What documentation is enough?

GIPS(R) (Global Investment Performance Standards) verification clients often ask what they need if one of their clients asks them to make changes to their account; for example, if their client asks them to increase the amount of cash they have.

Ideally, the manager should have a written communication from the client: this can be a letter or email, which provides them with the instructions. I can understand, however, that asking a client to put their request in writing might be difficult, so there are other options, too.

I recommend that asset managers follow up such conversations with a "negative response letter." This is simply a letter, to their client, that basically says something like "Pursuant to today's conversation, we will do XXX for you. If we are mistaken in your instructions, please notify us at your earliest convenience." [I'm not sure that I would actually use the word "pursuant," but that's a different matter.]

A log of the call is also appropriate, whereby the individual who took the call will document what was stated.

An internal email from the person who took the call, summarizing the details of the call and instructs the appropriate party(ies) to take certain action, also helps.

The more documentation, the better. And make sure documents are included in the client's file for easy reference.