Financial planners are not required to carry professional liability insurance, but most lawyers and consultants say it's unwise to operate without it. No one is ever immune from making mistakes -- and, of course, advisors can be sued or investigated even if they haven't been negligent.

The key is to understand the specifics of any professional liability or errors and omissions (E&O) policy, as well as the way it fits into your firm's specific risk protection needs.

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