Fidelity delivers a white paper and a warning to RIAs regarding new cost-basis rules
Multi-custody arrangements and third party platforms can lead to troublesome data fragmentation, the Boston custody giant says
Jim Starcev
I think I would side with Fidelity on this one. Syncing cost basis data between a custodian and a third party system is hard (I know because I did it for years as Managing Principal at Etelligent Consulting). The biggest challenge was not addressed in the article. That is selling partial lots. The example of the 1000 shares of IBM that was acquired over 10 dates (10 lots). If you sell 500, which do you sell. Most people default to FIFO (first in, first out), but there are multiple ways you can do this (high cost, LIFO, versus, etc.). Getting this to match how it is coded at the custodian is challenging. If it doesn’t match, not only this trade, but the shares left will not match what is reported. Even if the custodian downloads cost basis info, which would be very helpful, this is still going to be hard to reconcile.
Brooke Southall
Hi Jim,
Thank you for taking the IBM example to the next level and for rendering an opinion on this whole challenging topic. Of course, it makes me wish I’d called for your opinion for the article in the first place!
my best,
Brooke
Related Moves
A week after he became chairman of Eric Clarke's board, Charles Goldman is heading the search to replace Clarke as Orion CEO-- at Eric's direction
Eric Clarke founded Orion in 1999 and built it to a $3.6 trillion AUA juggernaut, but he believes both he and the company are ready for a big change
May 22, 2023 at 5:13 PM
TD Ameritrade's board suddenly pushes out Tim Hockey after his big misread of RIAs; Tom Bradley name-dropped as successor
The CEO broke the TD promise never to compete with RIAs, took it back and got sent packing
July 23, 2019 at 4:30 AM
Sleeping giant McKinsey & Co. hires Eric Clarke as it awakens to $9-trillion RIA business and plays catch-up
The New York City consulting giant quietly made the Orion founder and ex-CEO a McKinsey senior advisor two months after he stepped down last year.
May 30, 2024 at 1:35 AM
Another A-list RIA Schwabbie lands on his feet -- this time at DeVoe & Co. -- after TD Ameritrade merger displacement of 2,000-plus
Tony Parkin takes the reins as president of the San Francisco M&A shop and reunites with ex-Schwab boss who left 14 years ago
May 10, 2024 at 1:29 AM
See more related moves
TD Ameritrade
Asset Custodian
Top Executive: Tom Nally
