Schwab Encourages Advisors to Take Action in Preparing for Cost Basis Reporting Changes

Schwab Market Knowledge Tools® Report, Webcast and SOLUTIONS Session are Latest in Schwab’s Cost Basis Transition Toolbox

Monday, June 21, 2010 6:00 am PDT



Public Company Information:

"What the Cost Basis Legislation Means for You and Your Clients."

SAN FRANCISCO--(BUSINESS WIRE)--As part of its ongoing rollout of tools and resources to help advisors transition to new cost basis reporting requirements, Charles Schwab, a leading provider of custodial, operational and trading support for more than 6,000 independent registered investment advisor firms (RIAs), today announced a new report to help advisors plan for the change.

The Emergency Economic Stabilization Act of 2008 mandates for the first time that custodians and broker-dealers must report the adjusted cost basis of sold securities to advisors’ clients and to the Internal Revenue Service on Form 1099-B. The requirements will be phased in over three years, beginning on January 1, 2011, with equities acquired and sold on or after this date. Schwab Advisor Services is planning to introduce technology enhancements to enable advisors to more easily stay in synch with Schwab’s cost basis data. These include the ability to download and import Schwab’s cost basis data into their portfolio management system and online functionality to provide cost basis instructions on equity trades via Schwab’s online trading platform.

“As a custodian, Charles Schwab shoulders most of the compliance burden for the new requirements, but we are encouraging advisors to take action as well,” said Brian Keil, director, Cost Basis and Tax Reporting for Charles Schwab. “Our cost basis resources are designed to help advisors prepare now and manage the transition in a way that builds stronger client relationships and avoids potentially costly and time-consuming changes and workflow issues down the road.”

The Schwab Market Knowledge Tools® report, “Preparing for the New Cost Basis Legislation,” reviews the forthcoming changes in the reporting of adjusted cost basis of sold securities, highlighting the key changes that begin in 2011. The report recommends steps advisors can take now to improve clients’ experience:

  • Create a communications plan. Fallout from any investor confusion around the legislation may land with advisory firms. Actively reaching out to clients and offering guidance can reduce anxiety that may arise. Schwab will also be communicating directly with investors later in 2010 about the upcoming changes.
  • Anticipate client needs. Certain clients may want to access cost basis information for all securities, regardless of whether they are covered by the legislation or not, while others may want access to the information periodically. Firms that understand how Schwab and other custodians are reporting stand to create a smoother experience for their clients.
  • Evaluate the impact on your back office. Advisors should evaluate their portfolio management systems and ensure they are in synch with the custodian’s data. Advisors should also stay up to date on Schwab’s plans for complying with the legislation, including technology upgrades that may impact workflow.

On June 22, 2010, Schwab Advisor Services will host the latest in a series of webcasts to help advisors understand the cost basis legislation and what it means for their firms. Titled “An Advisor’s Perspective on Cost Basis Legislation,” this webcast is the third in a series explaining the legislation and its implications for investment advisory firms. Beginning at 1 p.m. PT / 4 p.m. ET, Schwab’s Brian Keil will lead an hour-long presentation with two advisors and conclude with an interactive question-and-answer session with industry experts and Schwab representatives.

In March, more than 650 advisors registered for Schwab’s last webcast on this topic, “New Guidance on Cost Basis Legislation.” Schwab initially kicked off the webcast series on December 1, 2009, with “What the Cost Basis Legislation Means for You and Your Clients.” Advisors who want to attend the June 22 webcast or to access earlier webcasts in the series should visit the cost basis resource section of Schwab Advisor Center, Schwab’s website for its RIA clients.

Additionally, Schwab Advisor Services will offer a special session, “Cost Basis Legislation and its Impact on Your Firm,” at its upcoming SOLUTIONS workshops across the country this July and August. The session will detail Schwab’s tools and offer practical guidance on dealing with workflow changes that may be necessary to align with Schwab’s cost basis data reporting system.

For general informational purposes only and is not intended to provide specific financial, compliance, tax or legal advice.

About Charles Schwab

The Charles Schwab Corporation (NYSE:SCHW) is a leading provider of financial services, with more than 300 offices and 7.9 million client brokerage accounts, 1.5 million corporate retirement plan participants, 794,000 banking accounts, and $1.4 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Named "Highest in Investor Satisfaction with Self-Directed Services" by J.D. Power and Associates in 2009, its broker-dealer subsidiary, Charles Schwab & Co., Inc. (“Schwab”) (member SIPC,, and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and mortgage services and products. More information is available at (0610-3711)


Charles Schwab
Lindsay Tiles, 415-667-0479
Makovsky + Company
Janet Yoo, 212-508-9606

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