There may be many documents that qualify for this
blog entry, but I am writing specifically about your brokerage
account statements. Sure, you may take a peek at the bottom line now
and then, but actually reading the entire statement—who does
that?! Let me suggest that next month it will be YOU!
Brokerage statements hold information your brokerage
firm is required to provide to you on a regular basis. They hold key
information about your life investments and how they are being
managed. The Financial Industry Regulatory Authority (“FINRA”)
has provided helpful insight to consumers regarding understanding
brokerage statements and the importance of the information contained
in those statements. Additionally, most regulators are going to agree
that staying on top of your brokerage accounts is extremely important
in ensuring your accounts are being handled in an appropriate manner.
This doesn’t mean you have to know a lot about
investments, but, according to FINRA, “Not only do these documents
help you stay on top of your investment holdings, but they also
provide valuable information that can alert you to errors, or even
misconduct by your broker or brokerage firm such as unauthorized
trading or overcharging customers for handling transactions.” So,
even if you don’t know everything a particular Mutual Fund holds,
your statements can bring to light problems you might not otherwise
notice in a timely manner. Some examples of “red flags” are:
Information or transactions in the account summary that you did not
authorize or expect, or income that appears on your statement, but
has not been deposited in your account.
FINRA has provided a helpful key information guide that breaks down sections of an account statement and
provides information about why it is important and what activity
might qualify as a red flag.
Many consumers are overwhelmed by the thought of
reviewing financial information on a regular basis. Either they lack
confidence that they will understand the statements and their
holdings, or they fear activity in the market may have decreased
their balance so they just avoid opening the statement all together.
If you start out slow, only focusing on certain portions of your
statement until you feel like you have an understanding of what
should be there and what it means, you can progress to fully reading
the account statement. While it may be uncomfortable and time
consuming, it is an important step in overseeing how your hard earned
money is being managed. It is a way to protect yourself from fraud
and other unsavory activity and, should you come across something on
your statement you are concerned about, FINRA recommends that you
“immediately call the firm that issued the statement or
confirmation about any transaction or entry [you] do not understand
or did not authorize, and re-confirm any oral communication in
writing with the firm.”
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