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IRR handling account fees

UnknownUnknown Member
edited January 2019 in Investing (Windows)
I've been entering brokerage account fees as withdrawals, but in the IRR report, these withdrawals show up as returns, which increase the IRR instead of reducing it. I tried editing these transactions by changing from a withdrawal (a cash transaction) to a miscellaneous expense (a brokerage transaction), but Quicken won't let me do it. I can probably delete each withdrawal transaction and enter a new miscellaneous expense transaction, but it would be much easier to edit the existing withdrawal transactions if that's possible, or using the find-and-replace feature. Any suggestions?

Comments

  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
    edited May 2018
    Changing the fee to an expense will not alter the IRR calculation. The only options I have identified are


    A. To export the IRR report to Ecel and do alternate calculations there, or


    B. To simply mentally adjust the computed figure downward. If your annual fee is 0.75%, subtract that from the Quicken calculation. I have found that to be generally accurate.



    You might also refer to other discussions along this line.
  • UnknownUnknown Member
    edited August 2016
    q.lurker said:

    Changing the fee to an expense will not alter the IRR calculation. The only options I have identified are


    A. To export the IRR report to Ecel and do alternate calculations there, or


    B. To simply mentally adjust the computed figure downward. If your annual fee is 0.75%, subtract that from the Quicken calculation. I have found that to be generally accurate.



    You might also refer to other discussions along this line.

    You're right. Quicken also counts miscellaneous expenses as returns, which doesn't make sense to me. I wonder if that's an oversight, or if there's a good reason for that.
  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
    edited December 2016
    q.lurker said:

    Changing the fee to an expense will not alter the IRR calculation. The only options I have identified are


    A. To export the IRR report to Ecel and do alternate calculations there, or


    B. To simply mentally adjust the computed figure downward. If your annual fee is 0.75%, subtract that from the Quicken calculation. I have found that to be generally accurate.



    You might also refer to other discussions along this line.

    I can't say it is an oversight, since it has been that way for many years and has been previously brought to Intuit's (at the time) attention.  

    In the broad sense, they are treating anything and everything your take out as return.  It doesn't matter if you are spending that on charitable contributions, investment fees, taxes, bribes, gifts, home improvements.  It all gets treated the same.  Remember that some use the investment accounts as their checking accounts.  You and I (individual investors) may know 'this expense' should be treated 'that way', but I don't think the programmers (or those defining the specs for the program some 20+ years ago) were comfortable with that additional flexibility.  Just my opinion.  

    With the change in ownership, it may well be a good time to put that need back on the table.   
  • markus1957markus1957 SuperUser, Windows Beta ✭✭✭✭
    edited January 2019
    I manually created a security called "[zAccount] Advisory Fee", where [zAccount] is the name of financial institution, to capture the impact of fees on investment return. Fees are charged quarterly so on each date a fee is recorded, I manually enter two additional transactions; an Add Shares for 1 share of zAccount Advisory Fee at a cost equal to the fee charged; then a Sell of that same share for Zero dollars. I also go into the price history for the "fee" security and zero it out for all dates so it never records any net asset value.  The IRR then matches the after fee return.
  • markus1957markus1957 SuperUser, Windows Beta ✭✭✭✭
    edited December 2016

    I manually created a security called "[zAccount] Advisory Fee", where [zAccount] is the name of financial institution, to capture the impact of fees on investment return. Fees are charged quarterly so on each date a fee is recorded, I manually enter two additional transactions; an Add Shares for 1 share of zAccount Advisory Fee at a cost equal to the fee charged; then a Sell of that same share for Zero dollars. I also go into the price history for the "fee" security and zero it out for all dates so it never records any net asset value.  The IRR then matches the after fee return.

    If using the suggested workaround, note that in Tax Planner an amount equal to the sum of all fees YTD should be added to the short-term capital gains section as an adjustment to offset the fake STG loss used to mimic the affect of the fee on investment returns.  When setting up the Advisory Fee securities for each FI, I also created and applied a Security Type of "Inv Mgmt Fee" so that they can easily be excluded from Investment Reports such as Capital Gains by using the Customize option for Security Type. 
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