Top 3 Fiduciary Mistakes and Ways to Avoid Them

When fiduciaries make mistakes, it can result in a big financial blow to the organization and also to the concerned individual. Having said that, we would like to tell you that fiduciaries are also human and they can make mistakes when working on achieving various financial plans for their clients. In this article, we have listed down the top 3 mistakes California-certified fiduciaries are likely to make and ways in which these can be prevented to safeguard the financial holdings of their clients.

Failure to identify all fiduciaries

This might seem quite unlikely however, in some of the prominent retirement plans, fiduciaries in an organization get often overlooked. And sometimes this can get pretty embarrassing, especially if the overlooked fiduciaries aren’t themselves aware of their responsibilities in that given line. It can also become a costly affair if, for example these fiduciaries are called to testify about their fiduciary conduct for a legal proceeding. Because they are not full aware that they are fiduciaries, they probably haven’t thought about all their actions with regards to those responsibilities.

All these people are fiduciaries:

* Trustees (except for those who don’t use trusts to hold assets)
* Investment advisors
* Individuals who exercise discretion in plan administration
* Administrative committee members
* Individuals who elect committee officials (such as board members)

Inability to offer proper fiduciary liability insurance

This might come as a surprise for the San Diego fiduciary service providers, especially if they are not much familiar with their duties in that capacity. This makes them personally liable for any mistake that they are about to commit as a fiduciary. It might come as an even bigger surprise if they are not at all insured. Officers’ and Directors’ coverage or employment practice liability policies might come into effect, however they don’t generally cover liability if it is an ERISA retirement plan. Also, do not mistake the ERISA fidelity bond for fiduciary coverage, it is only a type of safeguard against employee dishonesty or fraud, and not any kind of fiduciary liability.

Inadequate training of fiduciaries

The Department of Labor recently identified some of the most inefficient fiduciary training as an audit issue. And the training is perhaps the reason why fiduciaries don’t personally know how to figure out their own responsibilities. Not only must new fiduciaries be properly trained, providing them refresher courses, but the training must also be well-documented in meeting minutes and copies of training materials be retained and filed for future purposes.

Author’s Bio - Author is an online blogger. The content is about the San Diego fiduciary service.

About This Author

Paul Jardine Joined: December 18th, 2019