i've discovered an astonishing thing. Another lacuna, or blind spot, in the brokerage community, if you will.
there are 3 principal dual currency brokers. Everybody knows who they are. RBC. BMO. Questrade. With the exception of Q-trade & possibly virtual brokers, *all* the other brokers offer nothing but monocurrency registered accounts in canadian dollars.
when clients from monocurrency brokers transfer their registered accounts to a dual currency broker - as many thousands of such clients have been doing - their cost base (same thing as book value) goes with the account. All these cost bases are in CAD, of course. Because the original monocurrency broker could not keep any records in any other currency than CAD, duh.
at BMO, they pick up & continue to record the CAD cost base for all transferred registered USD holdings, even though it is wrong. Even worse, they then call the CAD cost base from the previous broker the *USD* cost base, which it is not.
surprisingly, BMO doesn't seem to be aware that they are making a gigantic number of these data misinformation mistakes on every new registered account brought in to them from a monocurrency broker.
worse yet, when asked politely to please restore a simple holding to its true USD cost base, which a client with impeccable records is able to precisely give them even though the previous monocurrency broker could not, the BMO licensed representatives refuse. They say they must stick to what the previous broker told them (although so far i've only been able to get this issue to a lowish level of licensed rep.)
i have thought about this issue carefully, though. I don't believe there's any practical alternative to what BMO is doing. What's missing in their approach is that, as trustees, they should be informing the clients about the distortion that is inevitably occurring.
every client who ever transferred a USD registered holding from a monocurrency broker to a dual currency broker is no longer able to accurately track total portfolio gains/losses on any spreadsheet. He cannot accurately compute his registered account paper gains or losses.
the cost base/book value distortion is not likely to be more than 10%. In some cases it will be much less. But the fact that such distortion is not being mentioned to clients is what bothers me.
does anyone know if RBC or questrade are handling this issue better? that is, more transparently?
there are 3 principal dual currency brokers. Everybody knows who they are. RBC. BMO. Questrade. With the exception of Q-trade & possibly virtual brokers, *all* the other brokers offer nothing but monocurrency registered accounts in canadian dollars.
when clients from monocurrency brokers transfer their registered accounts to a dual currency broker - as many thousands of such clients have been doing - their cost base (same thing as book value) goes with the account. All these cost bases are in CAD, of course. Because the original monocurrency broker could not keep any records in any other currency than CAD, duh.
at BMO, they pick up & continue to record the CAD cost base for all transferred registered USD holdings, even though it is wrong. Even worse, they then call the CAD cost base from the previous broker the *USD* cost base, which it is not.
surprisingly, BMO doesn't seem to be aware that they are making a gigantic number of these data misinformation mistakes on every new registered account brought in to them from a monocurrency broker.
worse yet, when asked politely to please restore a simple holding to its true USD cost base, which a client with impeccable records is able to precisely give them even though the previous monocurrency broker could not, the BMO licensed representatives refuse. They say they must stick to what the previous broker told them (although so far i've only been able to get this issue to a lowish level of licensed rep.)
i have thought about this issue carefully, though. I don't believe there's any practical alternative to what BMO is doing. What's missing in their approach is that, as trustees, they should be informing the clients about the distortion that is inevitably occurring.
every client who ever transferred a USD registered holding from a monocurrency broker to a dual currency broker is no longer able to accurately track total portfolio gains/losses on any spreadsheet. He cannot accurately compute his registered account paper gains or losses.
the cost base/book value distortion is not likely to be more than 10%. In some cases it will be much less. But the fact that such distortion is not being mentioned to clients is what bothers me.
does anyone know if RBC or questrade are handling this issue better? that is, more transparently?