How to read the statement, it’s all in the numbers

It’s a new year! Time to learn something new. Today we are going to tackle one of the most basic (and most frequently asked) questions we get: “How do I read my statement?”

First, let me differentiate between the two types of mail you would typically get from an investment company, as they are often confused with one another. 

Statements are for a period of time (usually a month or a quarter) and they show all the activity for that time, along with other information the reader may be interested in.

A Confirmation of Activity is for one specific transaction or group of transactions on a specified date. 

In the old days, Confirmations of Activity (more colloquially known as “confirms”) were usually a slip of paper (one third of an 8 ½ by 11” page) and looked totally different than a statement, so there was no confusion. Today, however, confirms typically come on a normal 8 ½ x 11” page and have additional information, so they are often confused with a statement. Just remember that:

• a Confirmation of Activity is sent to confirm that you initiated some activity, often on the advice of your advisor, and

• a Statement is a summary of all activity that occurred during a period. In this regard, an investment statement is very similar to your bank statement.

Investment statements vary wildly by dealer, but they all have some key elements and most have additional information that the reader may find of interest. Unfortunately, they often don’t include what investors care about most. It’s been my experience that investors inevitably want three questions answered on a statement:

1. What are my investments worth?

2. How much did I put in?

3. How much did I make?

Sadly, some statements still don’t have this information easily available, but most do. On a statement, you can expect to see:

• a time period indicating the period that the statement is for. Typically, this will be a month or a quarter, sometimes a year. Often, I see this listed somewhere near the top right corner.

• who the statement is for. This is usually found where you would find it in a formal letter (near the top left) and often includes an address for use in a windowed envelope.

• the current market value. The best statements will answer the three questions I mentioned previously in a simple summary, but at a bare minimum they will show the current market value as of the last day of the statement period. This can be confusing as often the statement doesn’t arrive until three or four weeks after it’s reporting date, so it’s already long out of date by the time you get it. The absolute best ones I’ve seen will include a small chart showing the simple summary over time since inception.

• a list of your accounts, indicating the type (RRSP, RRIF, TFSA, etc.) and account number at the top. After the account type and number, you’ll probably find some or all of the following listed for each account: 

o  a list of holdings (what you own) including the number of shares, share value, and total value. Total value is what it was worth at the end of the statement period. Theoretically, that’s what you would have received (not counting taxes and fees) if you had decided to sell on that day. 

o  book value, which many investors find confusing. In taxable accounts, this is your cost for tax purposes. In all other accounts this value is meaningless.

o  a list of all activity by account that occurred during the period, like buys, sells, switches, etc. 

o  a nice little summary of all accounts.

After the list of accounts, some dealers will have additional information they feel investors may be interested in. This information isn’t essential, but it’s nice to have, and can include:

• the top 10 underlying holdings.

• manager commentary.

• economic analysis.

• metrics on the investments such as bond vs. equity exposure, currency exposure, bond quality, etc. 

• the names of beneficiaries you’ve elected, risk tolerance, and Know Your Client information.

In this crazy busy world, we’ve had many clients ask us to reduce the paperwork they get in the mail. I’ve found that (most of the time) one annual paper statement with quarterly online statements has been the sweet spot – right between getting too much and not enough information. It helps that it’s pretty easy to have current account information at your fingertips these days, reducing the reliance on paper statements. 

Obviously, it’s different for everyone and not all platforms can accommodate everyone’s unique wishes, but don’t ever hesitate to call your advisor and ask that you be provided statements the way you want them. Whether in the mail, online, or a mix of the two, ask to get the information how you want it, when you want it. Most advisors will be happy to hear from you and will bend over backwards to help you in any way they can. And while you’re at it ask questions about your statements so that you can understand them when they arrive. I have never met an advisor who wouldn’t happily walk clients through their statements.

Arnold Machel, CFP® lives, works, and worships in the White Rock/South Surrey area. He is a Certified Financial Planner with IPC Investment Corporation and Visionvest Financial Planning & Services. Questions and comments can be directed to him at dr.rrsp@visionvest.ca or through his website at www.visionvest.ca. Please note that all comments are of a general nature and should not be relied upon as individual advice. The views and opinions expressed in this commentary are those of Arnold Machel and may not necessarily reflect those of IPC Investment Corporation. While every attempt is made to ensure accuracy, facts and figures are not guaranteed.  

Arnold is now accepting a limited number of invitations to speak for the 2022/23 calendar years. If you are interested in having him speak to your congregation or other group regarding money matters, please contact us at admin@visionvest.ca or (604) 542-2818 with your preferred date and time.