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Insurance
Policies available to Investment Advisors:
Click on each link for in-depth
details on coverage and policy forms
Professional Liability / Errors & Omissions Insurance (E&O)
Provides coverage for
negligent acts, errors or omissions of the Investment Advisor (third party
coverage).
Investment
Advisors ERISA Bonds
Required by ERISA if
the Investment Advisor has discretionary authority of client funds (third party
coverage). Can be written on an individual plan or blanket basis. These bond
the IA for fraud and theft of client plan funds.
ERISA Bonds
Required, by ERISA,
to be held by the plan holder (1st party coverage). Must be equal to 10% of the
plans assets up to $500,000.
Fiduciary
Insurance
Covers plan
fiduciaries for breach of fiduciary duties (1st party coverage).
Employee
Dishonesty Insurance
Provides coverage for
theft or misappropriation of your funds by your employees (1st party coverage).
Can be endorsed to include third party coverage (theft of client funds), and
crime (theft of your funds by non-employee). May also provide automatic
ERISA bond coverage.
Claim Statistics
|
Frequency By
Allegation type |
Frequency
By Security type |
|
Breach of Fiduciary Duty |
25.4% |
Mutual Funds |
42.3% |
|
Breach of Contract |
15.0% |
Annuities |
26.1% |
|
Negligence |
14.0% |
Options |
11.8% |
|
Failure to Supervise |
13.1% |
Common Stock |
8.5% |
|
Misrepresentation |
11.6% |
Corporate Bonds |
7.6% |
|
Unsuitability |
10.9% |
Limited Partnerships |
2.0% |
|
Omission of Facts |
4.3% |
Certificates of Deposit |
1.7% |
|
Unauthorized Trading |
2.7% |
|
|
All
Other Types |
3.0% |
|
Source: Financial Industry Regulatory
Authority (FINRA) |
