Bullet: Damned if You Don't
Tuesday, August 22, 2006
LTC Comment: Senior
financial advisers may get little credit for recommending solid
long-term care financing plans, but you're damned if you don't. Details after the ***news.***
Your Center for Long-Term Care Reform is about to take a little
time off. Between now and
September 7, you'll receive fewer LTC Bullets and LTC E-Alerts. From September 7 until the end of the month, we'll be offline
altogether for some overseas travel.
Enjoy the break. We'll
be back atcha full force in October. ***
LTC BULLET: DAMNED
IF YOU DON'T
LTC Comment: As
long-term care planning becomes more and more important, the risk to
financial advisors, including lawyers, financial planners, and insurance
agents, of failing to cover it becomes much greater.
If they carelessly neglect to advise their clients of the need to
plan and insure for long-term care, they can be vulnerable to
accusations of malpractice. And
now it is starting to happen! Here's
kudos to Harley Gordon, Founder
and President of the Corporation for Long-Term Care Certification (http://www.ltc-cltc.com/),
for pointing out this risk last August in "The Coming Wave: Financial Liability for Failure to Recommend a Plan for
Long-term Care," an article in the Journal of Financial Planning
that you can still read at http://www.fpanet.org/journal/articles/2005_Issues/jfp0805-art-seven.cfm.
agrees with Mr. Gordon on this so much that we published an earlier
version of his article in "LTC Bullet:
LTCi Professional Liability for Financial Advisors" on March
10, 2004 and included a link to a similar piece by Center for Long-Term
Care Reform president Steve Moses in the September 2001 Journal of
Financial Planning titled "Long-Term Care Due Diligence for
Professional Financial Advisors."
Check out the earlier Bullet at http://centerltc.com/bullets/archives2004/490.htm
and read Steve's article at http://www.fpanet.org/journal/articles/2001_Issues/jfp0901-art16.cfm.
here's the news. Gordon's
newsletter for his Certified in Long-Term Care graduates (CLTC
E-Alert - Putting Advice in Writing, 8/15/2006) reports the
obvious has happened.
story in Registered Rep detailed the travails of a registered
advisor who recommended long-term care insurance to his clients.
The problem is that he did not put it in writing assuming the
clients would take note. They
didn't, but the children did. They
sued the advisor for malpractice after both parents were diagnosed with
Alzheimer's. The article
made a number of points that are relevant to financial service
professionals, first among them is that failure to discuss a plan for
long-term care and protect the plan with long-term care insurance is
grounds for professional malpractice.
Other points addressed in this first rate article:
Always put the advice in writing. The article stated that if the
recommendation had been clearly stated in a letter, it is unlikely an
action would have been filed.
Check your E&O policy carefully. When the advisor put the claim in
the carrier denied coverage claiming that although the policy would have
covered an action brought by the clients there was a specific exclusion
for third party plaintiffs, in this case the children who filed the
full story, Scary Story, by Janet Arrowood can be read here.
Reprints are available from Foster Reprints (866) 436-8366.
Coming Wave: Financial
Liability for Failure to Recommend a Plan for Long-term Care" by
Harley Gordon can be found here.
are available from: