Friday’s Files: Records of Correspondence

Ben Dell’Orto, Spring 2018 IAC Student Intern

Though brokers are mostly identified with the buying and selling of securities on behalf of the investor, they serve another important role: advisor.

While there is a difference between a broker, who acts as an advisor with an “o” and an investment adviser with an “e,” both have responsibilities to their clients when providing guidance. Over the course of the broker/client relationship, it is important to frequently check in with your broker to keep track of how your account is handled. Whether you are giving precise instructions on what to buy or sell or you have given your broker full control of your account, it is wise to keep track of how your investments are doing and ask any questions you might have.

Unfortunately, the recommendations your broker gives for your account, or the justifications your broker gives for why he or she made a particular decision are sometimes misguided, incorrect or blatantly fraudulent. If these conversations are happen on the phone or in person, it could be very difficult to prove in an arbitration proceeding what was said.

This is not to suggest that you must record every conversation with your broker, which may prove difficult or illegal depending on where you live. You can keep a journal about your communications with your broker, or you can simply take notes and keep them with your other files. These notes should include the date and time of any conversations and what advice your broker gives, with as much specific information as possible.

Further, if you have any confusion or difficulties, you can email your broker to verify what you’ve been told and save those emails to keep a good record of your correspondence. Though your broker might disagree, it is still valuable to memorialize your understanding at the time.

Keeping track of the advice in this way will lend legitimacy to your claim if things ever go south.