Schwab Offers Help with Cost Basis Reporting Changes

As part of a rollout of tools and resources to help advisers transition to new cost basis reporting requirements, Charles Schwab announced a new report to help advisers plan for the change.

Schwab noted in a press release that the Emergency Economic Stabilization Act of 2008 mandates for the first time that custodians and broker-dealers must report the adjusted cost basis of sold securities to advisers’ clients and to the Internal Revenue Service on Form 1099-B. The requirements will be phased in over three years, beginning on January 1, 2011, with equities acquired and sold on or after this date.  

The Schwab Market Knowledge Tools report, “Preparing for the New Cost Basis Legislation,” reviews the changes in the reporting of adjusted cost basis of sold securities, highlighting the key changes that begin in 2011.   

According to the press release the report recommends steps advisers can take now to improve clients’ experience:

  • Create a communications plan. Fallout from any investor confusion around the legislation may land with advisory firms. Actively reaching out to clients and offering guidance can reduce anxiety that may arise. Schwab will also be communicating directly with investors later in 2010 about the upcoming changes.
  • Anticipate client needs. Certain clients may want to access cost basis information for all securities, regardless of whether they are covered by the legislation or not, while others may want access to the information periodically. Firms that understand how Schwab and other custodians are reporting stand to create a smoother experience for their clients.
  • Evaluate the impact on their back office. Advisers should evaluate their portfolio management systems and ensure they are in synch with the custodian’s data. Advisers should also stay up to date on Schwab’s plans for complying with the legislation, including technology upgrades that may impact workflow.

On June 22, 2010, Schwab Advisor Services will host the latest in a series of Webcasts to help advisers understand the cost basis legislation and what it means for their firms titled “An Advisor’s Perspective on Cost Basis Legislation.” Beginning at 1 p.m. PT / 4 p.m. ET, Schwab’s Brian Keil will lead an hour-long presentation with two advisers and conclude with an interactive question-and-answer session with industry experts and Schwab representatives.   

Advisers who want to attend the June 22 Webcast or to access earlier Webcasts in the series should visit the cost basis resource section of Schwab Advisor Center, Schwab’s website for its RIA clients.   

Additionally, Schwab Advisor Services will offer a special session, “Cost Basis Legislation and its Impact on Your Firm,” at its upcoming SOLUTIONS workshops across the country this July and August. The session will detail Schwab’s tools and offer practical guidance on dealing with workflow changes that may be necessary to align with Schwab’s cost basis data reporting system.  

Schwab Advisor Services said it is planning to introduce technology enhancements to enable advisers to more easily stay in synch with Schwab’s cost basis data, including the ability to download and import Schwab’s cost basis data into their portfolio management system and online functionality to provide cost basis instructions on equity trades via Schwab’s online trading platform.