PLANADVISER - November/December 2018 - 43
to the law, even higher than the duty imposed on corporate
directors and officers. Yet, plan fiduciaries' decisions, unlike
those of corporate fiduciaries, are not given the benefit of
corporate law's business judgment rule. "
To further complicate matters, Golumbic says, traditional
directors' and officers' (D&O) insurance, generally
in place at advisory firms, does not typically cover retirement
plan fiduciary liability. This puts advisers in the same
boat as the administrators at their plan sponsor clients, who
cannot rely on general executive insurance to protect them
in the case of an ERISA lawsuit.
He warns that there is a somewhat common misconception
in the marketplace that a plan sponsor client's
fiduciary-specific insurance policy can be used to defend an
adviser, or other third-party provider. But there are regulatory
limitations on the ability of a benefit plan or employer
to indemnify a third-party fiduciary who has been sued,
even if that plan or employer wants to do so.
" Just as important as understanding who is an insured
is knowing who is not an insured under any given policy, "
Golumbic says. " Third-party service providers such as investment
advisers, investment managers and third-party administrators
[TPAs] who are hired by the plan or plan sponsor,
but who aren't employees of the insured, are typically not
insureds under the standard fiduciary liability insurance
policy, even if they're considered fiduciaries under ERISA. "
Misconceptions About Coverage Abound
According to Nancy Ross, a partner and head of the ERISA
litigation practice at Mayer Brown in Chicago, some of the
confusion about D&O policies stems from the fact that, even
just 15 years ago, they typically offered fiduciary coverage
within an attached rider. Fiduciary insurance coverage
has since been carved out as a stand-alone, Ross says. If a
sponsor or adviser thinks their D&O coverage extends to
fiduciary insurance, they could be in for a surprise, she says.
Another misconception among sponsors and their fiduciary
advisers, Golumbic says, is that fiduciary liability
insurance can be used to restore losses to an employee
benefit plan when a plan fiduciary discovers it made an
error. In reading the fine print of the policy, advisers and
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PLANADVISER - November/December 2018
Table of Contents for the Digital Edition of PLANADVISER - November/December 2018
Weathering Audits
Protection for Your Practice
The Case for Roths
SEC on Rollovers
ERISA Section 409(b)
403(b) Litigation Update
PLANADVISER - November/December 2018 - C1
PLANADVISER - November/December 2018 - FC1
PLANADVISER - November/December 2018 - FC2
PLANADVISER - November/December 2018 - C2
PLANADVISER - November/December 2018 - 1
PLANADVISER - November/December 2018 - 2
PLANADVISER - November/December 2018 - 3
PLANADVISER - November/December 2018 - 4
PLANADVISER - November/December 2018 - 5
PLANADVISER - November/December 2018 - 6
PLANADVISER - November/December 2018 - 7
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PLANADVISER - November/December 2018 - 30
PLANADVISER - November/December 2018 - 31
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PLANADVISER - November/December 2018 - 33
PLANADVISER - November/December 2018 - 34
PLANADVISER - November/December 2018 - 35
PLANADVISER - November/December 2018 - 36
PLANADVISER - November/December 2018 - 37
PLANADVISER - November/December 2018 - Weathering Audits
PLANADVISER - November/December 2018 - 39
PLANADVISER - November/December 2018 - 40
PLANADVISER - November/December 2018 - 41
PLANADVISER - November/December 2018 - Protection for Your Practice
PLANADVISER - November/December 2018 - 43
PLANADVISER - November/December 2018 - The Case for Roths
PLANADVISER - November/December 2018 - 45
PLANADVISER - November/December 2018 - SEC on Rollovers
PLANADVISER - November/December 2018 - ERISA Section 409(b)
PLANADVISER - November/December 2018 - 403(b) Litigation Update
PLANADVISER - November/December 2018 - C3
PLANADVISER - November/December 2018 - C4
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