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Financial institutions, advisors, and regulators can all do more to protect America’s seniors against financial fraud. That’s the conclusion of a new survey of state securities regulators by the North American Securities Administrators Association (NASAA).

According to its survey of 36 state regulators, most (97 percent) believe the majority of cases of senior financial fraud go undetected rather than get discovered before they cause serious problems.

The same percentage—97%—say there’s a greater awareness of senior investment fraud today than there was a year ago. However, that hasn’t translated into a widespread decrease in senior fraud complaints. Sixty-nine percent said they have experienced about the same rate of senior fraud, while 29 percent said their cases have increased and 3 percent said they’ve decreased.

The results come from NASAA’s recent Pulse Survey conducted on member regulators from July 24 to August 4, 2017.

The survey also uncovered broad support for the notion that broker-dealers and investment advisors should do more to help prevent senior fraud, with 75 percent agreeing with that statement. The survey respondents also said state legislators could play a larger role since only 48 percent of jurisdictions had adopted NASAA’s Model Act to Protect Vulnerable Adults from Financial Exploitation. Yet those who had enacted the rule said they’d had success stopping the disbursement of senior funds to scammers using the law’s provisions.

What more can securities brokers and investment advisors do? A prior NASAA study provides an action blueprint for securities brokers and their broker-dealer firms to consider:
• Institute a formal policy defining senior clients and, if so, what age designates senior status.
• Create a department, committee, task force, or other group or person responsible for identifying and addressing senior-related issues.
• Devise a policy to collect information about trusted or emergency contacts.
• Determine what additional documents required when opening or updating accounts for senior customers.
• Establish a policy that sets frequency standards for reviewing, updating, and documenting senior investment objectives.

• Define a process for reporting concerns regarding potential diminished capacity and/or elder financial abuse.

The National Ethics Association also suggests that advisors consider it their fiduciary duty to take extra care when working with senior clients. They should do their best to act prudently regarding their resources, to do rigorous due diligence before any proposed actions, and to act in good faith at all times. Related to this is a special duty to help seniors stay safe in a dangerous marketplace.

The protective role suggests a more aggressive educational and counseling stance with senior clients than might be warranted with younger clients. The National Adult Protective Services Association suggests advisors watch for the following scams that strangers, financial/business professionals, and family members often perpetrate on seniors.

Common Scams by Strangers
Lottery & sweepstakes scams—“You’ve already won! Just send $2,500 to cover your taxes”

Home repair/traveling con men—“We’re in your area and can coat your driveway/ roof really cheaply”

Grandparent scam—“Your grandchild is in jail and needs you to send money immediately”

Charity scams—Falsely soliciting funds for good causes; very common after disasters

Utility company scams—“I need you to come outside with me for a minute” (while accomplice steals valuables)

House scams—Overpriced or unneeded roof or driveway repairs, yard work, or other maintenance items.

Phone scams—fraudulent telemarketing appeals, phony IRS accusations, or other threats

Money-transfer schemes—Pitches to have senior send money via PayPal or other means to fraudster accounts.

Common Scams by “Professionals”
Predatory Lending—seniors pressured into taking out inappropriate reverse mortgages or other loans

Annuity sales—seniors pressured into using the equity realized from a reverse mortgage (or other liquid assets) to buy an expensive annuity which may not mature until they are well into their 90s or older.

Investment/securities schemes—pyramid schemes; unrealistic returns promised; dealer is not licensed

Internet phishing—false emails about bank accounts

Identity theft—credit cards opened fraudulently

Medicare scams—which can be the costliest in terms of the dollar amounts

Common Ways Family Members and Trusted Others Exploit Vulnerable Adults
Using a Power of Attorney—given by the victim to allow another person to handle his/her finances, as a license to steal the victim’s monies for the perpetrator’s own use

Joint bank accounts—taking advantage in the same way

ATM cards and checking accounts—using those vehicles illegally to access and withdraw a senior’s money.

Violence—threatening to abandon, hit or otherwise harm victims unless they give the perpetrators what they want

Medical Blocks—refusing to obtain needed medical care and personal services for the victim in order to keep the senior’s assets available for theft

In-home care providers—Charging for services, keeping change from errands, asking the vulnerable adult to sign falsified time sheets, spending work time on the phone and not doing what they are paid for

Finally, according to EOforLess, an online provider of E&O insurance for financial professionals, failing to detect obvious signs of senior financial exploitation might raise legal issues for advisors should their clients’ money be stolen. As always, EOforLess urges life insurance agents and investment advisors to identify and mitigate the risks of working with older clients and their families.

How to Build Your Business with Ethics.net and EOforLess.com

Most insurance and financial professionals today have access to the same products. They position themselves roughly the same way. Their customer service is comparable. And they’ve largely earned the same industry certifications, so their knowledge bases are similar. How can an agent or advisor stand out? By building stronger customer relationships based on trust. The good news: not all agents are equipped to do this. If you can, you’ll have a leg up on your competitors.

Where does trust come from? Simply put, it comes from:

  • What you say and do,
  • What your clients say and do,
  • What prospects and customers see when they visit your website or read your marketing materials, and
  • How much credibility you project into the marketplace.

Let’s go over each of these elements. The starting point for creating trust: words. You must always strive to speak from a place of deep authority. Know what you’re talking about, and project that expertise in every consumer interaction, whether personal or via your website. Authority comes from years of study and experience and is conveyed through facts, not hype. If you know your craft, you don’t have to exaggerate what you bring to the table. You just have to speak the truth.

The quality and credibility of your words must emerge in every phase of the sales cycle. When you call for appointments, your words should be totally above board, never misrepresenting what you do or what you sell in order to get an appointment. When you score an interview, you should never sell through fear or misrepresentation. And when you present a solution, you should strive to clearly and accurately explain all product features and benefits. If you don’t, you will not only erode trust, but also plant the seed of future client disputes and E&O insurance claims.

Your actions are also pivotal. Everything you do speaks volumes about your trustworthiness. Whether you follow up with the information you promised during an interview. Whether you return phone calls promptly. Whether you meet the deadlines you committed to for completing a transaction. Whenever you break a promise, you create a trust deficit. When that mistrust grows, every aspect of moving your business forward becomes harder. If your deficit grows too large, you will soon be treading water . . . and ultimately sink.

What clients say is also crucial. Because let’s face it. If you drop the ball with a client, that person will complain about it to many others, both face-to-face and online. But when you impress a client as a professional with integrity and unquestionable competence, he or she will talk you up to their friends, post favorable reviews on Yelp and Google, and perhaps even agree to write a testimonial for you on your website (assuming you’re not an investment advisor).

Client actions come into play when they refer you to a friend or recommend you to a professional group to which they belong. When clients act positively on your behalf, you know you have won the trust battle.

The final credibility element has to do with images or optics. When a prospect visits your website, does he see an attractive, professional page design that projects strength, reliability, and conservatism? Will she see photos and videos that portray you and your team as highly impressive professionals? Will he notice your marketing brochure is well designed and informative? And will she take note of your affiliations with highly credible business groups, especially your financial-services designations and trade association memberships?

Also important is belonging to organizations that can highlight your commitment to ethics and compliance. Two important ones are the Better Business Bureau (BBB) and the National Ethics Association (NEA). Financial professionals belong to the BBB to show they’re consumer friendly and to resolve complaints (using the BBB’s complaint-resolution process).

NEA differs from the BBB since it advocates for ethics in the financial-services industry, educates producers about ethical and compliant business practices, and provides tools for advisors to showcase their integrity. By joining NEA, agents and advisors can:

  • Stamp their business with an ethics seal.
  • Enhance their credibility by passing a Certified Background Check.
  • Be listed at Ethics.net as a Registered Member.
  • Advocate for transparency by providing access to industry regulators directly on your Ethics.net profile.

The items above are powerful trust icons that eliminate friction in the sales process, speeding your prospects’ journey to the close. But there’s another trust-building feature of NEA membership that producers should consider: the ability to buy NEA-sponsored E&O insurance from its affiliate, EOforLess.com. Think about it. When you protect your business with E&O insurance, you are basically telling the world you are a responsible professional—that you stand behind your words and deeds 100 percent. Consequently, in the unlikely event something goes wrong and a client suffers a financial loss, you will have the financial means to make things right.

In summary, if you’re looking to build your business on a foundation of trust, consider doing the following:

  • Be careful about what you say and do,
  • Give your clients multiple reasons to say positive things about you,
  • Make sure your marketing vehicles are confidence builders, and
  • Show that you’re responsible by purchasing E&O insurance.

And if you can save money and time by doing the last item at EOforLess.com, all the better. Good luck!

E&O Insurance for Your Business

Do you need E&O insurance for your business? Almost all financial professionals ask themselves this question at one point or another in their careers.  Many answer, “yes” because they perceive themselves to be operating in dangerous times.

Think about it. Insurance and financial advisors deal with complex client needs—savings for retirement, protecting estates, insuring valuable property, etc.  The products they sell can be difficult to understand and explain. Marketplace volatility can produce client losses. And the manufacturers of insurance and financial-services products can fail to stand behind their promises to both the people who sell their offerings and the ultimate consumer. Take all these factors into account and what do you have?  An extraordinary degree of risk for insurance and financial advisors doing business today.

As a result, financial professionals must ask themselves how comfortable they are dealing with such risks. Are they so confident in their expertise that they believe they’ll never make a mistake? Or do they realize that mistakes can happen to any financial practitioner at any time . . . even to those with high degrees of integrity and competence? If you fall into the latter camp, then you fully understand why buying E&O insurance for your business is a wise decision. It simply reflects the inherent risks implicit in doing business, as well as the impossibility of performing flawlessly with every client, in every transaction.

As if this weren’t disturbing enough, consider the types of mistakes financial practitioners are prone to make.

Worst-Case Scenario

According to one major E&O insurer serving the life/health insurance segment, there are at least 11 potential mistakes an agent can make. They range from . . .

  • misrepresentation,
  • due diligence problems,
  • premium errors,
  • office mistakes,
  • failure to explain or provide coverage,
  • tax losses,
  • beneficiary-related mistakes,
  • policy change errors,
  • suitability issues, and
  • business management lapses.

Of all those mistakes the top three most common are misrepresentation (25 percent of the total errors), failure to provide coverage (13 percent), and failure to explain coverage and office errors (both tied at 11 percent).

Compounding the risk is this fact: E&O mistakes carry high price tags. For example, the same insurer found that the average cost of an E&O disability-insurance claim was roughly $149,000. For pension products and individual life policies, the average claim costs were $71,000 and $40,500, respectively. Worst-case scenario? Making multiple mistakes within a single customer account, which could add up to hundreds of thousands of dollars in personal liability, potentially leading to the death of your business and a devastating personal bankruptcy.

Protectioneoforless

Faced with risks such as these, most savvy financial professionals decide that buying an E&O insurance policy is a wise decision. What exactly does an E&O policy provide? Simply put, it provides protection—money that cushions the costly financial aftermath in the event you lose a lawsuit in court. E&O insurance provides money . . .

  • to hire an attorney to defend you,
  • to pay for legal judgments and settlements, and
  • to pay for court costs levied in the proceeding.

By having E&O insurance, you avoid being personally liable for the direct and indirect financial costs resulting from your error or omission. Your E&O insurance policy should cover these obligations for you, up to your policy’s limits.

Two other benefits of E&O insurance are less obvious. The first is having an E&O insurance claims adjuster on your side to help manage the claim-settlement process. This can be an enormous time saver. The second is the fact that having E&O insurance for your business reduces your stress and worry should you ever get sued. Not only will you sleep easier at night, you’ll also have more time and energy to spend working on your business rather than hassling with a customer complaint or lawsuit.

Strategy

Given the risks and costs just discussed, what strategy should you follow to mitigate your E&O risks? Many experts suggest finding high-quality coverage, at an affordable price and then buying it in the most convenient way possible. To secure high-quality coverage, make sure the policy is designed to precisely accommodate the needs of your business model and license type. For example, if you provide investment-advisory services, then trying to save money by purchasing E&O coverage for life/health agents may be penny-wise and pound-foolish. Also be sure to read the specimen policy to see exactly how the insurer frames the “insuring clause” (what it promises to cover) and its exclusions (what it will not cover).

To secure affordable protection, investigate programs available through professional associations devoted to your business. Such protection is typically issued on a group basis and can be more cost-effective than individually issued policies.  Also, check to see if the E&O provider attempts to reward financial professionals who adhere to low-risk business practices. Typically, such insurers offer streamlined underwriting screens in which answering no to, say, 10 risk-assessment questions will qualify you for “preferred-risk” pricing. The savings in this case can be substantial.

Finally, consider whether you want to purchase your E&O insurance through a conventional insurance broker or on an online E&O insurance platform. The former method may be appropriate for advisors with complex businesses with large risks. But the downside of buying through a broker is that it will take more time for the person to submit a long application form to one or several carriers and then to receive a proposal back from. Buying through an online E&O provider is typically much faster. For example, at EOforLess.com, you can typically input your information, answer the underwriting questions, and then pay and bind your coverage in 5 minutes or less.

Whatever you decide, the important thing is that you protect your business against the many risks it faces in today’s risky environment.  If you want to assure your professional future, buying E&O insurance for your business is truly the most sensible way to go.

Buy E&O insurance for your business

Click, Bind and Print E&O Insurance Online

Affordable E&O Insurance Online

Buying insurance is increasingly becoming an online affair. Just witness the growing number of financial professionals today who buy and print E&O insurance online. This should come as no surprise for two reasons.

  • First, insurance and financial advisors know just how risky their business can be. Clients with complaints, imagined or real, can bring suit, resulting in judgments costing tens or hundreds of thousands of dollars. Financial professionals understand that self-insuring against such risks can have devastating consequences for the sustainability of their firms and careers.
  • Second, professionals who sell insurance and financial products are busy people. Spending days or weeks shopping for E&O insurance is simply time they don’t have. Instead, thanks to technology advances, they are increasingly buying their E&O insurance online. Using websites such as EOforLess.com, they can quickly input their information, answer some risk-profiling questions, add their payment information, and within a few minutes print out a certificate of insurance. A buying process that used to take weeks now happens in minutes, freeing up time for other important business tasks.

What is E&O Insurance?

Errors-and-omissions insurance—or E&O insurance as it’s commonly called—is a type of professional liability insurance that protects business professionals in the event they do something wrong or fail to perform an important activity that financially harms a client. Policies provide two forms of protection: funds to hire an attorney to defend the insured in court and money to pay for legal judgments and court costs if the plaintiff (party suing) wins the case.

“Years ago, many business professionals didn’t think much about E&O insurance,” says Steven R. McCarty, Co-Chairman and Founder, EOforLess. “Today, they understand it’s a crucial form of insurance for virtually everyone who works in a sales or client-advisory capacity in a financial-services business.”

The risk of going uninsured is profound for such individuals, according to McCarty. The average cost of an insurance- or investment – related lawsuit can range from $40,000 to $150,000 or more. E&O insurance exists to mitigate these risks so financial professionals can continue to work in their firms and provide for their families. In many cases, without sufficient E&O insurance coverage, the only feasible outcome for those who lose court battles is to declare bankruptcy.

Who is EOforLess.com?

Given the importance of securing E&O insurance protection as quickly and conveniently as possible, the insurance industry has fostered innovation to increase access to E&O insurance online. A major player in this regard is EOforLess.com. Launched in 2008, it currently offers E&O insurance to financial professionals selling under various licenses, as well as to real estate broker/owners. It pioneered the direct sale of E&O insurance online—i.e., dispensing with the need to work with a broker—providing a unique shopping platform that makes buying E&O insurance faster and easier than ever before.

EOforLess.comRemoving brokers from the sales process is key to EOforLess.com’s strategy. Because financial professionals can select their desired E&O product, submit their information, and buy online, they can get insured in minutes rather than weeks. According to the Midwest Insurance Agency Alliance, many E&O insurance companies take up to two weeks to provide a premium quote after a broker submits an application. This antiquated process can literally cost big money if the delay short circuits a financial professional’s ability to receive an appointment to sell an insurance or investment provider’s products.

Another important aspect of EOforLess is its focus on low-risk insurance and financial advisors, which allows it to offer affordable premiums and, in some cases, eliminate deductibles (thresholds that must be met before the insurer begins providing benefits). If financial professionals can answer no to a limited number of risk-assessment questions, they can qualify for EOforLess.com’s competitively-priced coverage, which can be customized for each advisor’s specific needs.

“Providing convenient, affordable E&O Insurance has been in our DNA since Day 1, says EOforLess.com’s Steve McCarty, who is also Chairman and Co-Founder of the National Ethics Association, sponsor of EOforLess.com.

Who is the National Ethics Association?

The National Ethics Association is an association of business professionals committed to building their firms on a foundation of trust, transparency, and best practices. Formed in 2001, the Association provides an array of services that helps members grow their online reputations while enhancing their overall marketing efforts. Member benefits include credibility icons that build professional reputation; ethics and compliance content that improves business quality and prevents customer disputes; certified background checks that accelerate the consumer sales process; and a wide array of purchase discounts for companies such as Staples, Verizon, Costco, and Dell.
National Ethics Association
Another important benefit is the ability to purchase convenient and affordable E&O insurance through NEA affiliate, EOforLess.com. Through their membership in the National Ethics Association and their ability to pass EOforLess’s risk assessment, NEA members are eligible to purchase E&O insurance protection on a group basis through a variety of highly rated insurance underwriters such as CNA, Everest, and Liberty International Underwriters.

“By combining the efforts of the National Ethics Association, EOforLess, and our insurance partners, we’re helping thousands of financial professionals do business with less risk, expense, and worry than ever before,” NEA’s McCarty says. “This much is clear—it’s a great time for financial professionals to buy E&O insurance online.”

 

Learn More about How P&C Agents buy their E&O Insurance Onlinehttp://www.ibamag.com/infocus/e-o/how-pc-agents-buy-their-eando-insurance-today-21236.aspx