Case Study – Financial Planner

June 6, 2010


As a Financial Planner, you assist your clients in numerous ways – by preparing comprehensive plans, by developing estate and retirement strategies, by offering tax, investment, and insurance advice. You may even prepare tax returns or perform other accounting services for your clients. They look to you to be their expert guide, and may not always clearly hear your admonitions regarding the risks of certain strategies or investments. They may not even understand that there is no absolute guarantee than they will meet their financial objectives.

Prosurance Group understands your insurance needs, and will provide the personalized service you deserve. We will discuss with your insurance agent or you directly what type of coverage you require and how to best design a policy that offers you maximum protection at a reasonable cost. If you also offer tax preparation or accounting services or administer pension or benefit plans, we can offer the professional liability, fiduciary and trustee coverages you may also need.

“The unhappy investors obtained a judgment against her and it remained in the court records for 10 years.”

Even the most careful and experienced Financial Planner can innocently become involved in a professional liability claim.


A commissioned broker and registered investment adviser converted her practice to fee-only financial planning. She had purchased E&O insurance as a registered representative through her former broker-dealer but did not carry any for her investment advisory firm. She had invested some of her financial planning client’s assets in limited partnerships that later failed.

Three of her former clients filed arbitration claims with the NASD and alleged ethics violations with the CFP Board of Standards. The financial planner thought she was covered under her former broker-dealer policy, but in fact she had no coverage. This policy only covered her business through the broker-dealer. Her independent financial planning and investment advisory services through her own firm were not insured.

The unhappy investors obtained a judgment against her and it remained in the court records for 10 years. Without insurance the financial planner was unable to fulfill her financial obligations and the investors filed a lien against the planner’s home and other assets to have her wages and financial planning fees garnished.


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No One Expects To Be Sued
But as a financial professional, you and your firm could be. Clients rely on your knowledge and expertise to help them and you may be liable for any mistakes you might make. No matter how carefully you perform your job, your daily activities can put your career and financial existence at risk. At any moment, in any situation, an unhappy client can bring a complaint against you.