Financial Advisor Insurance Protection

Don't Trust Your Financial Advisor? Get Insurance for Protection

Updated on Apr 09 2019


Trusting any one person with your nest egg and financial future can be nerve-racking. How do you know your financial advisor can be trusted? Unfortunately, issues like embezzlement, overcharging and dishonesty can happen in the financial industry and can make investors wary of pursuing a relationship with a financial advisor. On the other hand, getting the help of a professional to get educated about the financial marketplace and grow your assets can set your future up for financial success.

Paul Merriman, Founder, Author and Educator at The Merriman Financial Education Foundation discusses why he thinks fiduciary advisors help give you peace of mind:

“I think the biggest risk we have is trusting the wrong advisor. Finding a financial expert you can trust is huge. Make it a priority to find someone who is competent and ethical. A fiduciary advisor can provide valuable insights and an unbiased perspective.”

There is also a new form of insurance to help protect investors and give them peace of mind. Learn more about how to find a financial advisor you can trust and a the new insurance to protect against bad financial advice.

Professional Financial Help Has Doubled Over The Past Decade

Between 2010 and 2015, the percentage of Americans using financial advisors doubled and now, more than 40 percent of people use an advisor. This is mostly because Americans are on their own for financial and retirement planning, which is a switch from years past when businesses had built-in retirement plans.

The problem is that there is an increasing number of people are unsure about the financial advice they are getting. In a survey from Visual Capitalist, 60 percent of respondents stated that they believed financial advisors act in their companies’ best interests rather than the best interest of the consumer.

To make sure you have found a financial advisor you can trust, ask your advisor if he or she is a fiduciary. In other words, are they required to put your interests ahead of their own - even if those interests conflict? Evaluate their reputation, their competency and their reliability. If any of those three areas are lacking, look for financial advice elsewhere.

Protection from Embezzlement

If you decide to move forward with a financial advisor but want additional protection against embezzlement, there is a new form of insurance that protects against unscrupulous financial service professionals. The insurance only protects against crimes by financial professionals, covering “security industry professionals that serve as investment advisors, asset managers, fund managers for the investor’s invested assets and must be individually named on the policy.” The policy does not protect against bad financial advice or decisions.

Called Capital Shield, the new product is the brain-child of a few former victims of embezzlement. Travus Pope, co-founder and managing partner of Capital Shield remarks, The genesis of everything is always personal.” He and two other co-founders lost approximately $1.5 million combined due to embezzlement.

Because the product is so unique and serves a small niche, the insurance terms are simple. To insure against bad advice, it costs $1,500 per million, per year, with a maximum of $10 million. “There is no actuarial pool for this,” said Pope. “There’s always been an issue when you protect institutions, but there’s never been coverage for an individual. Protect for the individual is important.”

If you’re concerned about dishonesty or embezzlement, connect with a fiduciary financial advisor and voice your concerns. He or she will be able to help you navigate your investments, set a sound financial plan and keep your assets safe from financial advisors who are not acting in your best interests. There is also always the insurance to also help protect your assets.

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