Register for our Email Newsletter | Register

Advantages of a Wealth Advisor Insurance Policy

Investment Advisors Professional Liability Insurance

It is common practice for Registered Representatives to maintain professional liability insurance through their Broker/Dealer.  However, as many advisors evolve their practice to RIA's their Broker/Dealer coverage may no longer continue to be sufficient.

 

It is important to have the opportunity to review your Broker/Dealer's policy (and, have it reviewed by a professional like NAPLIA).  NAPLIA can assist your Broker/Dealer in improving their policy, and work with you to obtain a stand-alone policy that meets the needs of your individual practice.

Not all stand-alone policies are the same and it is important to review all provisions, conditions, and endorsements.

 

Eight Advantages of a stand-alone Professional Liability Policy over coverage for your RIA through your Broker/Dealer

 

1. Fiduciary Coverage

Affirmative Fiduciary coverage is one of the most important coverage's not traditionally offered through your B/D.  Not all policies are the same and with increasing scrutiny on fiduciary responsibilities, you want to make sure your policy provides coverage for your role as a "fiduciary".

2. Portable

A stand-alone policy is your policy and evolves with your practice.  Insurance through your Broker/Dealer (B/D) is tied directly to the services you provide for that B/D.  If you move to another B/D, or move on to provide other services, you can not take your insurance coverage with you.

3. Prior Acts Coverage

With a stand-alone policy you maintain your own Prior Acts Coverage (coverage for previous work that you performed).  Under your B/D policy, you will typically lose your prior acts coverage when you move to another B/D.

4. Individual Limit

Your limit with a stand-alone policy applies solely to your firm.  The aggregate limit on a B/D policy is typically shared by all of their Registered Reps.  Therefore, claims against other Representatives may reduce your available coverage.   

5. Coverage for all your Services

A stand-alone policy can provide coverage for your services as an Investment Advisor, Registered Representative, Life Insurance Agent, Trustee, and Fiduciary.  A typical B/D policy will only provide coverage for services that you provide through that B/D

6. Coverage for RIA Activities

a stand-alone policy is specifically designed to meet the niche market of Registered Investment Advisers.  The B/D policy may not cover all of the services that you provide and typically will not provide coverage for RIA services.

7. Entity Coverage

A stand-alone policy policy provides coverage for your entity and all advisers for work performed on behalf of that entity. A B/D policy is intended to provide coverage for the individual representative of the B/D.  Coverage is typically not provided for your entity.

8. Flexibility in Coverage

a stand-alone policy is a comprehensive policy form that allows you to tailor coverage, through endorsements, for the specific needs of your firm.  As a certificate holder of your B/D's coverage, you do not have the ability to amend coverage as necessary to your specific needs.