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Outside Financial Advisors not Considered Professionals

Businesses using outside financial advisors may be surprised to learn that according to courts in New York City, those financial advisors are not considered professionals.  In a recent appellate case, Starr v. Fuoco Group LLP, 2016 N.Y. Slip Op. 02143 (1st Dept. 2016) the Court ruled that so-called “financial advisors” were not professionals.  Therefore, unlike an accountant, attorney, engineer, or doctor, financial advisors cannot be held liable in tort for failing to exercise reasonable care.  The Court found that any duty to render financial advisory services competently must arise out of the contract itself.  Some of these contracts, but not all, may be boiler plate, but both financial advisors and potential clients would be well advised to obtain competent legal counsel before entering into such an agreement.  Proper execution can prevent substantial litigation expenses.

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