Within a company, a fiduciary can be anyone who cares for the financial interests of its workers’ benefits. This role carries a stricter requirement to carefully advise, invest and care for the welfare of the funds entrusted to them. Because of this, companies are required to carry increased fiduciary liability insurance to protect themselves and those acting as trustees, against claims. Here are just a few types of claims protected by this kind of policy.
1. Improperly Establishing Benefit Entitlements
These entitlements are designed to offer employees benefits like retirement, health and welfare and profit-sharing. Any errors or mismanagement could drastically affect their future and cause them to file a claim.
2. Not Diversifying Dedicated Funds
A fiduciary has a distinct obligation to diversify funds given to invest. Not doing this could cause the investor to be at risk to lose money, leading to a possible claim.
3. Personal Gain Though Investment Advice
When a fiduciary’s advice on invested funds may contribute to his personal gain, then it’s considered a conflict of interest. If this situation arises, there may be grounds for a claim to be filed.
Every person a fiduciary represents has plans and a future they are investing in through their employer. It is the obligation of the trustee to manage, advise and care for these benefits. Having the best fiduciary liability insurance provides coverage for issues that may result during the performance of these duties.