Insurance for Asset Management Firms

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TEXT: TRUE STORY
To err may be human. But when a mistake has a large price tag attached, to err can be very costly as well.
Presented by Travelers Insurance
Once Upon a Precarious Portfolio

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A non-profit organization that helps fund college educations, received donations that amounted to a tidy sum. It was the largest endowment Strategic Perspectives Asset Management had ever been asked to manage.

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The non-profit was anxious to protect and grow their investments to support their efforts. Tom, a mid-level investment advisor, was up to the challenge.

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Or so he thought. Tom outlined an agreement with a capital preservation strategy. It limited investments to low-risk debt securities with a small allocation for large cap value equity securities.

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After agreeing to rebalance the portfolio quarterly, Tom and the non-profit organization, we're confident that the endowment would grow steadily over time.

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Until Tom took his eye off the ball. An unexpected slowdown in global economic output triggered a decline in the equity markets. 

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When Tom failed to adjust the non-profit’s portfolio accordingly as agreed upon, the non-profit’s portfolio lost a significant amount of its value. The firm was then alleged to have been in breach of its fiduciary duty.

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This serious professional service oversight put the firm in a very tough spot and the endowment’s viability in jeopardy. Happily, Strategic Perspectives had a better safe than sorry philosophy

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and Travelers Errors and Emissions coverage. Because the claim was covered, Strategic Perspectives – and especially the non-profit organization –

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sidestepped what could have been a very unhappy ending. The non-profit organization was back to business as usual,

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helping college-bound kids pursue their dreams of a bright future.

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TEXT: Contact your Travelers representative to learn more

Travelers Casualty and Surety Company of America and its property casualty affiliates. One Tower Square, Hartford, CT 06183.

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