Q.This week my client corrected the cost basis information for some mutual fund shares which were sold in her accounts during the last tax year.  Will PortfolioCenter automatically receive the updated cost basis information (for shares which have already been sold) now that the cost basis data has been updated at the broker?  

A.Good question.  The answer is no.

First, no cost basis updates happen automatically in PortfolioCenter — at least at this point.  I do so much cost basis work for my managers that it seems automatic, but the process is still largely manual.

That said, cost basis reporting and reconciling has greatly improved since 2008 and all brokers (especially Schwab) have increased the completeness and accuracy of the cost basis information available. I expect the process will continue to improve.

Sold positions

At this point, to my knowledge no broker downloads cost basis changes to closed positions.  Therefore, PortfolioCenter will not get updated unless you tell your PortfolioCenter specialist exactly what needs to be changed and have her manually make the changes.

But that raises the question, why you would update PortfolioCenter after the fact.  Depending on the number of trades affected and the activity since the sell in question, this kind of change can be difficult and time-consuming and have little benefit.

Historical cost basis changes do not typically affect performance.   They will only change the historical realized gain/loss report – which you may not need from PortfolioCenter if your broker is the System of Record.

Open Positions

Cost basis changes on currently held positions will not automatically update PortfolioCenter either.  BUT the reconciliation report will show that the broker’s cost basis and PortfolioCenter’s no longer reconcile.  At that point, your PortfolioCenter specialist can find the changes and update PortfolioCenter.  Be patient.  It can take several business days for the changes to appear in the downloads.

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