newsstate corporation commission encourages greater awareness about broker dealer fees

State Corporation Commission encourages greater awareness about broker-dealer fees


money-newlinksMany investors are in the dark when it comes to fees they pay their brokers, other than commissions. In recognition of Financial Literacy Month April 1-30, the State Corporation Commission (SCC) encourages Virginia investors to make sure they understand all of the fees charged by broker-dealer firms for services and maintenance of investment accounts.

“Enhance your financial literacy by arming yourself with information. Understand what services you are paying for and how much you are paying,” said Ron Thomas, director of the SCC’s Division of Securities and Retail Franchising. “Identify resources and know where to turn if a problem arises,” he said.

A recent survey by the North American Securities Administrators Association (NASAA), of which the SCC is a member, reveals that investors are confused about brokerage service and maintenance fees and want clear and easy access to fee information from their broker-dealer firms. This survey 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 to service and maintain their investment accounts.

The survey polled 1,072 Americans who said they had brokerage accounts. Of these, 30 percent thought their brokerage firms did not charge annual service and maintenance fees, although most of them do. According to the survey, 52 percent of investors were aware of such fees, but did not know how much they were. A large majority of the respondents indicated that they want fees charged by broker-dealer firms disclosed in a chart or other graphic with language that is uniform and easy to understand, making it easier to compare prices, products and firms.

To enhance investor understanding of broker-dealer fees, the SCC encourages investors to pay special attention to the timing, method and content of fee disclosures.

Fees are typically disclosed when a customer account is opened. Ask for a fee schedule and make sure it is up to date. Do not invest any assets until a current fee schedule is provided. Investors have the right to know the fees in advance.

Watch for any 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.

The SCC encourages investors to read the fine print when shopping for a broker-dealer. Most such 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.

Remember that different broker-dealer firms may use different terms for the same service. Make sure you are comparing apples to apples when considering fees charged by various firms. Know what services you plan to use regularly and ask specifically what terminology a firm uses for its services and the associated fees.

For more information, contact the SCC’s Division of Securities and Retail Franchising toll-free in Virginia at 1-800-552-7945 or in Richmond at (804) 371-9051 or e-mail the division at [email protected]. Additional information may also be found on the Securities Division’s website at or the NASAA website at




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