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Read your statements

Posted by Jill Boynton  January 18, 2010 10:56 AM

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Recently a New York couple sued their financial advisor and Fidelity for damages related to a loss of more than $2 million in their portfolio. FINRA, who arbitrated the case, denied the claim against Fidelity in part because the couple had stopped opening their account statements through the summer and fall of 2008. In fact during their 4-year relationship with their advisor they had opened statements only half of the time. The award statement noted that the losses were caused by the actions of the financial advisor, "coupled with the failure of the claimants to monitor their accounts."

Over the past couple of years I've had more than one investor tell me that they had stopped opening their account statements because they didn't want to see how much money they'd lost. I always tell them that that's a dangerous thing to do. If you don't look at your statements you lose track of what's going on with your account. If you are uncomfortable with the level of losses you see then it's time to call your broker or advisor and have a discussion. Ask your advisor why the losses are so large and talk about the strategy going forward.

Just as importantly, if you don't monitor the activity in your account you won't know if something goes on that you didn't approve. This is exactly how brokers/advisors are able to steal money from clients - by withdrawing money that they know the client isn't going to notice. And I'm not singling out any specific kind of advisor. I've seen theft happen with both brokers and independent financial advisors. I also had an elderly client who's credit card number, which was tied to her Merrill Lynch Account, was stolen (they didn't steal the card, the thief just got the number). The thief used it for a Las Vegas vacation and to sign up for Match.com. The client didn't see the unauthorized charges and it was a family member, reviewing the statements, who noticed her 80-year-old mother's Match.com charges!

So don't stick your head in the sand. Open those statements every month and read them thoroughly. It's the only way you will stay in control of your finances.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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ABOUT MANAGING YOUR MONEY
Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

About the contributors

D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of CardHub.com, a credit card and gift card marketplace, and WalletHub.com, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

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