Which investment action should I assign to an advisor fee that takes shares?

rmiles2

Currently, I'm using action "Removed", but issue with it is that the transactions show up as returns in Investment Performance report like I'm getting the returns rather than acting like expenses as they should. Account is 401k, tax deferred. Advisor takes shares of each security each month to cover their fee.

Jim_Harman

I record the share transactions as Sold, with the proceeds going to the account's cash. Then I record the fee as a MiscExp, using an appropriate Category. 

If you go to the Category list and edit the Category, there is a confusingly named "Affects investment performance" checkbox that determines whether the fees are treated as returns to you in Quicken's IRR calculations. The Help text is even more confusing. IIRC if the box is checked, fees and other withdrawals that use that category will not be counted as returns and thus will hurt the account's performance.

Frankx

Hi @rmiles2

Removing the shares only records the fact that you no longer hold the shares.  You will need to make two transactions to correctly record these activities in Quicken - the first is the sale of the shares to provide the funds to pay the advisor's fees and a second transaction is the removal of the "cash" proceeds in  payment of the Advisor's fees. Also, in case you are worrying about whether there will be repercussions related to gain or loss by recording the sale - keep in mind that this is a tax deferred account so there is no tax impact.  You should use the date that the shares were removed from the account (and the share price on that date) when you make the first entry.

Let me know if you have any followups.

Frankx

Jim_Harman

I record the share transactions as Sold, with the proceeds going to the account's cash. Then I record the fee as a MiscExp, using an appropriate Category. 

If you go to the Category list and edit the Category, there is a confusingly named "Affects investment performance" checkbox that determines whether the fees are treated as returns to you in Quicken's IRR calculations. The Help text is even more confusing. IIRC if the box is checked, fees and other withdrawals that use that category will not be counted as returns and thus will hurt the account's performance.

Frankx

Hi @rmiles2

Removing the shares only records the fact that you no longer hold the shares.  You will need to make two transactions to correctly record these activities in Quicken - the first is the sale of the shares to provide the funds to pay the advisor's fees and a second transaction is the removal of the "cash" proceeds in  payment of the Advisor's fees. Also, in case you are worrying about whether there will be repercussions related to gain or loss by recording the sale - keep in mind that this is a tax deferred account so there is no tax impact.  You should use the date that the shares were removed from the account (and the share price on that date) when you make the first entry.

Let me know if you have any followups.

Frankx

Amy Sewell

I have been recording the fees as shares sold, then denoting the fee paid as a commission. So it is only one transaction. But should I be doing that? It is a tax deferred IRA account.

Jim_Harman

Amy Sewell said:

I have been recording the fees as shares sold, then denoting the fee paid as a commission. So it is only one transaction. But should I be doing that? It is a tax deferred IRA account.

It doesn't really matter in an IRA account because you don't have to keep track of the cost basis, but I think the Sold/MiscExp as described above captures the impact of the fees on your performance more accurately.