One of the most important questions is when should a manager become compliant? Must they wait five years (since a firm must report five years or since inception) or at least one year?
First, the issue about "five years or since inception" is often confusing: if the firm has five or more years of history, THEN they must show at least five (building to 10); however, if the firm is less than five years old, then they must report since inception (and again, build to 10 years of annual returns).
Now, to the question: ASAP! That is, as soon as possible the firm should begin to become compliant. And "why?," you might ask. Because the sooner you begin, the easier the process.
- The firm can design its policies and procedures, and immediately begin to use them.
- They can add accounts to composites as they are brought on.
- They won't have to look back over history but rather will be building in "real time."
- And, the firm can immediately take advantage of their claim of compliance, even though their history may not be extensive.