When your brokerage account statement comes in the mail, do you shred it without giving it a close look? Perhaps, your brokerage account statements are neatly stacked, unopened, in your home office somewhere because reading through them feels confusing and arduous.
While many folks might overlook their statements because they trust their brokers and investments, it is certainly wise to keep track of how your investments are performing. Understanding your brokerage account statements begins with learning how to read the information contained within them.
Following are some helpful tips for keeping a watchful eye over your nest egg.
Brokerage Account Statement Sections: The Basics
Brokerage account statements are rather homogenous when it comes to the types of information they contain. While the values presented vary from person to person based on the performance of their investments, there are standards for how this information is presented to account holders.
Basic Account Information
The first page of your brokerage statement will contain basic account information such as the account holder’s name and address along with the account number and statement period. Next to basic account information is the summary of assets and their values.
Asset summaries contain values for cash within an account as well as the value of assets managed by the broker, portfolio assets managed elsewhere, and the starting and ending values of all assets for the statement’s time period.
The first page also contains identifying information about the account holder’s carrying broker and/or introducing broker. If one has an introducing broker, this agent is responsible for taking orders but not actually clearing or holding assets. There is also contact information for clearing brokers, also known as, “carrying brokers”. Clearing or carrying brokers manage the sale and transfer of assets along with holding a client’s cash and/or securities.
Another segment of a brokerage account statement is the account summary. This portion of the statement breaks down the values of assets into categories such as cash, fixed income, equities and options, and mutual funds. Each of these categories is also assigned a percentage value, which is displayed in tables and pie charts to denote how assets are allocated compared to their total value.
There are also tables, pie charts, and graphs within a brokerage statement to help account holders view the value of assets at the beginning of the statement period and its end. These values are used to project annual earnings as well.
Change in Account Value
Statements have sections to show the value of investments throughout the year. Under “year-to-date” sections, account holders can compare statement period values and year to date values. This section is beneficial for monitoring the overall performance of one’s investments and assets.
The transaction section of a brokerage account summary itemizes activity such as dividend and interest earnings where applicable for the statement period. This section also displays the sale and transfers of funds within a brokerage account.
Account and Holdings Summaries
The account and holdings summaries are useful tools for account holders who want to compare performance from the statement period to annual performance. Normally broken up into charts, account holders can easily view the cash flow of their portfolio for the statement period and compare it with cash flow from a year-to-date summary for categories including cash, interest charges, and deposits.
The holdings summary section gives a broad view of account activity from the beginning of the statement period until the end. This section is divided into categories for items like bonds, cash, and mutual funds.
The disclosures section is an important segment of a brokerage statement that contains tips on reporting discrepancies and errors along with pertinent information that defines terms and the calculation of fees. This section is meant to help an account holder make sense of their brokerage statements.
Beware of Red Flags
As with any financial account, it is important to look out for potential errors or fraudulent activity. If you find errors in your statements, do not hesitate to call or make an appointment with your broker. Your broker can help you identify discrepancies and resolve them. If you feel that your broker or his or her firm has mismanaged your accounts, you can seek help from regulating agencies such as the Financial Industry Regulatory Authority (FINRA) or by contacting an investment fraud lawyer.
If your brokerage account statements appear unprofessional, including having misspellings, grammatical errors, distorted logos, or crooked images and text, they could be fraudulent. Criminals have tried to replicate statements by using counterfeit watermarks and logos. If your statement looks suspicious, contact your broker using information listed on previous legitimate statements, as criminals can print fake numbers and addresses on fraudulent statements.
If you believe that you might be a victim of fraud or deceptive business practices, call our office at (504) 207-5010 to schedule a consultation with one of our investment fraud attorneys.