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Reconciling Investment Accounts

wab49

After many years of using Quicken for Windows, I have been using the Mac version for the past several months. I have been having a very hard time keeping investment accounts reconciled. I have a number of such accounts that include mutual funds, money market funds, and cash. When I click the reconcile button in Quicken sometimes it seems to only look at the cash in the account and compares that to the total value of the account online and then says the balance is off by the amount that is not cash. I have looked at holdings under portfolio and they match and the market value of the account in Quicken is correct, but reconcile is off by a very large amount. Do I have some configuration wrong or is this just a Quicken Mac issue? Thank you.

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jacobs

In Quicken Mac, at this time, Reconcile only works for cash. But the good news about that is that the developers have recently stated that they are going to implement the ability to reconcile share balances as well:

https://community.quicken.com/discussion/7861875/reconcile-using-share-balance-instead-of-cash-value-in-mac-version-4-legacy-votes

As with all feature requests on this site, being marked "Planned" means it's on the development team's schedule, but we don't know when it is planned for release.

In the meantime, let's dig a little deeper into what you're trying to accomplish and how things work currently…

(1) When you use the Reconcile window, you're reconciling just the cash balance of an account. And it works just like reconciling a bank account or credit card account: enter the ending balance and date, then check off the transactions which are included, and the reconcile difference should be zero. You can create a New transaction in the Reconcile window (look for the “New” icon), and enter a Type=Payment/Deposit and Category=Adjustment transaction to raise or lower the cash balance if you're not looking to dig into the source of the discrepancy.

(2) There is no functionality to reconcile the number of shares of specific securities, but this does not prevent you from checking your share balance as of a specific date in the Portfolio screen, and then marking all the share transactions as reconciled (green check mark) if you find it helpful to do so. One approach to doing this is to first go to the Portfolio window, set the "As of" date to match a brokerage statement, and check the share balance and market value of each security on the statement versus the Quicken portfolio window. Once you have verified they agree — after making any adjusting entries if needed — you can then go to the Transaction screen, click Reconcile, and mark all the transactions for cash as well as shares as reconciled. You're technically just reconciling the cash balance, but in the process, you can set all the share transactions to a status of reconciled via this window.

Alternatively, you can mark individual transactions for securities as reconciled (green checkmark in the Clr column) manually, if you wish. When you click on the Clr column, it toggles between no status and “cleared” (blue checkmark) — b if you hold down the Option key, it will toggle between no status, cleared, and reconciled (green checkmark). For instance, if you have verified that your share value for Microsoft is correct, you could Option-click each one to mark that share transaction as reconciled.

Marking investment transactions as reconciled doesn't serve any real purpose other than keeping track for yourself that you have verified the share balance of this security through whatever date you mark the transactions reconciled. Personally, I only use Quicken's Reconcile only in investing accounts which have cash balances. I also check my share balances for each account and each security in Quicken versus my brokerage statements when I get them monthly or quarterly, so I know my transactions in Quicken are reconciled; I just don't bother adding the green checkmarks in Quicken. Some people might want to do so, and there's nothing wrong with that. Even in accounts with no cash balance, if you've verified in the Portfolio screen that your share balances are correct, you can go to the Transactions screen and do Reconcile, enter the end of the month date, enter a balance of $0.00, and click the Mark All As Cleared button in the Reconcile window to mark all the transactions through that date as reconciled.

I hope this helps and I didn't lose you. ;) Post back if anything isn't clear.

Boatnmaniac

Would your brokerage by any chance be Fidelity Investments?

If so, you might want to read through the thread at this link: Downloads from Fidelity do not included activity into the settlement fund. While this is a QWin thread the last person posting in it mentions how it is applicable to QMac, as well.

Chris_QPW

I would point out that when you select Reconcile in an investment account in Quicken Windows it is only using the transactions that affect the cash balance. You still need to first ensure that the shares are correct, before reconciling the cash.

To aid in keeping the share balances correct one can have Quicken Windows do a compare to what was downloaded from the financial institution (this is the "summary" part of each download). And this compare can be kicked off automatically after the download. This is in fact, where the "nasty placeholders" might be put in if people aren't careful of the downloaded information is incorrect (or there is something incorrect in Quicken).

But the point is that there isn't any "Reconcile my investment account" that takes into account both shares and cash balances.

wab49

Too bad. Anyway, I now see what is happening. My brokerage, Schwab in this case, lists cash and money market separately, as it should but then shows a "total cash & money market." When I use the reconcile function in Quicken, it uses "total cash and money market" as the online balance which it compares to the Quicken balance, which only reflects the actual cash. This renders the reconcile function actually useless. Going forward I will not use that function and just compare the holdings to the statement, as suggested.

Thanks.

Boatnmaniac

https://community.quicken.com/discussion/comment/20405640#Comment_20405640

I should have mentioned that almost 2 years ago Schwab started to do the same thing that Fidelity does…downloading the value of the 2 MMFs used for holding cash as Cash instead of downloading the shares. Click on SWVXX (Value Advantage Money Market Fund) and SWGXX (Schwab Government Money Fund) to see the Announcement of this.

Assuming that new process is working since then as is stated in that Announcement, the imbalance might be due to shares you've held of one or both of these MMFs from before the conversion. If that is the case, then my earlier referenced thread regarding Fidelity might be applicable to your situation because it describes what edits to the transactions in the account register need to be done to resolve this issue and allow Reconcile to once, again, work.

wab49

Thanks. The problem, I think, is that Schwab does not sweep the cash into the the Money Market Fund. Right now, I have both a "cash" balance and a MMF balance and Schwab rolls both into a total, which apparently all looks like cash to Quicken. I'm going to invest the non-MMF cash, so I'll see if this all straightens out after I do that.

Thanks.

Boatnmaniac

This is not a matter of it "all looks like cash to Quicken". It is that Schwab is downloading the MMF value (of SWVXX and or SWGXX) as cash into Quicken instead of as shares….at least, that is what is supposed to be happening. If you have shares of these 2 MMFs in your account in Quicken then that is likely a problem that is throwing your account in Quicken out of balance. Attempting to "force" the account in Quicken to match what Schwab is showing online for these MMFs and cash holdings is likely the reason behind your not being able to reconcile your account in Quicken.

In other words, you need to be matching that "total cash & money market" to the cash balance in Quicken during the reconciliation process. That is what should be happening as that is the intent of the downloading change that Schwab implemented nearly 2 years ago.

wab49

Thanks, Boatnmaniac. I take your point. I have one MMF and the rest is uninvested cash. In the long run, I don't want to have any uninvested cash in the account, but there are periods of time when I do hold cash there while I'm waiting to invest it. I want the Quicken account to reflect the reality of the Schwab account regardless of how Schwab is choosing to aggregate those funds for downloading. So, I guess my solution will need to be to match the holdings in the account to what is shown online and not use the reconcile feature of Quicken, at least whenever there is uninvested cash. I can't speak to the intent of the downloading change that Schwab made, but but for my purposes it does not meet my needs.

Boatnmaniac

I think what Fidelity, Schwab and others who follow this same MMF/Cash download protocol are trying to message is that investors need to stop thinking of the designated MMFs as investment vehicles. Instead, we should be thinking of the values of the designated MMFs as "Cash", just like we do when we think of the traditional Sweep accounts, bank savings accounts and credit union share accounts.

The logic behind this is that the share value of MMFs is always $1.00 (it never changes), it is very liquid (orders are completely transacted the same day that the order was placed (provided the order was placed during trading hours) and, at least for Fidelity, the orders are automatically placed by the brokerage in the background to support buys/sells of other securities, distributions, transfers to other accounts with no action required on our part. The main difference between these different kinds of funds/accounts from a practical perspective is the amount of interest/dividends they pay out and MMFs pay out much more than these other types of cash holding vehicles.

At least, that is how my Fidelity advisor explained it to me years ago. He said I should always think that the designated MMF=Cash and that Cash=the designated MMF interchangeably because that is how they view it and use it.

BTW, you do not actually have Cash in your account at Schwab. They might call it that in your online account and statements but it is not really cash they are holding. Investment brokers are not banks (not permitted by law) so they place the cash in different holding vehicles. One is the traditional Sweep account which is really a savings account the brokerage has contracted for with an independent bank. The other is the designated MMFs that we've been talking about. Brokers generally will put the cash in the MMFs now because it provides a much higher interest/dividend rate than can be obtained from a Sweep account which can give them a competitive advantage (currently 4.5%-5.0%) over other brokers who still use Sweeps.

When I first was made aware of all this I really struggled with it. I couldn't wrap my head around the fact that I should be thinking about my designated MMF as cash instead of as a security. But now I find that it makes my life much easier because I can now see in Quicken exactly how much I can invest, distribute or transfer (i.e., the Cash+MMF amount) without needing to sell any securities because Fidelity will make the selling of the MMFs transparent to me.

Enough of my rambling on this subject. I won't post anything more about it unless you have questions or concerns about it. .

wab49

Agree that we should probably call it a day on this. However, my last comments are that perhaps things have evolved and perhaps Schwab is a bit different than Fidelity. Two points are key from my perspective. In today's climate and in my particular situation, I regard MMFs as an investment and not just idle cash. Second, and this is where Schwab might be a bit different, the "cash" in my brokerage MMF is not investable. In order to make an investment, I have to sell shares of the MMF to create non-MMF cash, which I can then invest. These are the reasons why I disagree with Schwab bundling the MMF with non-MMF cash and calling the bundle "cash." The MMF funds are not usable as cash and not handled as cash; and the yield is very different. The only thing cash-like is the fixed share price of $1.00. OK, probably more than enough on the topic.