Your Brokerage Statement: How to Read and Make Sense of It
When you receive a statement from your brokerage firm, do you give it just a quick glance or even ignore it? If so, you might be missing the opportunity to review critical information about your investment accounts. If you don’t read and understand your brokerage statement, you might not spot mistakes or potential misconduct.
So give each brokerage statement a thorough read. If you see a transaction or entry you don’t understand or didn’t authorize, immediately call the brokerage firm or your financial professional to request an explanation.
Your brokerage firm will mail you statements—or, if you opted for e-delivery, you can view them online via the company’s website or mobile application. Here's a look at the information a brokerage statement might include and what to keep in mind when checking for errors or signs of a problem with your account.
Statement Period or End Date
Your statement should show the value of your investments at the end of the statement period. Knowing that end date can help you gauge your investments’ performance over a certain time period. Statement end dates typically follow a consistent pattern, such as the last day of every month.
Account Information
This information on your statement identifies ownership of the account (individual, joint, etc.), as well as the account type (personal, business, retirement, etc.) and account number(s). It also identifies the current mailing address the firm has on its records. Be sure the account number matches your previous statements and that all account ownership information is correct, including your mailing and email addresses and any joint owners on the account.
Contact Information
The name and contact information for your financial professional are generally located at the top of your statement. Statements from online brokerages or other investment firms that don’t provide investment advice might not include the name of a specific financial professional but will include contact information for customer service.
Clearing Firm
The clearing firm identified on your statement is the brokerage firm that maintains custody of the securities and cash in your account. Account statements must provide clearing firm contact information. The clearing firm may be a subsidiary of your brokerage firm, and thus have a name similar to your brokerage firm, or your firm may have an arrangement with another broker-dealer to act as its clearing firm.
If you notice any inaccuracies or discrepancies on your account statement, report them in writing to both your primary brokerage firm and the clearing firm listed.
Account Summary
The account summary shows the big picture of your account’s performance, including the total value of your account and the performance since the last statement period. It can give you important insight into how successful your investment strategy is and whether you should change course.
Always review your account summary and report any unauthorized activity. Also be wary if your statement always shows the same rate of return, regardless of market conditions, and especially if the return is above market norms. This can be a sign of fraud.
Income Summary
This section helps you see income earned and its source and may be consolidated with your account summary, deposits, withdrawals, dividend interest and bond maturity dates. Remember that actual yields or total investment returns can differ from estimated annual income (EAI) or estimated yield (EY), which, as the name suggests, is only an estimate and may change.
Raise concerns about unfamiliar sources of dividend and interest income or if you see income that appears on your statement but hasn’t been deposited to your account.
Fees
This is where fees associated with your account are disclosed. It isn’t possible to get a clear picture of your investment results without an accurate understanding of your fees, so you’ll want to review this section of your statement carefully and be alert to any unexpected charges. Don’t be afraid to ask about fees, including commissions, that seem excessive or unusual or if you see unanticipated handling charges or other costs.
Account Activity
This section should include detailed information about account activity during the period, including any trades made and money going out or in. Check the details for accuracy, including deposits and withdrawals, and be sure the activity matches the trade confirmations you've received in the past, including the price at which you bought or sold a security and the quantity of securities bought or sold.
Margin
Margin is a loan from your brokerage firm that’s secured by the securities you’ve purchased. Additionally, a margin account is generally required to sell securities—such as options—short. Your statement will tell you which securities are held in a margin account, the outstanding amount of the loan, and how much margin interest you’ve paid on this loan in a given account period.
Ask for an explanation of any margin costs that exceed the disclosed rate of interest or securities purchased on margin without your permission.
Portfolio Detail
This information will show the individual assets in your account and might include a breakdown of investments by asset class. From here, you can assess whether the list of holdings is accurate and get a sense of how diversified your portfolio is, which can help you evaluate whether your investments are in line with your goals and risk tolerance. The portfolio detail section might also include other information like bond insurance ratings, unrealized gains and losses, and income from investments.
Disclosures and Definitions
From explanations about fees to key definitions, this section is designed to help you understand your statement. It’s also where you’ll find details about key legal information. Note that any fees disclosed here should match those being charged in the account. Disclosures and definitions may be at the end of the statement and/or on the back of a hard copy.
Tying It Together: Appearance Test
One of the biggest red flags, particularly when it comes to scammers issuing fraudulent statements, is a statement that looks unprofessional or altered in any way. For instance, logos might have an oddly low resolution or fonts might be inconsistent. In some cases, scammers impersonating a legitimate firm have been known to include that firm’s logo on their own trumped-up statements.
If you find inaccuracies or discrepancies in any of your statements, contact your financial professional or brokerage firm as soon as possible using the contact information or links that appear on the firm’s Customer Relationship Summary, which you can access by looking up the firm on FINRA BrokerCheck. If they can't resolve the problem, consider filing a complaint using FINRA's online Complaint Center.
If you have questions or concerns about your brokerage account statements or your investments, you can call the FINRA Securities Helpline for Seniors at 844-57-HELPS (844-574-3577).
