he noted that the survey did not attempt to confirm if sponsors continued to monitor claims of compliance after the engagement.

Survey Says

The survey found that:

  • While nearly 3/4 of respondents (71%) always inquire whether a prospective manager complies with AIMR performance standards, only 58.1% actually require it.
  • 45.2% of respondents indicated AIMR compliance increases a manager’s chance of being hired.
  • Less than half (41.9%) of respondent’s RFPs even ask about compliance verification, and only 26.7% require it.


Most respondents (67.9%) look for Level II verification–composite level, similar to an audit in which securities held and pricing are verified by an independent third party. A much smaller number (17.9%) require Level I verification, which is a broader, firm-wide review of procedures and AIMR rule adherence as well as composite level audit.

The AIMR standards are intended to:

  • Promote full disclosure and fair representation of investment managers? results.
  • Ensure uniformity in reporting so results are directly comparable among investment managers.
  • Help improve the level of integrity and ethical behavior of the investment community.
  • Promote and support the notion of self-regulation in the industry