PLANADVISER - March/April 2019 - 52
practice management
Buyer
Beware!
There's no such thing
as standard adviser
E&O insurance
B
rian Francetich of Golsan
Scruggs (GS) in Portland, Oregon,
has worked for more than a
decade as a matchmaker between
registered investment advisers (RIAs)
and errors and omissions (E&O) insurance
carriers.
GS works with nearly 1,000 RIA
clients, many of them 401(k) plan
specialists. Francetich, director of
GS RIA and managing underwriter,
stresses that his firm is not an insurance
carrier, but an independent
brokerage agent placing business with
skilled providers in this space.
In a phrase, Francetich says RIAs'
understanding of the nuances of E&O
policies is lacking. Likewise, he says,
generalist risk experts at the major
insurance companies do not necessarily
know much about advisory
firms or the provision of securities to
retirement plans. As one would expect,
this can cause confusion and the occasional
point of friction for retirement
plan advisers who are shopping for an
E&O policy.
" The typical contract may be 60
pages or more of granular detail, so it's
always going to be challenging to shop for E&O policies-even
for people with a lot of experience, " he says. " Even if you have
read the whole contract, it's going to be hard to understand
everything that's contained or implicated in the document. "
In basic terms, E&O coverage can be drawn upon to help
defend a firm against: claims for actual or alleged mistakes
or misconduct; claims or suits alleging staff imprudence
or disloyalty during operations; claims alleging failures to
accurately assess client suitability; claims related to not
meeting client expectations; and claims relating to other
potential liabilities imposed under the Investment Advisers
Act of 1940.
According to Francetich, RIAs will be best served by
contracting with one of the seven or eight leading providers
of E&O insurance for advisers.
" More and more insurers have moved into this space, " he
notes. " As a result, there are some providers with much less
experience than others. We see some firms insuring RIAs
in what we think are unsuitable ways, for example trying
to do E&O-type coverage under miscellaneous professional
liability forms. Some are using bankers' professional
liability forms, and some are even using tax preparer insurance
forms. "
He says this is like trying to use a hammer when a screwdriver
is the right tool.
" The core providers have built specific coverage forms
designed around the Investment Advisers Act-that's
the center of the coverage and they build out from there, "
Francetich explains. " This approach is the soundest legal
basis for insuring RIAs, in our view. "
52 | planadviser.com March-April 2019 Art by Zack Rosebrugh
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PLANADVISER - March/April 2019
Table of Contents for the Digital Edition of PLANADVISER - March/April 2019
2019 PLANSPONSOR Retirement Plan Advisers of the Year
Coaching the Committee
When Savers Exceed the Limit
The Role of Alternatives
Buyer Beware!
Are Personal Advisers ERISA Fiduciaries
Unrelated Taxable Income and Pensions
An IPS Is Not Required
PLANADVISER - March/April 2019 - C1
PLANADVISER - March/April 2019 - FC1
PLANADVISER - March/April 2019 - FC2
PLANADVISER - March/April 2019 - C2
PLANADVISER - March/April 2019 - 1
PLANADVISER - March/April 2019 - 2
PLANADVISER - March/April 2019 - 3
PLANADVISER - March/April 2019 - 4
PLANADVISER - March/April 2019 - 5
PLANADVISER - March/April 2019 - 6
PLANADVISER - March/April 2019 - 7
PLANADVISER - March/April 2019 - 8
PLANADVISER - March/April 2019 - 9
PLANADVISER - March/April 2019 - 10
PLANADVISER - March/April 2019 - 11
PLANADVISER - March/April 2019 - 12
PLANADVISER - March/April 2019 - 13
PLANADVISER - March/April 2019 - 14
PLANADVISER - March/April 2019 - 15
PLANADVISER - March/April 2019 - 16
PLANADVISER - March/April 2019 - 17
PLANADVISER - March/April 2019 - 18
PLANADVISER - March/April 2019 - 19
PLANADVISER - March/April 2019 - 20
PLANADVISER - March/April 2019 - 21
PLANADVISER - March/April 2019 - 2019 PLANSPONSOR Retirement Plan Advisers of the Year
PLANADVISER - March/April 2019 - 23
PLANADVISER - March/April 2019 - 24
PLANADVISER - March/April 2019 - 25
PLANADVISER - March/April 2019 - 26
PLANADVISER - March/April 2019 - 27
PLANADVISER - March/April 2019 - 28
PLANADVISER - March/April 2019 - 29
PLANADVISER - March/April 2019 - 30
PLANADVISER - March/April 2019 - 31
PLANADVISER - March/April 2019 - 32
PLANADVISER - March/April 2019 - 33
PLANADVISER - March/April 2019 - 34
PLANADVISER - March/April 2019 - 35
PLANADVISER - March/April 2019 - 36
PLANADVISER - March/April 2019 - 37
PLANADVISER - March/April 2019 - 38
PLANADVISER - March/April 2019 - 39
PLANADVISER - March/April 2019 - 40
PLANADVISER - March/April 2019 - 41
PLANADVISER - March/April 2019 - Coaching the Committee
PLANADVISER - March/April 2019 - 43
PLANADVISER - March/April 2019 - 44
PLANADVISER - March/April 2019 - 45
PLANADVISER - March/April 2019 - When Savers Exceed the Limit
PLANADVISER - March/April 2019 - 47
PLANADVISER - March/April 2019 - 48
PLANADVISER - March/April 2019 - 49
PLANADVISER - March/April 2019 - The Role of Alternatives
PLANADVISER - March/April 2019 - 51
PLANADVISER - March/April 2019 - Buyer Beware!
PLANADVISER - March/April 2019 - 53
PLANADVISER - March/April 2019 - Are Personal Advisers ERISA Fiduciaries
PLANADVISER - March/April 2019 - Unrelated Taxable Income and Pensions
PLANADVISER - March/April 2019 - An IPS Is Not Required
PLANADVISER - March/April 2019 - C3
PLANADVISER - March/April 2019 - C4
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