How to Make Sense of Your Monthly Account Statements
Brokerage account statements can be lengthy and complicated. Having a basic idea of what you are looking at, however, can help you spot mistakes, unauthorized activity, and even fraud. Here are the key types of information generally found on monthly account statements and some potential red flags that warrant follow-up with your brokerage firm.
General Appearance
Account statements should look professional and not look altered in any way. The brokerage firm’s information and logo should be uniform throughout the statement and should match all of the other documentation you have received from the company – trade confirmations, new account forms, and correspondence.
Possible red flags: a statement that looks different from others you have received in the past or information on the statement appears to have been altered in some way.
General Account Information
The account statement should include: 1) the type of account ownership (individual, joint, trust, etc.); 2) the name(s) of the account holder(s); 3) the account number; 4) the mailing address of the account holder(s); and 5) the contact information where any duplicate statements are sent (CPA, attorney, independent investment advisor, etc.).
Possible red flags: the account type or account holder(s) is incorrect; your mailing address is wrong; duplicate statements are being sent to a third-party without your permission; the contact information for an authorized duplicate statement recipient is wrong; or the account number is different from previous statements.
Contact Information for the Firm/Broker
Monthly account statements should contain the name and contact information for your broker or investment advisor. Statements for self-directed accounts may only contain a phone number for the brokerage firm.
Possible red flags: the named broker/investment advisor is unfamiliar to you or the listed phone number is out-of-service, always busy, or not being answered.
Clearing Firm
A clearing firm is a type of brokerage firm that maintains custody of the securities and cash in investment accounts and provides margin services, if applicable. Your brokerage firm must disclose whether it uses a third-party clearing firm. If it does, it must disclose the identity of the clearing firm on the account statements. This information may be reflected on the monthly statements as “clearing services provided by,” “brokerage products and services offered by”, “account carried by,” or something similar. Brokerage firms occasionally change clearing firms, so if the clearing firm is different than on previous statements, it is not necessarily a red flag.
Possible red flags: no clearing information whatsoever is listed on the account statements.
Account Performance Summary
This section contains the total value of your account for the reported period and how it has performed since the last statement.
Possible red flags: a sudden large movement up or down could signal that the investments are not in-line with your risk tolerance level.
Account Activity Summary
This section should detail the trades made in the account, any transfers of securities in and out, and any cash deposited or withdrawn from the account.
Possible red flags: trading activity that does not match the trade confirmations that you received; trades that you did not authorize; transfers of securities in or out of the account that you did not request; or deposits or withdrawals that you do not recognize.
Margin Summary
Margin is a type of loan that is secured by the securities you buy. In addition to reflecting the balance of any outstanding margin loan, your statement should indicate which securities were purchased “on margin” and the amount of margin interest you have paid since the last monthly statement.
Possible red flags: the margin costs exceed your expectations or securities were purchased on margin without your consent.
Fees
The fees you were charged by the brokerage firm should be included in every statement.
Possible red flags: fees that are unexpected or seem excessive.
Income Summary
This section will show the interest and dividends you received since your last statement.
Possible red flag: income that is reflected on your monthly statement, but hasn’t been deposited into your account.
Portfolio Detail
The specific investments in your account should be itemized on your statement and may include things like date acquired, price, current value, unrealized gain/loss, and the number of shares you own etc. Typically, the investments will be grouped by asset class (equities, fixed income, alternatives, etc.). Some brokerage firms even include a pie chart showing your overall allocation of different types of assets. This can help you determine whether your portfolio is properly diversified in line with your goals.
Possible red flags: investments that you do not recognize; investments that you believe you own, but are not reflected on the statement; products that are listed in a different asset class than you expect (e.g., a product you were told was a “bond” is listed under “equities,”); or the asset allocation does not match your risk tolerance.
Disclosures and Definitions
The small print on the backside of most statements contains definitions for the key investment terminology used throughout the statement. It also typically contains legal information about the brokerage firm and its obligations related to your account.
Possible red flags: there are no definitions or disclosures listed, or the information in this section differs from what you were orally told.
Conclusion
If you find any of the possible red flags above, or something just doesn’t look right, contact your broker or brokerage firm right away. If the issue isn’t resolved, explained, or corrected to your satisfaction, visit FINRA’s website to see how you can get help.
