Achieving success in your investment project requires that you put your eyes on it. Even if you have handed managing that investment to your broker, a regular review of what he does with your money is important, because as human beings like you, they may not be correct all the time and knowingly or unknowingly.
Abraham Lincoln in one of his popular sayings said, “you can fool some investors all of the time, and all investors some of the time, but you can’t fool all investors all of the time—unless, of course, they don’t review their brokerage account statements and trade confirmations.”
For a prospecting investor, personal finance experts have identified some tricks and traps to be alert to. In the investing community, there are complaints here and there! They seem to have not end, but your personal measures can be great checks tool.
Firstly, trading commissions should be clearly disclosed on your confirmations. Scrutinize any ancillary fees. Always compare transactions listed on your account statement with your trade confirmations.
For instance, if your statement starts showing a lot of buys and sells, especially if you haven’t been receiving confirmations for all of them, it could be a sign that your broker is “churning” your account to rack up commissions. If you have a problem that you cannot resolve with your broker, brokerage or clearing firm, you can file a complaint at the Securities and Exchange Commission.
Especially at times when your portfolio is taking a beating, becoming a regular and astute reader of your brokerage statements and confirmations can help you spot or avert potentially costly problems, ranging from innocent mistakes (you mean you only wanted to buy 100 shares of that stock, not 1,000?) to actual misconduct, such as unauthorized trades or overcharges.
Gerri Walsh, an investor education expert said whether you are a do-it-yourself investor with an online brokerage account, or you get investment recommendations from a broker at a full-service brokerage firm, you’ll typically receive an account statement, or at least quarterly, and a trade confirmation every time you buy or sell a security. These might come electronically or via snail mail.
You also might receive a consolidated statement, showing your holdings across all your accounts. These are supplements to—not replacements for—the regular quarterly statements. If you get both, read and compare them, but know that it’s the official quarterly statement that governs in the unfortunate event of a dispute with your broker or brokerage firm.
Your statements and confirmations might come from the brokerage firm you opened your account with or from the clearing firm that settles, or “clears,” your trades and holds your securities.
Carolyn Geer, another investment experts said: “Beware of con artists pretending to be brokers and claiming to have relationships with well-known clearing firms. Among the red flags: statements with inconsistent account information, phone numbers that always seem to be busy, out-of-service or unanswered, and crooked or fuzzy logos.”
