In a perfect world, professionals like you wouldn’t need E and O insurance. All transactions would unfold without a glitch, all clients would be happy and we wouldn’t even need regulatory bodies because people just did what they should. All the time.
We don’t know where that world is. We do know mistakes happen because people are not perfect. We also know that following some common-sense rules in how you conduct business will minimize the chance you’ll be hit with an Errors and Omissions claim.
Whether you are just starting out or are an experienced finance professional, embrace these 5 ways to avoid a professional liability claim and establish a solid foundation for you and your business:
Research
Know your product lines. Make sure each product and investment program you offer is not only registered with the appropriate regulatory authority but, if appropriate, also approved by your registered-investment advisor, broker-dealer, or any other entity charged with your supervision.
Expertise
Do not jump on a hot new product you have not investigated and are not licensed to sell. Recommend products you truly understand; if prospects are looking for something different, it is your job to refer them to another provider, as long you can vouch for that provider’s competence and integrity.
Solicitation
Take great care with solicitation materials, whether they are printed, online or in a video or audio format. Never misrepresent what you sell, what you do, or who you are. If required – and perhaps even if not – get approval from your insurance company and/or broker-dealer for all solicitation materials. Most state regulatory agencies also have guidelines for what is and is not appropriate.
Disclosure
Clients can be savvy and more information about you builds trust and protects your business. Disclose affiliated advisers and companies plus other required information. Be honest and straightforward about your business practices, track record and client satisfaction. Always err on the side of full disclosure.
Professionalism
Keep up with regulatory requirements and changes. Invest in your career and knowledge base with professional development courses and continuing education units. Make sure your designations are up-to-date. Know what you are recommending – do not just take someone else’s word for it.
Don’t cut corners when it comes to professionalism. Following standard professional practices is the right thing to do but also helps protect you against potentially damaging and costly E&O claims.
Professionalism is simply not a box you check before moving on with your day.
DISCLAIMER:
This article/blogpost is provided for informational purposes only, does not necessarily represent Aspen’s views, and reflects the opinion of the authors in light of market, regulatory and other conditions which may change over time. Aspen does not undertake a duty to update the article/blogpost.
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