Professionals in the financial industry—accountants, CPAs, tax professionals and more—are in the unique situation of being responsible for the gains or losses of clients. With the responsibility of other people’s money on your shoulders, you have to be on top of your game at all times. A calculation error or a bit of not-so-great advice can mean big losses for a client, who can then turn around and sue you to recover funds.
And as if that great responsibility wasn’t enough, you must also familiarize yourself with laws and regulations that pertain to the financial industry as they change. Being adaptive to these changes helps you effectively assist your clients and offer relevant financial advice and investment strategies.
But of course, we’re only human and mistakes do occur from time to time. Unfortunately, even a minor mistake could be extremely costly to your accounting firm. This is especially true if your client takes you to court, in which case you’ll be responsible for legal fees and any rewarded settlement costs.
There are a few practices your firm can implement in order to minimize the risk of these mistakes, including the following:
- Review with colleagues: Before extending contracts or other documentation to clients, ask a colleague or two to review the materials to catch any potential errors or typos. It’s also wise to go over advice you plan to offer with a colleague to ensure it’s sound before sitting down with a client.
- Communicate clearly: Thoroughly explain advice and strategies to clients so they are equipped to make an informed decision. Explain what you plan to do and when you plan to finish tasks. Ask if clients have any questions about processes so miscommunications can be cleared up on the spot.
While these practices can help reduce risks, they can never be completely eliminated. Fortunately, you can get the protection your firm needs in the form of professional liability insurance. This type of policy is designed to offer financial protection in the event that you make a costly error or omission. And since many financial services—namely, tax and audit services—can lead to costly claims, it’s a prudent decision to discuss professional liability insurance with your independent insurance agent today.
We’re here to help protect your interests. Call Akin & Associates Insurance Group for more information on professional liability insurance.