Why buy E&O? We’ve never been sued.
This month’s ia360 RiskTip addresses another common question our office receives from the RIA community: “Why should we purchase E&O? –For we have yet to experience a lawsuit and/or a claim in all our history.”
Great question and asked with rhetorical color – completely understandable. Is that not the case with the majority of advisors? – Most have never experienced such an onslaught.
What exactly does RIA E&O cover? Are all policies alike?
This month’s RiskTip addresses one of the most repeated questions: What Exactly Does E&O Cover?
While some harmony exists among the seven or so key underwriters’ insurance contracts in the RIA E&O marketplace, the prudent answer is – “It Depends” (some say the two key words an attorney learns in law school). Though seemingly a deflection, such is the only accurate answer.
RIA Liability Claim: Define “Alternative Investments”
Proverbs 4:13 informs us to “Hold on to instruction, do not let it go; guard it well, for it is your life.” In navigating a successful investment advisory practice, we are wise to learn from other firms and their fiduciary claim nightmares. Once again, when it comes to purchasing E&O (errors and omissions) insurance, “Details, details, details!”, or your firm’s primary risk-transfer mechanism (insurance) may reveal itself an ineffective strategy.
What’s your 2010 fiduciary risk management plan?
As many begin the New Year with the formation of hopeful aspirations (or necessary modifications!), one such goal within the RIA practice could be to review one’s current strategy for fiduciary risk-transfer, or broader yet, one’s total Fiduciary Risk-Management Program.
Fiduciary and E&O Liability: What’s the difference?
Yet another common question posed to us from advisors across the country, it seemed a good idea to address this question.
The insurance industry has their own independent glossary of definitions that generates understandable confusion to the advisor community. Specific to this ia360 Risk Tip newsletter, confusion in that insurer’s usage of the term “fiduciary” does not match the investment advisor communities’ usage of the same.
Alternative Investments: A perspective on Allocation
Movement appears to be afoot among the custodial community seeking to avoid what they are calling “unnecessary risk” posed by various “Alternative” investments. An “Alternative” is defined as an investment product other than a traditional investment instrument such as stocks, bonds or mutual funds. Examples are real estate, private equity, venture capital, commodities and hedge funds. Case in point: Schwab’s February 2009 decision to remove “Alternatives” from their platform by the end of 2009 (indications from other custodians announced or expected). Why is this happening?
Material Change: Understanding the Impact on Your E&O
Expanding into new Investment Types? Adding new Advisor Representatives? Acquiring a Practice?
The business environment is ever changing, and this has never been truer in the arena of finance. When opportunities arise we want to afford them consideration. As an RIA, opportunities can arise to select new types of securities, add advisor staff, or acquire an industry practice. While such proceedings present opportunity, one must be cautious.
