To address the upcoming cost basis rule change, Advent Software announced Tuesday that it has enhanced its product and data services to make it easier for advisors to stay in sync with custodians and brokers.
Advent formed a cross-departmental team a year and a half ago with members from marketing, product management and development along with the custodian and trading departments to form a "holistic view" to better understand the impact legislative changes would have on advisors, said Chris Flynn, vice president of product management and marketing.
Advent has also been working to educate advisors on the potential ramifications of the rule change, which will require custodians to report cost basis information using Form 1099. Nine months ago, the company began focusing on educating advisors to prepare them for changes.
The challenge, Flynn said, is advisors' relationship with custodians. The focus is on the custodian because the legislation targets the custodian and the burden is on the custodian to report to the Internal Revenue Service, but advisors must stay informed.
"The advisor is making the decisions, though, and if they're not aligned with the custodian, their strategy may not be realized," he said.
Flynn stressed the importance of making sure all parties are in alignment and communicating.
"We look at the start of the investment process in the order management system, and work with all organizations to ensure they're aligned," he said. He noted that there's a risk that brokers may not be ready to collect data, and added that "custodians must be ready to provide information so the auto-reconciliation process can catch errors."
The enhanced services will support new, more efficient workflows. Custodian interfaces, reports and trading integration points have been enhanced, as well, in order to facilitate reporting and reconciliation.
With the enhanced products, advisors will be able to process cost basis information as it comes down for reconciliation, Flynn said.