When Tom launched his financial advisory firm in Louisiana, he thought he had every risk covered. He had professional liability insurance, a solid compliance program, and a team of advisors who followed strict fiduciary guidelines. But one day, he received a lawsuit naming him and his firm’s board of directors personally responsible for a client’s financial losses. The claim alleged mismanagement, failure to disclose risks, and breach of fiduciary duty.
The lawsuit wasn’t just a threat to the business—it put Tom’s personal assets at risk. He quickly realized that professional liability insurance alone wouldn’t cover these allegations. That’s when he learned why Directors & Officers (D&O) insurance is a must for financial firms.
D&O insurance protects the leaders of a financial firm—partners, executives, board members, and senior advisors—from lawsuits alleging mismanagement, regulatory violations, breach of fiduciary duty, and financial misconduct. Unlike professional liability insurance, which covers errors made in client services, D&O insurance focuses on business decisions and leadership responsibilities.
Without D&O coverage, firm owners and executives could be personally liable, meaning their personal assets—including their home, retirement savings, and bank accounts—could be at risk if a lawsuit arises.
Financial advisors operate in a highly regulated industry where even unintentional missteps can lead to lawsuits. Louisiana firms face additional risks due to state-specific compliance laws, SEC regulations, and client protection policies. D&O insurance helps mitigate these risks by covering legal costs, settlements, and regulatory penalties.
D&O claims against financial firms often stem from:
A comprehensive D&O policy for financial advisory firms typically includes:
Many financial advisors assume their Errors & Omissions (E&O) insurance provides complete protection, but E&O coverage only applies to client-related financial mistakes. D&O insurance, on the other hand, protects the firm's leadership team from personal liability for business decisions.
Founded in 2017, Kastner Insurance Group is a full-service, independent insurance broker based in Lafayette, LA. Our insurance agents specialize in offering a variety of insurance products tailored to individual and commercial needs, making sure clients receive personalized and comprehensive coverage options from a variety of insurance companies/insurance carriers.
With over 43 years of combined experience, the team at Kastner Insurance Group is dedicated to providing expert advice and exceptional service. They proudly serve professional offices and businesses across Lafayette city/parish, Youngsville, Broussard, Baton Rouge, New Orleans, Alexandria, Acadiana, and statewide in Louisiana.
Call us today or visit our website for a customized quote.
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