Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Investor Presentation (April 2009)
12 slides from Broadridge Financial Solutions's investor presentation, Apr 27, 2009
Slide 1: Confronting the Key Challenges of Cost Basis Reporting
April 27, 2009 Confronting the Key Challenges of Cost Basis Reporting Time is of the Essence Sean Cunniff Research Director Brokerage & Wealth Management © 2009 The Tower Group, Inc. May not be reproduced by any means without express permission. All rights reserved.
Slide 2: Informational purposes disclaimer
This information is provided for informational purposes only and should not be interpreted as legal, financial, tax, or other form of advice and no legal or business decision should be based on its content. © 2009 The Tower Group, Inc. May not be reproduced by any means without express permission. A
Slide 3: Agenda
Agenda !Discuss the key challenges involved in calculating cost basis !Discuss the opportunities the new law presents !Discuss the cost basis implementation timeline !Panel Q&A © 2009 The Tower Group, Inc. 2 © 2009 The Tower Group, 2
Slide 4: Common Transactions That Impact Cost Basis
Common Transactions That Impact a !"#$%&'()*+,-*'+./*&* Transaction Definition Comments Wash sale Sale of a security at a !An investor may not claim the tax loss; instead, the loss followed by loss is added to the cost basis and the security repurchase within 30 holding period is adjusted days !Wash
Slide 5: Steps in Calculating Adjusted Cost Basis
Steps in Calculating Adjusted Cost Basis Original Basis Adjust For Wash Determine Adjust For Depends On How Sales Or Short Gain/Loss & Corporate Actions Acquired Sales Short/Long !Cost basis of !Mergers, acquisitions, !Adjusting for wash !Amount and character purchased shares is spinoffs, stock righ
Slide 6: The Impact of Wash Sales on Back-Office Systems
The Impact of Wash Sales on Back-Office Systems Accounts Wash sales impact the 1,000,000 number of tax lots by over 300% Positions 3,500,000 Transactions 31,000,000 Tax Lots 60,000,000 Tax Sub Lots 196,000,000 Source: Wolters Kluwer, TowerGroup © 2009 The Tower Group, Inc. 5
Slide 7: Methods of Calculating Mutual Funds Cost Basis
Methods of Calculating Mutual Funds Cost Basis First In, First Out Average Cost Average Cost Share Identification (FIFO) (Single Category) (Double Category) ! IRS uses FIFO if ! Method most ! Similar to single- ! Generally the no other method is commonly used by category method, most chosen by the f
Slide 8: Hypothetical Integration of Cost Basis into Wealth Management Platform
Hypothetical Integration of Cost Basis into Wealth Management Platform Trading Performance Advisor/Client Web site Tools Reporting Client 1099 Statements Reporting Middleware Portfolio/Tax Accounting Engine Corporate Cost Gain/ Actions Tax Lot ST/LT Realized/ Wash Recon Basis Loss Calc Unrealized Sa
Slide 9: Potential Enhancement of Existing Systems with Real-Time Cost Basis Information
The Potential Enhancement of Existing Systems with Real-Time Cost Basis Information Statements can be enhanced to show embedded gains/losses Statement Generation Trading Interfaces can be upgraded to allow customer to identify specific Trading Interface shares to sell Cost basis information can be f
Slide 10: Sample Cost Basis Timeline
Sample Cost Basis Timeline Business Goals Define Scope Build or Buy Evaluation RFP Process Vendor Selection & Contacts Development & Implementation Testing Begin Basis Tracking Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2009 2010 2011 2012 Individual Securities Mutual Funds Source: TowerGroup
Slide 11: Key Take-Aways
Key Take-Aways !Handling complex transactions such as wash sales and processing corporate actions automatically are some of the more pressing challenges financial services institutions must tackle. ! Many current cost basis systems do not track every cost basis method or allow customers to choose a
Slide 12: Questions
Questions scunniff@towergroup.com TowerGroup is a wholly owned subsidiary of MasterCard Worldwide and operates as a separate business entity with complete editorial independence. MasterCard Worldwide is not responsible for and does not necessarily endorse any opinions, statements, or other content p
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