Cost-basis reporting: The impact on investment advisers

Jeff Gowan and Aaron Adolphson

Journal of Securities Operations & Custody, 2012, vol. 4, issue 3, 246-252

Abstract: As US custodians and brokers are well aware, the cost-basis reporting requirement went into effect this year. While the new law does not directly target investment advisors, it does affect them to the extent that they have the fiduciary responsibility to look out for their investor clients’ best interests. They therefore have a stake in ensuring that they are in sync with custodians as to how cost basis is calculated and reported. Custodians and brokers have already invested considerable sums in upgrading their technology platforms to meet the reporting requirement. However, to achieve consistency with advisors in an efficient, automated fashion, systems and workflows between the buy- and sell-side need to be evaluated, and additional upgrades are likely to be necessary. As a provider of technology that automates workflows among advisors, custodians and other counterparties, Advent Software is in a unique position as a neutral intermediary to provide some perspective on these issues. In this paper, the authors share some of the insights gleaned from working with advisors, explore the challenges posed, and identify some of the solution gaps and opportunities for improvement in the current system.

Keywords: cost basis; cost-basis reconciliation; cost information; tax-lot reconciliation; custodian sync (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2012
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