Technology Update

Are you ready for cost basis reporting?

Nov 12, 2007 @ 12:01 am

A "nightmare" is how Shami Kaur, an adviser and certified financial planner with SK Financial Alliance in Cedar Knolls, N.J., describes dealing with cost basis issues and their tax ramifications.

For advisers such as Ms. Kaur, the problem may only worsen if the Tax Reduction and Reform Act of 2007 becomes law.

If the House bill is enacted, advisers will be required to provide cost basis reporting for stock acquired after Jan. 1, 2009, and all other instruments acquired after Jan. 1, 2011. The rule would apply to securities in existing accounts as well as securities transferred into accounts managed by the adviser.

Complying with a cost-basis-reporting requirement "will not be cheap, and it will not be easy, but it is clearly something that Congress is intent on doing," said Travis Larson, a spokesman for the Securities Industry and Financial Markets Association of New York and Washington.

Mr. Larson said that broker-dealers will bear the brunt of the compliance expense, and he thinks that for many of the larger broker-dealers, meeting the requirements would be a matter of reconfiguring their services and software.

For independent or small firms, especially those that hadn't already begun to lay the foundations for meeting the requirements, the outlook may not be as good.

"For those that aren't doing any reporting now, it will be a tough row to hoe. That's why we're calling for the 18 months of implementation time [before the legislation goes into effect]," Mr. Larson said.

Some advisers already have tools in place.

John D. Bochniak, a registered investment adviser and CFP with Compass Financial Consulting LLC in Atlanta, said he isn't worried about compliance, because between his software and custodian, his bases are covered. His firm, which has just over $100 million in assets under management, uses TD Ameritrade Holding Corp. of Omaha, Neb., as its custodian.

"Essentially, the software we use [from Interactive Advisory Software LLC of Marietta, Ga.,] takes the cost basis data from our custodian and allows us to export it into an Excel spreadsheet," Mr. Bochniak said.

Several other vendors and service providers offer applications that can assist advisers in their efforts to comply with whatever reporting rules are mandated.

Here is a brief look at five tools:

AccuBasis is a web-based calculator offered by The Depository Trust and Clearing Corp. of New York in partnership with Networth Services of Phoenix. It provides cost basis data for a client's holdings on a transaction basis using the security name, symbol or CUSIP number and date of purchase. Introduced this past January, the service is available on an enterprise level or by buying bundles of transaction searches, which start at $400 for 25. For more information, visit

Albridge Solutions of Lawrence-ville, N.J., has a tax lot interface built into its wealth-reporting platform that company officials say is little known and thus far little used. The interface synchronizes the Albridge database to that of a participating custodian to provide a history of an investment since its inception. Albridge works with 20 clearing firms and custodians. The interface is available at no extra cost to subscribers. For more information, visit

BasisPro and GainsKeeper are products of Wolters Kluwer Financial Services of Minneapolis. Like AccuBasis, BasisPro is an online historical cost basis generator for individual securities that provides realized and unrealized gains and losses. It is available directly and as part of Intuit's TurboTax product. Access to Basis Pro is based on calculations purchased, with 25 costing $349.

GainsKeeper is an online tool that allows an adviser to track realized and unrealized gains and losses of all the securities in a client's portfolio. Some 5,000 advisers use the tool through broker-dealers.

Information about both products is available at

Maxit, from SciVantage Inc. of Jersey City, N.J., is an application that is integrated within the portfolio management platforms of four broker-dealers. It is expected to be available through eight broker- dealers by the middle of next year. Maxit takes into account an investor's combined holdings, the length of time held, current prices and the investor's tax bracket to assist advisers in minimizing a client's tax burden. More information is available at

Davis Janowski can be reached at


What do you think?

View comments

Recommended for you

Upcoming Event

May 14


Retirement Income Summit

Join InvestmentNews at the 13th annual Retirement Income Summit—the industry’s premier retirement planning conference.Clients and investors continue to search for retirement income solutions and personalized investing advice. This... Learn more

Featured video


Regulators' gloves are coming off with cybersecurity. Put up your dukes with these tips

Updated guidelines and some of the first-ever rule enforcements signal that regulators are getting serious about holding firms accountable for data breaches, according to special projects editor Liz Skinner and technology reporter Ryan Neal.

Latest news & opinion

6 biggest RIA acquisitions of 2018

As M&A involving registered investment advisers hit another record last year, these six deals topped the list

Anatomy of an annuity buyout offer

Readers are invited to comment on whether the columnist should keep or ditch her Ohio National VA contract

Factions emerge in OneFPA overhaul

Critics fear the FPA is trying to take money and power from local chapters, which officials and proponents call overblown.

RIA M&A sets another record in 2018

Last year's 181 deals were twice the number recorded five years ago, and the average asset size of the acquisitions was $1.3 billion — 31% larger than in 2017.

6 tech companies heading for IPOs this year

These Silicon Valley technology companies could make an IPO splash in 2019.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print