Reconciliation - what is it?

[mday]

I am trying to understand what reconciliation is and why it might be a challenge for advisors to do well.

Can someone tell me what it is? This wasn't covered in class!

Thanks

[the observer]

Hi mday,

You're going to have to significantly flesh out your post if you want anyone to post anything at all. The word "reconciliation" has a myriad of meanings depending on what it is you are trying to ask.

[mday]

Hi the observer,

I got the term from this article:

Among the 70% of advisors who outsource at least one of their business activities, IT operations topped the list (28.7%), followed by client reporting (26.3%), portfolio management and reconciliation (25.7%)

[the observer]

Here's my suggestion.. Go to:

http://www.fpml.org/

and top left run a search for the word reconciliation. You'll find a number of excellent and complex explanatory articles in the topic. It'll give you something to impress your friends with! :)

All the best.

[mday]

Thanks! Ah modern times. I've now learned all about the challenges of reconciliation by reading a software spec!

OK for others reading this later, here's my take: Reconciliation is the process of resolving the entry differences in the accounting of portfolio software vs. the accounts at custodians. Since financial transactions don't get processed by those software packages simultaneously, and since the software packages don't necessarily have consistent pricing or sometimes awareness of the financial instrument, differences are common.

Reconciliation is important for advisors because you want an accurate periodic report to your client, and regulators also want to see you're monitoring client accounts for any potential missing (or erroneous) transactions or assets.

[the observer]

Now yer just showing off!! :)