Confused about what settings to choose in the Schwab Interface?

Schwab Performance Technologies recommends unchecking the two market value settings and checking the rest. I recommend you check them all but one of them.  Here’s why.

Use current market value as cost basis for initial positions.

Checking this box replaces the default $0.00 with the market value as of the date received in the Cost Basis field of receipt or credit transactions generated as an initial positions.

Use current market value as cost basis for transactions

Like the first option, checking this box replaces the default $0.00 with the market value as of the date received in the Cost Basis field for receipt or credit transactions which come from your broker.

Schwab Performance Technologies recommends leaving both these boxes unchecked as an indicator that cost basis is missing.

However, 0.00 in the Cost Basis field is not reliable a indicator of missing cost basis, because some positions actually do have zero cost basis.  Additionally, the zeros inflate some values on some of the holdings reports (e.g. the Portfolio Position Analysis), creating client confusion and inflating percent gain/loss.

A better practice is to substitute the market value for cost basis and use a “red flag” date in the Date Acquired/Original Trade Date field to indicate the switch.   I use April Fool’s, 1960 (04/01/1960).  You could also use “01/01/1900” or some other date that stands out. If you use the date consistently (meaning absolutely no exceptions), it is a useful, searchable “red flag” for missing cost basis.

Create initial positions for new accounts.

Checking this box creates initial positions under the positions tab of the interface for each new portfolio — which is much better than creating them yourself manually.

Create flows for new accounts (receipts and deposits)

Checking this box means PortfolioCenter will create initial positions for new accounts as receipts and deposits (rather than credits and journals).  For performance purposes, unless your particular situation demands it and you know exactly what you are doing, check this box and stick with the receipts and deposits.

Use RPS file instead of BLD file

You need to check this if you use variable annuity files (VS files) and/or Schwab Trust (TS files).   If you are using the enhanced interface files, you can leave it unchecked.  If you don’t know, leave it unchecked.

Use enhanced file format

Check this is if you use the enhanced file format (PC files) rather than the original CS files.   At this point, I suspect everyone has converted to the enhanced file format.  If you haven’t, you should.

Link fixed income partial calls to original security

If you invest in fixed income securities, check this box to use the actual symbol rather than a temporary symbol for partial call transactions.  It helps preserve your cost basis and performance.

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