Site icon AdvisorSmith

Business Insurance for Financial Advisors and Advisory Firms

Financial advisor insurance

Get a quote on Business Insurance

Financial advisors provide a wealth of services to address their clients’ financial needs, from giving advice on estate planning to creating a savings plan for retirement. The primary function of a financial advisor is to assess the financial situation and needs of a client and provide advice and guidance on how to achieve short- and long-term goals. From tax planning to investing to purchasing insurance, financial advisors can wear a number of hats, but most important of all is the role of trusted advisor. Clients depend on their financial advisors to serve in their best financial interests and help them to make the right money moves for their lives.

Because clients rely on financial advisors to help make critical financial decisions, it is inevitable that financial advisors face a number of risks and liabilities. Consider a client who loses a significant amount of money in the market based on his financial advisor’s guidance—it’s not hard to see that a lawsuit could arise, with the client claiming poor performance or simply negligence on the part of his advisor. Or consider the risk a financial advisor takes on by working with and storing his client’s personal financial records and tax information. With identity theft and data breaches on the rise, if something were to happen to this confidential client information, an advisor could be held liable.

In order to protect yourself and your business, consider the benefits of having a comprehensive business insurance policy in place. A coverage package that is uniquely suited to your firm’s risks and exposures could help to safeguard your business in times of trouble. Even if you feel like you’ve done all the right things for your business, sometimes unfortunate and unpredictable events do occur. Business insurance, while an investment up front, can not only help to give your business some financial cushion, but also ease your fears and keep you focused on what you do best—leading your clients to a successful financial future.

Consider purchasing business insurance for your financial advisory business if:

What insurance coverage do I need as a financial advisor?

Below are some of the most common business insurance coverages financial advisors should consider, along with a few examples of how these coverages might be applicable to your business.

Professional Liability Insurance

Professional Liability Insurance, also known as Errors & Omissions Insurance, can protect you and your business from potential client lawsuits stemming from the performance of your financial advising duties. When it comes to dealing with the personal finances of your clients, you can imagine that clients are particularly sensitive to changes in their portfolio or savings. If a client claims your services caused him financial loss, he may sue your business for damages. Professional liability insurance can provide financial protection for you in these cases and cover your legal fees and any judgement or settlement costs.


General Liability Insurance

General Liability Insurance protects your financial advisory firm financially from damages that arise while doing business. It covers property damage, bodily injury, and personal and advertising injury. It also covers the costs of any legal defense or attorney’s fees incurred while defending against covered lawsuits. General liability insurance is third-party insurance, which means it covers you against claims by third parties, which don’t include your business or your employees. Third parties may include clients, vendors, or landlords.


Commercial Property Insurance

Commercial Property Insurance protects the investment you’ve made in your business property, including office space, furniture, equipment, computers, artwork, and other property that you use to run your business. Commonly covered causes of loss include fire, lightening, wind, hail, explosion, and vandalism. Note that commercial property insurance does not cover any vehicles your company owns. For that coverage, you’ll need commercial auto insurance.


Additional Coverages


Financial advising can be a rewarding profession, particularly when you can see your clients succeeding and accomplishing their financial goals. The profession can be fraught with risks, however, and as a business owner, you must consider protecting you and your employees against any financial liabilities. If ever you’re faced with a litigious client who is unhappy with your services, or you make a material mistake that causes a client to suffer financial losses, it helps to have the appropriate insurance coverage to provide a financial safety net for your business.

Aside from the professional risks of financial advising, there are general, everyday risks that come with operating a business and hiring employees. From a natural disaster that can damage your office and property to an employee who suffers an injury on the job, there are various insurance coverages that can help protect your business in a variety of unexpected scenarios. Having the right set of insurance policies in place can not only help to safeguard your business from the financial damages of lawsuits, but also protect your employees from any unfortunate events.

Exit mobile version