E&O insurance is similar to other forms of insurance—for healthcare, property, automobiles—in one key respect. It typically requires consumers to absorb a pre-defined level of financial loss before it begins to pay an insurance benefit. Known as a deductible, this feature has been a common element of E&O insurance policies for financial professionals since time immemorial . . . until now.

That’s because the National Ethics Association, sponsor of EOforLess, has announced a no-deductible feature for its E&O coverage for life and health insurance agents. What this means is that agents embroiled in a legal dispute no longer have to pay for part of their legal fees up front. This frees up money to cover normal operating expenses, including office rent, employee salaries and benefits, agent retirement contributions, and more.

No Deductible E&O Insurance

No deductible E&O Insurance is a key enhancement to our E&O offerings for financial professionals,” says Steven R. McCarty, Co-Chairman and Founder, National Ethics Association. “With no deductibles, financial advisors facing legal action no longer have to worry about covering part of their legal fees. They simply can sit back and let their E&O insurer-appointed attorney defend them, while they focus on what they do best—selling and servicing their customers.”

Sponsored by the National Ethics Association, an organization of ethics-minded financial professionals, EOforLess entered the E&O marketplace in 2008, providing essential E&O insurance protection for life and health insurance agents. Rather than selling through brokers, EOforLess developed an advanced online buying platform. With this functionality, financial advisors no longer had to fill out long, confusing applications or wait hours or days to receive an insurance quote. EOforLess’ innovative e-commerce technology provided “click and bind” coverage in minutes, with no hassles or hidden fees. And this convenience came with substantial reductions in premiums over comparable plans.

https://www.eoforless.com/products/

E&O Insurance with No DeductibleSince then, EOforLess has further streamlined the purchase process, entered other markets, and added additional money-saving features such as free continuing-education (CE) courses for its insureds (except for real estate broker/owners).

In a world where consumers rarely receive something for nothing, how can life and health insurance agents avoid paying for deductibles? It all goes back to EOforLess’ original strategy of providing affordable, convenient E&O insurance for low-risk financial professionals. By effectively screening out high-risk financial advisors (think “good driver” auto insurance discounts), EOforLess has been able to develop a large customer pool with favorable claims experience. This allowed its insurance company to eliminate deductibles without hurting the financial dynamics of the group plan, while generating significant savings for EOforLess insureds.

Group Rates and Membership Benefits

Which raises another important difference with EOforLess. Because the coverage is group insurance, financial advisors not only save money due to their low-risk status, they also benefit financially from the inherent efficiencies of group insurance. And being members of a group—the National Ethics Association—makes them eligible for value-added benefits such as free CE courses, E&O loss-prevention content, purchasing discounts, and the use of online reputation badges for advisors who pass a comprehensive background check (requires additional fee).

McCarty says the best part about eliminating deductibles is that it also reduces stress for EOforLess customers. “Think about it,” he says. “Getting sued is a rough experience for most people. The last thing they want to worry about is coming up with money to pay for legal bills, while also working with their attorney to defend their business. By eliminating deductibles, we’re helping our customers get through a tough time with much less worry. This is what EOforLess is all about—less cost and less worry.”

Resources: https://en.wikipedia.org/wiki/Professional_liability_insurance#Errors_and_omissions_insurance

With the aging of America, financial professionals are facing increasing numbers of clients showing symptoms of Alzheimer’s and other age-related dementias. Although the temptation is to not get involved due to privacy concerns, it’s important for advisors to take action to protect their clients, as well as to prevent E&O insurance exposure. National Compliance Services, an RIA consulting firm in Delray Beach, Florida, suggests advisors adopt the following escalation process once they witness client memory issues or other cognitive symptoms.

Step 1: Raise the issue with an immediate supervisor and/or Chief Compliance Officer.

Step 2: Check the client file for presence of an executed trading authorization form, durable power of attorney, or a guardianship appointment form. If none of these is available, consider notifying the client’s agent, attorney, or other representative to express your concerns.

Step 3: Make sure anyone claiming authority to act on the client’s behalf actually has that authority.

Step 4: Encourage the client to bring a spouse, close family member, or trusted friend to the next meeting. Failing that, seek the advice of the client’s attorney, doctor, or attorney.

Step 5: If doubts remain, determine jointly with Compliance whether it’s advisable to secure a legal opinion about the wisdom of continuing to advise the client under the current arrangement. A big part of that analysis will involve determining the applicability and legitimacy of existing authorization, powers of attorney, or guardianship-appointment forms.

Step 6: If the client declines to bring a third-party to the next meeting and the authorization documents are missing or questionable, get legal advice to see what further escalation may be needed.

Now, in cases where advisors suspect senior financial abuse, it will be crucial to document concerns, log supporting facts, and report the matter to Compliance. In certain jurisdictions, notifying state protective services may also be warranted.

For further information, the National Ethics Association encourages advisors to read NCS’s full discussion of this issue, as well as to contact their own firm’s compliance department or legal counsel. Prompt action should serve to minimize complaints from family members, lawsuits, and future E&O insurance claims

For information on affordable E&O insurance for low-risk insurance agents, investment advisors, and real estate broker/owners, please visit EOforLess.com. For information on ethical sales practices, please visit the National Ethics Association’s Ethics Center.

When was the last time you had a restful night’s sleep? Can’t remember? You’re not alone. According to the Centers for Disease Control and Prevention, about 50-70 million U.S. adults have problems sleeping, leading them to wake up chronically tired and ill equipped to function at work. But here’s what we really want to know. Does Bernie Madoff, the notorious Ponzi schemer, sleep like a baby at night?

We bet he does, for a number of sordid reasons. But your average financial advisor is no Bernie Madoff. He’s much more likely to worry about the consequences of his actions. And the resulting stress can become a distraction at work, lowering productivity, sales, and income, not to mention setting the stage for E&O insurance problems. Talk about worries!

But here’s what’s sad. So many such incidents are self-inflicted. Perhaps advisors acquire too much debt in order to acquire the trappings of wealth. Or they manage their income and/or expenses sloppily. Or they just want to attend exotic sales conference at any cost, leading them to make unsuitable annuity sales, churn investment products, or misrepresent features to serve their own needs. Or they might write insurance on phony prospects in order to pocket the commissions or convince Grandpa and Grandma to let him invest their savings . . . and then use their money for her own purposes.

No wonder so many advisors stare at the ceiling at 3:00 a.m., wondering where their integrity went (although maybe not in the last instance).

And it gets worse.  When advisors allow their ambition and greed to rule, it’s common for them to experience damaging after effects, including client complaints, E&O insurance claims, regulatory sanctions, jail time, and worst of all, loss of self-respect. Of course, there’s a better way to avoid such problems and ensure maximum success . . . no worry selling!

No-worry selling consists of a number of values that appear across the sales process, including . . .

  • Doing what’s right for the prospect or client, even if it’s not legally required.
  • Treating the customers with loyalty and professionalism.
  • Following all relevant regulations and laws, both national and local.
  • Putting the client’s needs ahead of your own.
  • Being committed to delivering tangible value to your customers in every transaction.
  • Being there for your prospects and clients—before, during, and after the sale.
  • Being transparent about your background, capabilities, and limitations.
  • Operating under the spirit and the letter of the new Department of Labor Fiduciary standard (when it takes effect).

Advisors who aspire to “no-worry selling” must implement the above values into the following sales-process stages:

  • Solicitation
  • Fact-Finding
  • Closing
  • Post-Sale Service

In four future articles, we’ll explore each of those areas in greater detail to see what a no-worry sales style looks like and why it leads to ultimate success as well as fewer client complaints and E&O insurance claims. Until then, consider these suggestions for selling ethically (and sleeping like a baby at night):

  • Never get a sales meeting under false pretenses.
  • Be up front about who you are and what you’re selling.
  • Never misrepresent for whom a product is best suited or how it works.
  • Always take the long view on client relationships . . . i.e., never “forcing” sales because you want or need more income.
  • Watch for—and avoid—behaviors that benefit you more than the customer.
  • Read The Wizard of Lies by Diana B. Henriques to see the full human cost of unbridled greed.

For information on affordable E&O insurance for low-risk insurance agents, investment advisors, and real estate broker/owners, please visit EOforLess.com. For information on ethical sales practices, please visit the National Ethics Association’s Ethics Center.