Legal and Approved Investments May Still Result in Fiduciary Liability


Plan funds and assets don’t have to be invested in an illegal manner in order for an investment to count as imprudent and a breach of a plan sponsor’s fiduciary duty to plan participants. Even legal, complaint investment products can be deemed to be imprudent and a breach of fiduciary duty.

Even if an investment product has gotten through all government regulators and an established financial analyst or advisor believes in that product, if it’s deemed that it was too risky or commissions were too high, it will be a breach of a plan sponsor’s fiduciary duty to their plan participants and they’ll be held personally liable.

Navigating the current landscape as a plan sponsor and fiduciary personally liable to plan participants for imprudent investments is a minefield these days. If even 100% legal product use can result in a breach of fiduciary duty, you have to protect yourself and your personal assets. The risk that even legal behavior could result in a breach is just too high.

How can you make sure you’re personally protected from a fiduciary breach? Fiduciary liability insurance!

Where the ERISA fidelity bond is set in place to protect the participants of the plan it, however, does not protect YOU as the fiduciary.

Colonial Surety Company is a Treasury Listed surety company providing ERISA fidelity bonds packaged with fiduciary liability insurance that includes a cyber liability insurance endorsement at no extra cost. Colonial is one of the leading providers of ERISA related products, offering bonds approved by the Department of Labor. We make it easy to obtain your bond instantly as well as allowing you to purchase retroactive insurance for the years the plan was not previously covered.

Under ERISA, fiduciaries may be held personally liable for a breach of their responsibilities in the administration or handling of employee benefit plans. Under ERISA 410, the plan cannot relieve you of this responsibility with indemnification language, however, it specifically permits persons with personal liability to purchase fiduciary liability insurance. Covering yourself with fiduciary liability insurance gives you a piece of mind that you are protected. Learn how to bundle your ERISA bond and fiduciary liability insurance for a discounted rate.