By Scott Evans, Spring 2014 Student Intern
Account statements are the primary means by which investors monitor their investment accounts. Investors should review these regularly. Like all of us, investment professionals can make mistakes, and account statements are an easy way to monitor for them. Account statements also help investors keep an eye out for potential wrongdoing. Account statements tend to come via the mail or e-mail, and they also come in predetermined intervals. Most brokerage firms send out account statements quarterly, but this rule is not set in stone. Ask your investment professional when you should receive statements. Once you know when to expect them, check at the anticipated arrival, open, and read them. While this list is not exhaustive, account statements will usually contain the following information:
- Statement period – this provides the time window which the account statement covers. The value of the account is shown as of the last day of the statement period.
- Account identity information – information such as the account number, the holder of the account, the type of account, and more is listed.
- Broker information – the name and contact information of the brokerage firm and the specific broker assigned to the investor’s account will be provided.
- Account activity – this will show the transactions that have occurred in the account within the statement period.
- Account summary – this tends to show the account’s performance over its life, and is not limited to the statement period. The summary enables investors to view the progress of their investments from a bird’s eye view.
- Fees – any fees charged to the account must be disclosed in the statement.
- Portfolio breakdown – this will show the different types of investments within the account so that the investor can monitor whether the portfolio is adequately diversified.
Many of these items are explained in greater detail in this pdf file prepared by FINRA as part of its Investor Education Series. For an example of what an account statement actually looks like, see this SEC example. For a useful checklist of what an investor should do when reviewing an account statement, see this brochure issued by the North American Securities Administrators Association.