Types of Insurance That a Financial Planner Should Purchase

Financial Planner Insurance, just like any other company owner, face some risks. The way to minimize those risks though is by making certain that you set up a thorough insurance portfolio for your business. A NY financial planner provides a wide array of financial services to individual clients, which include an assessment of their overall financial objectives, reviewing financial data, identifying risk management, and providing advice to help you get these objectives in place. If you are a business owner looking for a financial planner, contact us for more information on how a financial planner can help you.

Risk management is a key element for any long-term investment strategy. If you buy a stock that’s currently going up, the ideal situation would be to sell and purchase more shares at a lower premium to maximize your profits. Good financial planners can help you find the right stocks. One advantage of using insurance cost insurance providers is that they provide information about the different levels of risk that different types of investments carry. Some of the types of investment options that fall into this category include:

Some types of insurance coverage that are offered to financial planners professional indemnity insurance, which protects planners against claims based on negligence or errors made when advising you regarding your investments and your overall risk tolerance. Professional indemnity insurance is usually only used in the most serious of cases where a planner has taken the time to fully understand the products and services that they recommend. This type of protection is not available with all insurance providers. Your Broker should be able to provide you with information regarding the various types of coverage that are available to you. In general, professional indemnity insurance coverage is designed to cover you in the event that you are sued or if you are the subject of a legal claim brought against the firm.

The third type of insurance cover that financial planners can purchase to protect their clients is professional liability insurance. Professional liability insurance comes in two different forms. It can be purchased as a policy that will cover you in the event that you make a mistake or that your advice is considered inaccurate by another party, or it can be purchased individually as a policy that will only cover the financial planners for liabilities that arise out of giving advice that results in injury to a third party. The insurance that financial planners purchase to protect them is similar to that you would purchase to protect yourself, except that professional liability insurance comes at a cost.

Financial planners can also purchase insurance that will require them to pay a performance fee. The performance fee is referred to as an Expense Ratio. This refers to the ratio of the amount of compensation an advisor charges to the amount that they actually earn. Some planners prefer to purchase additional policies to insure that they always remain at the top of their game. When you are working with a planner that charges an Expense Ratio higher than 2%, you are asking for trouble.

As stated before, most professionals prefer to work with insurance agents who charge a percentage of the compensation that they receive, rather than a flat fee. There are some planners who will allow you to purchase a policy that allows you to pay a flat fee, but gives you the choice of selecting the specific policy features that you want. Some of these policies include customized investment advice and the protection of investments from liability. If you purchase an insurance policy that does not provide these options, you may be putting yourself at a disadvantage when you seek professional financial advice.

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