Ignore Statements at Your Own Peril

BY VINCENT A. SCHIAVI

To avoid the temptation to sell in a bear market, one of the CPA/financial planners interviewed for “Lessons of a Bear Market” ( JofA, Aug.01, page 20) advises her clients, “Don’t watch CNBC and don’t open your brokerage statements—there’s no point in it.”

I don’t have a problem with not watching the talking heads on the financial shows or not reading what all the so-called experts have to say. I have a big problem with any financial adviser seriously recommending that clients not open and read their monthly brokerage statements. Those statements represent important evidence of what they actually own. If clients don’t communicate problems shown on their statements in a timely manner, they could lose important rights of redress.

In my 19 years as a financial adviser, I have found the most significant fraud committed upon investors involves the transfer of money directly from clients to the adviser, with the adviser returning to the clients in-house-prepared investment reports.

One protection clients have is the use of a third party such as a brokerage firm to act as custodian for their funds. Brokerage statements present an opportunity for clients to review for errors or unauthorized withdrawals from accounts. Financial advisers should encourage clients to always open and read any communication from their account custodians. Whether we are in a bear market or a bull market shouldn’t make any difference. Advising anything less is unacceptable.

Vincent A. Schiavi,
CPA/PFS, CFP
Wilmington, Delaware

SPONSORED REPORT

CPEOs provide peace of mind around payroll services

The creation of these new IRS-certified service providers for small businesses clarifies some issues around traditional professional employer organizations.

QUIZ

News quiz: Senate health care bill in the spotlight

Reports related to the Republican bill to repeal many provisions of the PPACA, other tax issues, and the giant AICPA ENGAGE Conference offered a diverse reading list for June. See how much you know about recent news with this short quiz.