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McGowanPRO Opens the Faucet For a New Advisor-Focused Program
October 8, 2013
Gary Sutherland and his team at North American Professional Liability Insurance (McGowanPRO) have come up with a brand new product to address a growing insurance coverage gap for the 401(k) elite and other financial advisors.
McGowanPRO just unveiled DRIP: a deductible reduction insurance program. DRIP, which is insured by the Hanover Insurance Group, is designed to supplement advisors' errors and omissions (E&O) insurance by covering their deductible, an idea that, according to Sutherland, is unique in the marketplace.
McGowanPRO CEO Sutherland McGowanPRO investment advisory division Vice President Paul Smith talked with 401kWire today on the sidelines of the CFDD conference at the Grand Hyatt in San Antonio, Texas.
Most independent and regional broker-dealers' E&O coverage for their advisors now include deductibles of around $50,000, Smith said, meaning that the advisor has to cover the first $50,000 of a claim out of their own pockets.
"The market's going into higher deductibles," Sutherland said.
"The illusion is that registered reps are wealthy and that handling a $50,000 is not an issue," Smith said.
The McGowanPRO team is reach out to those B-Ds to offer DRIP to their advisors. For about $400 to $500 per year per advisor, DRIP will cover up to 90 percent of that $50,000 deductible, though McGowanPRO will only offer the program if most of the advisors at the B-D sign on. And the advisors themselves normally pay the premium for DRIP.
"We're now communicating with the C-suites of these independent and regional broker-dealers. We're getting a good response," Smith said. "It's a win-win. In many cases the broker-dealer has essentially no out-of-pocket cost at all."
Sutherland described the direct B-D outreach as channel one, with channel two being direct, internet-based outreach to individual advisors. Yet channel one takes precedence for now.
"Really our focus is on the broker-dealer," Sutherland said. "It's a broker-dealer solution."
McGowanPRO launched DRIP last month.
To learn more about McGowanPRO's Deductible Reduction Insurance Program, visit: www.mcgowanprofessional.com/DRIP