If you think the cost basis enhancements in PortfolioCenter 5.5 sound too good to be true, you’re right.  Postpone the celebration. By my reading, the announcement promises more than the enhancements deliver.

The announcement for enhancements to PortfolioCenter 5.5.300.1 reads:

Enhanced Transaction File:  PortfolioCenter 5.5 automatically determines the Lot Selection Method used for each closing transaction by reading the new Daily Realized Gain/Loss file in conjunction with the Daily Transaction file. Additionally, it automatically closes the appropriate lots for transactions using the Selected matching method.

Doesn’t that sound wonderful? “Additionally, it automatically closes the appropriate lots for transactions using the Selected matching method.”  Giving PortfolioCenter the ability to sell the same lots in the same order sold by the broker would go along way toward solving many of the cost basis issues.  I couldn’t wait to upgrade.

Within the first week, I noticed I was still facing the same cost basis issues.  Nothing seemed to have changed.

Eventually, I found the perfect  test case.  I had an account where the cost basis of every position reconciled to the penny on Wednesday.  On Thursday several positions were sold using Highest Cost.  Friday the cost basis failed to reconcile with the broker and some accounts differed by as much as $4000.  After verifying that both Schwab and PortfolioCenter sold the lots using the same matching method, I finally determined the cause of the through reconstructing each sell using the trade lot reconciliation tool.  Several lots had the same unit cost (which happened to be highest cost) and Schwab matched different lots than PortfolioCenter.

According to the enhancements this should no longer happen, right? I called Raleigh to for an explanation.

Answer:  The “enhanced transaction file” described above ONLY applies if both the broker and PortfolioCenter use “Selected” as their default matching method. (I don’t know anyone who falls in that camp but there must be someone out there.)  The rest of us still have to manually clean up the mess.

On the bright side, maybe this improvement is only the first step.  Having programmed the ability to match specific lots through the downloads for one matching method, it doesn’t seem that difficult to make the same tool available regardless of the default matching method.  I’ve already requested this for a future enhancement.  Cast your vote, too.

Wouldn’t you rather outsource this to an expert?