Maine Office of Securities Shines Light on Broker-Dealer Fees

In recognition of Financial Literacy Month, Maine's Office of Securities issued an advisory to raise investor awareness about fees charged by broker-dealer firms for services and maintenance of investment accounts.

"A key component of building financial literacy is learning what you need to know and where to find it," Securities Administrator Judith Shaw said. "That is especially important when it comes to understanding what services you are paying for and how much you are paying."

The advisory follows new research from the North American Securities Administrators Association (NASAA), of which the Maine Office of Securities is a member. The research indicates that many investors are confused about brokerage service and maintenance fees and want clear and easy access to fee information from their broker-dealer firm.

A national public opinion poll commissioned by NASAA found that fees are important to investors but a general lack of standardization and clarity in their disclosure has left investors unaware of how much their broker-dealer firm charges for the service and maintenance of the investment accounts. To address this concern, Administrator Shaw suggests investors focus on the timing, method and content of fee disclosures.

-- Pay attention. Fees are typically disclosed when a customer account is opened. Ask for a fee schedule and make sure it is up to date. If it is not readily available, do not place any assets with the firm until it is provided. You have the right to know the fees in advance. Also, watch out for fee changes. Most broker-dealers disclose fee changes at least 30 days in advance, but they may use different methods to reach investors. Make sure your broker-dealer firm knows how you prefer to be contacted.

-- Read the fine print. Most broker-dealer firms disclose fees for certain services on a table, chart or list, while some use a narrative, but it may not list dollar amounts or formulas. If you do not see a section on fees and charges, ask for it. Investors are responsible for reading and understanding all materials provided by a broker-dealer.

-- Talk the talk. Different firms may use different terms for the same service. Know the services you may be using regularly and ask specifically what terms a firm uses for its services and the associated fees.

"Savvy consumers know it is important to compare prices on similar products, and they want the tools to make an informed decision," Administrator Shaw said. "Investors have spoken; regulators and the industry need to listen."

The advisory is available on the Office of Securities' website at www.investors.maine.gov. Consumers may contact the Office to check an adviser, salesperson or investment, or to obtain other information related to investing, by calling (877) 624-8551, visiting the agency's website, or writing to Maine Office of Securities, 121 SHS, Augusta, ME 04333-0121.