What Your Financial Planner Doesn't Tell You
A quick guide on how to make sense of what your financial adviser sends you.
May 5, 2009 — -- In a recent column about fraud allegations against two financial planners, I advised readers to study account statements as one way to make sure they do not fall victim to a crook.
That advice prompted a question from a reader in Louisiana, who referred to the column's headline: "Is Your Financial Advisor a Crook?"
Q: That's what I want to know! How do I tell? The statements are so many (pluses and minuses); I don't know what's going on.
--T.W., Iowa, La.
Answer: T.W., you are correct, the account statements issued by many firms can be tough to understand. However, it's in the best interests of you and every other investor to study them carefully. Not only can a close review help you spot potential misdeeds, it also can help you understand your overall financial health.
For those mystified by investment statements, let me offer a few suggestions on things to look for when one arrives in the mail or electronically from a brokerage firm, bank or mutual fund family.
Just understand that every company's statement is different. There is no standard format. The information provided and the manner in which it is presented differs from firm to firm.
When looking over a statement, start with the account summary that typically appears at the top. Such a summary will show the account balance at the beginning of the period covered by the statement and the balance at the end of the period.
If there's a large difference, try to figure out why. Did the value of the investments you own rise or fall dramatically during the period? Did you make a large contribution or withdrawal?
If you can't account for the difference, that might be your first clue of a problem.
