As a fiduciary, it is your responsibility to select advisors and investments, minimize expenses and follow plan documents. No one is perfect, and managing your organization's retirement plan is likely not your full-time job.
Fiduciary Liability insurance helps protect companies from claims of mismanagement and the legal liability related to serving as a fiduciary. Follow these steps to help avoid showing up on the Department of Labor's shortlist.
Steps to Minimize Litigation Risk
The number of lawsuits over excessive plan fees has increased year over year since2016. Defense of these lawsuits costs can total in the low seven figures by the time there is a final determination on a motion to dismiss.
Individuals involved in the management of a retirement or health plan – can be at risk if they breach their fiduciary duties and be personally required to make the plan whole for any losses they caused. Make sure you are covered with fiduciary liability insurance along with taking the following steps to minimize risk.
Fiduciaries must follow plan documents or they could face litigation. What processes are in place to ensure you are not only following these but also documenting the decisions made by the committee?
Are the plan investments monitored regularly? Are the fees reasonable? Are lower-cost share classes available? If not, it may be time to change investments. Fiduciaries are responsible for providing a broad range of investment options and minimizing the expenses associated with those investments. Actively monitor the performance and expenses of the investments
offered in your plan(s).
Fiduciaries have the responsibility of monitoring all outside vendors -especially your recordkeepers and advisors. When was the last time you vetted your providers' services and fees?
Be sure to benchmark fees regularly, as excessive plan fees are one of the easiest claims to file against you as a fiduciary.
MORAL OF THE STORY
Even if you are doing all of these things, you're never guaranteed to avoid a lawsuit. Protect yourself and your organization through fiduciary liability insurance.