Reps Receive Support on Cost Basis Issue

By Bennett Voyles
Jul 1, 2007

Bennett Voyles profiles Scivantage and discusses the growing need to gather and report cost basis information.  With pending legislation in Congress, the securities industry is bracing for the potential impact of having to report the cost basis of clients’ capital gains to the Internal Revenue Service.  Voyles writes that it may take some time for new software to meet the cost basis reporting requirement, but with the introduction of such software as Scivantage Maxit, advisors will have ‘an increased ability to manage the portfolio from a tax standpoint’.

Cameron Routh, senior vice president of strategic products at Scivantage, was interviewed and stated that, "…cost basis is actually dynamic.  In fact, though most brokers have access to the original cost basis of a stock, that number changes over time--such as in the event of a merger or other corporate action”

Along with other vendors of cost basis accounting software, Routh contends that few brokerages track cost basis for their clients right now. "Even the better firms out on the Street will provide adjusted cost basis only to their biggest clients," he says. And the news is even worse for Joe Client. "The average investor doesn't have access to any of this," adds Routh.

A final cause for enthusiasm may be that better cost basis information is likely to be popular with clients.  Chip Roame, managing principal of research and consulting firm Tiburon Strategic Advisors in Tiburon, Calif., stated that "cost basis is desperately, desperately needed by consumers.”