Product Understanding is Essential
Product Understanding is Essential10.10.2014
Selling a product without product understanding misses the
mark and often causes losses for Broker/Dealers and their Registered
Representatives. Read below to see how a simple lack of product understanding
led to large losses:
Claim Scenario: Clients invested more than $1,500,000 in tenancy-in-common real estate interests (TIC) that were allegedly unsuitable and did not meet their investment goals and objectives. The registered representative testified at hearing that he did not completely understand how a TIC operates or the risks involved in such an investment. His testimony severely impacted the ability to defend the claim.
Estimated Claim Cost: $600,000
Loss Prevention Tip: Be certain that you fully understand an investment, product or service before presenting it to a client. Utilize in-house training and services that provide education about products before you offer them for sale. If the product is found to be defective for example, the client may seek compensation from you for failure to properly advise of the risks and costs.
All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.
Written by CalSurance Team Published October 2014