There are a few geniuses out there that know everything about anything. They have deep knowledge in many subjects. But they’re few and far between. Most of us are general practitioners who outsource our weak areas to those with expertise in their fields. The financial industry is a macro metropolitan sector than has multiple disciplines, some significant and others secondary…but all necessary.
Often insurance agents are licensed to sell securities, but not knowledgeable enough to manage securities. So, they outsource to registered representatives or registered investment advisors who have assets under management and have a good track record to boot. Financial professionals in retirement planning often refer their clients to fiduciaries like estate planning attorneys and CPAs because they have interrelated areas in their planning models. There’s nothing wrong with outsourcing, but you could be liable for their mismanagement and or recommendations that go wrong because you nominated them.
In the big scheme of things, everybody up and down the compensation food chain will be named in the lawsuit. Prosecutors are always looking for those with deep pockets. If you traded anything for the recommendation that has monetary value, you could still be named in a suit. Keep in mind if you didn’t disclose this as outside business, your broker/dealer could terminate you as well. Even if your nomination had zero recompense, you still might be cited in the opening lawsuit documents. Does your outsourcing partner have error and omissions insurance? Do you?