What To Expect
One claim against you could cause your demise. A culmination of illegitimate claims can quickly destroy your reputation and your future as a financial professional. To prevent your potential demise you must structure your business and your personal affairs for maximum protection. In other words you need to implement a structure and develop habits that will protect your practice and your lifestyle.
Litigation is the #1 reason a financial professional, Broker Dealer firm or an Insurance Agency will go out of business. Some statistics place the financial professional as the #1 litigious target of any profession in North America more so than Doctors. Litigation is not about fairness, but economics. The majority of litigious attacks against financial professionals are groundless, and many Financial Professionals and Firms will go bankrupt and lose their business defending their integrity.
Forget about philosophy, fairness and fault.
Instead you must focus on the economics of litigation.
In the "Old West", guns were used to settle disputes. The victor was the individual with the quickest draw and the most ammunition or (dry powder). Being "right or wrong" was not a consideration in the fight. Today, disputes are settled with lawyers (guns) and dry powder (money and time). Similar to the old west where someone without a conscience could shoot and take your valuables (or your life), lawyers today can shoot with lawsuits and collect from their victim (YOU) in the form of contingency fees when a settlement is paid.
For the record, lawyers do not like to be shot at or use their own powder. Instead, they want to collect powder from their victims without expending any of their own. They know that whoever runs out of powder first, right or wrong, loses. Unlike the gunfighters of the old west, today lawyers collect the "boot” by brandishing their gun and threatening to use their powder via a lawsuit.
Lawyers also know that financial professionals have a lot of powder to lose. A financial professional not only loses money, but also time, reputation and their emotional well-being. On the other hand what does an attacking lawyer have to lose? Nothing, but time. Countless lawsuits are filed because attacking lawyers have much more to gain than lose. Proportionately, lawyers do not risk the money, reputation, or emotional well being as compared to the victims they attack. They know they don't play by the same rules so they can take more risks. It’s easy to take risks with other people's money.
Lawyers are able to win in almost every scenario. You, the defendant, however, must expend a disproportionate amount of money to defend the attack. The typical scenario for the defendant is that they will be so hung up on "Being Right" they will lose everything to try and prove it and usually end up in a very similar position as if they just said "Fine, take all my money!!" at the beginning. The truth behind all this non-sense is that the aggressor does not have much to do but make a claim and file complaint paperwork,(that may be about 5 hours on average). In fact every time you respond to a request by the regulatory agency overseeing your activities or receive another 300 question interogatory you will lose on average 30 hours of work. You will also need to retain an attorney to protect your rights, if nothing else. So the game is this... the attorney files a case and spends about $1000.00 in time and physical expenses. You will spend $12,000 to $15,000 before your attorney sends the first response to the acusing Attorney. On top of that expense you must factor in the lost time in earnings you are losing by not spending time managing your clients. These are called un-realized expenses. Phone calls, postage, faxes, preparation, consultation, YOUR TIME.
So how do you rectify this disparity
and level the playing field?
Document, Educate, and Relate
Engaging FA RISK Management, and utilizing the exams and tools available to you through your exclusive membership will support you in the endeavor of protecting your practice, increasing your market penetration, and improving your overall experience of being a financial professional.
First and foremost you must design structures, systems and firmly resolve to do those things necessary to protect your lifestyle, your business, and your reputation. Part of this new design for your practice will be a plan in the event of a Litigious Attack.
Many Financial Professionals have purchased Errors & Omissions (E&O) insurance to defend against these attacks and pay claims. However, E&O insurance companies are not stupid and they are not in the business of paying claims. They will defend you, yes, to a point then regardless of your opinion about it they will settle and allow your reputation to be destroyed because you are expendable.
Currently more than half of all financial professionals have no E&O or Professional Liability insurance coverage simply because they can’t afford it or better still—can’t get it. The percentage of financial professionals “running naked” rises every month.
FA Risk Management is an organization founded on educating and protecting individual advisors, firms and agencies in the Financial and Insurance industry. Individuals and firms can maximize legal defense protection by enrolling in a FA Risk Management plan membership.
This eDefense Manager was developed to protect and enhance your financial practice. Whether you are a Registered Representative, an Investment Advisor, an Insurance Agent or carry numerous financial certifications this program is for you and designed to support you in your defense in the event of a litigious attack.
As a Broker Dealer firm or Insurance Agency, or independent Financial Professional our programs will help mitigate the chances of being a party to litigation, improve your practice management skills and save your company thousands of dollars in the event of litigious action.
Your membership gives you access to:
- Litigation tested letters
- Critical forms
- Guidance on compliance rules and regulations
- Easy to use procedures
- Business Resources
Why did we create the eDefense Manager?
This eDefense Manager was created to help you prepare your financial practice for a litigious attack.
Encompassing two decades of research and the recommendations of over 1000 interviews with insurance agents and financial professionals from the large wire house to the one-man operation. The lessons learned are shared and contained in this eDefense Manager to help you avoid their mistakes.
Why is this a valuable investment of your time?
This eDefense Manager is a time efficient "step-by-step" guide to defend yourself and your financial business from litigation.
Forms that cost thousands of dollars to create are now at your fingertips. Additionally, this program will:
Save you valuable time
Help you earn more money
Improve client relationships
To be prepared, you must be armed with knowledge. This eDefense Manager will give you applicable knowledge and systems to easily implement into your business. The problem with knowledge is that unless it is used it is worthless. FA RISK is the avenue for you to engage in, test, evaluate and get measurable results in your performance.
We pull no punches. We know the conditions you face as a financial professional. We have two objectives -- we want you to THINK and ACT in order to prevail against a litigious attack.
We will strive to push you to your greatness!!
We accept your full uninhibited commitment to excellence
and the growth of your business.
Back to Discover FA Risk
Learn more about our unmatched risk management benefits
Read the latest article on BICE, the Best Investment Contract Exemption, is a trap.
FINRA Rule Filings
SEC Proposed Rules
- No tweets found.
When I needed help regarding a bogus arbitration filed by a client of my old firm, Doug Schriner and FA Risk Management provided the advice and guidance at a critical point in my career. Their support helped me through the process and ultimately cleared my record of the false accusations. The value and service of FA Risk Management is something I recommend to every advisor.Tony Taddeo, CFP