Regulatory Notice 08-77

Customer Account Statements: FINRA Provides Guidance on Estimated Annual Income and Estimated Yield

Executive Summary

In recent years, broker-dealers have begun to provide estimates of income, dividend and yield information concerning specific securities in their customers' accounts. According to some broker-dealers that prepare and distribute customer account statements, customers consider this information important data in their customer account statements. Some customers may use the estimated annual income (EAI)1 and estimated yield (EY) to monitor and review the income and yield of securities they hold, while other customers may use EAI as a financial planning tool to estimate annual cash flow. FINRA is concerned that some customers might confuse EY with the actual performance of their investments, although EY is not designed to depict total investment returns or actual yields.

This Notice provides guidance on how broker-dealers can best meet their responsibilities with respect to the presentation of estimated annual income and estimated yield in customer account statements. FINRA strongly encourages all broker-dealers that present EAI and EY in customer account statements to review this Notice carefully and take any necessary action.

1 For purposes of this Notice, income and dividend information are referred to as "estimated annual income".