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"Sign Here Please..."
By John M. Gannon
Summer 2008
We sign our names to all sorts of documents, from credit card receipts to delivery confirmation forms. But not all investors bother to read and sign important financial documents, and some investors let someone else – such as a spouse, broker or other financial professional, lawyer or accountant – sign those documents for them.
The simple message is that it’s best if you – and only you – read and sign documents relating to your accounts and transactions. This includes account agreements, written disclosures about products, and documents describing commissions, fees or other charges you may incur.
Don’t Take The “Easy” Way Out
Investors should never allow anyone else to sign documents for them. Taking the time to read and sign documents -- including new account forms, customer disclosure documents, variable annuity allocation and transfer forms or margin agreements – is not a needless formality.
Investors might believe that giving someone else permission to sign documents will speed up a transaction or service, or simply save them time and trouble. But trouble is what investors often find when they do not take the time to carefully review and personally sign each document.
Permitting someone to sign documents for you – especially documents you have not read or were not provided to you – may result in erroneous transactions, increased costs, tax issues and confusion about your accounts or transactions. So it is very important that you take the time to review all documents pertaining to your account, make sure you fully understand them, and then sign the documents yourself.
Why You – And Only You – Should Sign On The Dotted Line
Here are three reasons why you should always read and sign documents yourself:
Signing tends to go hand-in-hand with document review. When the document is staring you in the face, you are more apt to read it, raise questions and remember precisely what you signed. Be sure to keep a copy of the signed document for your records. Never permit anyone else to sign any document that was not provided to you or that you have not read.
Signing helps you stay in control of your investments. Taking the time to read, understand and sign account documents is an important step toward remaining in the investment driver’s seat. It’s a fundamental way to protect not only your investments but yourself against terms to which you did not agree, rights to which you are entitled and responsibilities to which you may be legally bound to uphold.
Signing really isn’t that time consuming. We live in an era of express mail, easy downloads, e-mail and faxes. The time it takes to receive, sign and return important account documents is worth the effort and minimal delay. In fact, in today’s electronic age, you should be extremely wary of unsolicited offers to “take care of the paperwork for you.”
If you have a complaint concerning a securities professional, you should contact his or her supervisor, or the firm’s compliance department or senior management. You also may file a complaint with respect to a brokerage firm or broker using the Financial Industry Regulatory Authority’s online complaint center at www.finra.org/complaint. For other financial professionals, you can turn to their regulators, generally the Securities and Exchange Commission or your state securities or insurance regulator.
For tips on protecting your online brokerage or financial accounts, visit FINRA’s identity theft web page at www.finra.org/identitytheft.
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John Gannon is Senior Vice President of FINRA, the world’s leading private-sector provider of financial regulatory services. Visit www.saveandinvest.org, a comprehensive website to help servicemembers manage their money with confidence.
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Keep Track of Your Investments
Once you’ve signed your documents, keep an eye on your investments. This can help prevent minor mistakes from turning into big problems. You can protect yourself by taking the following steps:
Keep all documents you receive from your broker, mutual fund or investment adviser in a safe place. Check to make sure your confirmations and account statements are accurate.
Get all confirmations and account statements sent directly to you. If you can't look after your own investments, get copies of these documents sent to someone you trust, such as a family member, lawyer or accountant, so that there is always a pair of independent eyes looking after you.
If you don't get account statements or confirmations, follow up. You have a right to this information. If you are not receiving these documents on a regular basis, it could be a sign of trouble.
Ask questions about any information you receive about your investments. If you don't understand something, ask questions. If investments that you did not authorize appear on your confirmations or account statements, contact your broker or adviser at once.
Even if you don't trade online, consider getting online access to your account. Online access to your account allows you to review your account whenever you want. You can verify information that you received from your broker or adviser or in your confirmations or account statements.
Periodically review your portfolio. Make sure the securities in your account still meet your investment objectives. Since these can change over time, you will want to make sure the firm’s records accurately reflect important information about you – such as your age, income, net worth, financial status, long-terms goals and investment objectives.
