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Investment Adviser ERISA Bonds Overview

Frequently Asked Questions

How to Use Your Insurance as a Marketing Tool

Gaining new clients, and maintaining your current clients, is obviously a priority in growing your practice. As an Investment Advisor this involves several challenges including compliance issues and the overall stigma created by high publicity Ponzi schemes.

But, are you be overlooking a valuable asset in marketing and retaining clients? Your insurance. Your clients and prospects will be doing more due diligence, and to develop (and maintain) trust, you'll need to be pro-active in your approach.

Why should Investment Advisors and other financial professionals use their insurance as a Marketing Tool ?

 

Demonstrate your Knowledge and added Value

You can use your Confirmation of Insurance to demonstrate to your clients and prospects your clear understanding of First Party, and Third Party Fiduciary exposure, and your affirmative coverage. In addition, if applicable, you can show your understanding of ERISA Section 412 and how it relates to your role with their ERISA Plan. Further, you may use this opportunity to educate your client about their personal fiduciary exposure, and how they may utilize First Party Fiduciary Insurance for their own protection.

Create "Peace of Mind"

Much has happened in the financial industry to undermine the trust of quality advisors. You need to do more, and proactively, to gain (and maintain) your client's trust and create Peace of Mind. By proactively presenting confirmation of your insurance you can begin to break down these walls with your client. Transparency is the best approach to create trust.

Confirm "Fiduciary" Coverage

We have seen that providing a "Certificate of Insurance" is not always sufficient anymore. Plan Sponsors are hiring their own ERISA attorneys and want to see full policy forms to confirm fiduciary coverage. By including a Confirmation of Insurance statement in your RFP you pro-actively demonstrate your awareness of this issue and have confidence that your policy provides affirmative fiduciary coverage.

Raise the Bar for your Competition

Once you have pro-actively shown your affirmative fiduciary coverage, and Investment Advisor ERISA Bond (if applicable), you have raised the bar for your competition. Every advisor who approaches your client or prospect after you will likely be asked to demonstrate the same.

NAPLIA has developed a "Confirmation of Insurance Coverage" exclusively for our clients.

This form allows you to confirm:

- Errors & Omissions Insurance
- Affirmative Fiduciary Coverage
- Investment Advisor ERISA Bond; Meeting ERISA Section 412 requirement for advisors who have the right or power to exercise discretionary authority over purchases and sales of plan assets.
- This includes all 3(21) full scope, and 3(38) fiduciaries

Sample Confirmation of Insurance Coverage