Products
Insurance and Bonds for Investment Advisors
Liftman Insurance provides errors & omissions/directors & officers, cybersecurity, fidelity, employment practices liability, and regulatory bond coverage for SEC and state-registered investment advisors. More than 2,500 investment firms rely on Liftman for their insurance and bonding needs. Liftman Insurance understands what regulators require, what carriers look for, and where standard policies leave advisors exposed. Insurance can cover a solo RIA or a multi-office wealth management firm. Click any product below to learn more about different types of coverage.
Errors & Omissions and Directors & Officers Liability
Errors & Omissions Insurance (also known as E&O or Professional Liability Insurance) protects the investment advisory firm and its employees when clients sue for an actual or alleged negligent act, error or omission, or breach of fiduciary duty committed in the scope of performing or the failure to perform their professional services. Coverage may include legal defense costs even where allegations are baseless.
Directors & Officers Liability Insurance (also known as D&O Insurance) provides coverage for directors and officers of an investment advisory firm for allegations brought by stakeholders for errors in judgment, breaches of duty, and wrongful acts related to the firm’s activities. Since a director or officer can be held personally responsible in some cases, most directors and officers will demand that their organization provide them with D&O Insurance to protect their personal assets.
Most insurance companies combine D&O and E&O into one policy. Liftman Insurance works with insurance companies to provide the proper protection for their client’s needs.
Cybersecurity Insurance
Advisory firms maintain exactly what cybercriminals want: account numbers, Social Security numbers, credit card numbers, and the ability to move client funds. Registered investment advisors are subject to the SEC amended Regulation S-P, which requires written incident response programs, oversight of service providers, and notice to affected individuals after certain breaches.
Cyber policies may cover both the firm’s losses and claims brought by regulators and clients including:
- Network extortion and ransomware payments
- Social engineering and fraudulent funds transfer (firm’s own funds)
- Data forensics, breach notification and credit monitoring
- Regulatory defense, fines and penalties, where insurable by law
- Business interruption and reputational loss
- Public relations expenses and media liability
Crime / Fidelity Bonds
A fidelity bond, also commonly referred to as a crime policy, is designed to protect against a range of fraudulent exposures. Crime coverage is particularly important because losses resulting from theft, fraud, embezzlement, or fraudulent transfer of funds are generally not covered under standard property, liability or cyber insurance policies. A crime policy serves as a critical safeguard by protecting both the institution’s own assets and, where applicable, client funds entrusted to the institution’s care, custody or control from potentially significant losses arising from both employee dishonesty and external criminal acts.
Call 617.439.9595 to Apply Now
Employment Practices Liability Insurance
Employment Practices Liability Insurance covers claims by employees, former employees and job applicants concerning discrimination (based on age, sex, race, disability, etc.) wrongful termination, sexual harassment and other employment-related allegations.
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Securities Transfer Agents Medallion Program Surety Bonds
When an investment advisor guarantees a client’s signature on a securities transfer that turns out to be forged or unauthorized, liability is incurred. STAMP (Securities Transfer Agents Medallion Program) bonds are signature guarantee surety bonds that protect investors, securities issuers and transfer agents against such fraud.
SEC Rule 17Ad-15 requires transfer agents to use a consistent method for accepting signature guarantees from eligible guarantor institutions. The medallion stamp confirms that the signature is backed by a surety bond. Without this medallion stamp , account transfers and re-registrations stall, and clients notice the delay.
Liftman Insurance can help you confirm whether your firm qualifies for the program, determine the required bond amount, and assist in completing the application.
Call 617.439.9595 to Apply Now
State Investment Advisor Surety Bonds
Many states require investment advisors to post a surety bond, particularly firms that have custody of client assets or discretionary authority and do not meet the state’s minimum net worth requirement. The bond is a contract in which an insurance carrier (the surety) accepts secondary responsibility to the state for any default or debt of the advisory firm. If the firm violates state securities laws, the state and its residents can recover damages under the bond, up to its full amount.
Requirements vary by state, and a firm registered in several states may need several bonds.
Liftman Insurance can expedite the surety bonds in a timely fashion through the insurance carrier. Our state surety bonds do not always require a personal guarantee from a firm’s principal to meet the registration requirement.
Call 617.439.9595 to Apply Now
ERISA Fidelity Bonds for Plan Fiduciaries
Section 412 of the Employee Retirement Income Security Act of 1974, as amended (ERISA), requires fraud or dishonesty bonds. These bonding requirements of Section 412 (a) generally apply to a fiduciary of plans covered by ERISA and also applies to a non-fiduciary who “handles” plan assets. A failure to have the necessary coverage results in a violation of ERISA.
The required amount is generally at least 10% of the plan assets handled, with a minimum of $1,000 and a maximum of $500,000 per plan ($1 million for plans that maintain employer securities).
Liftman Insurance has underwriting authority for ERISA bonds, so we can often issue the correct coverage quickly without a lengthy carrier review.
Call 617.439.9595 to Apply Now
Pension / ERISA Bonds for Your Firm’s Own Plans
Management companies that sponsor a 401(k), profit sharing or pension plan for its employees are bound by ERISA Section 412, which requires that any individual who handles plan funds be bonded. The bond protects the plan, not the firm, against losses from fraud or dishonesty by the people who manage or handle the assets.
Section 412 of ERISA requires a bond limit of 10% of plan assets, with a minimum of $1,000 and a maximum of $500,000 per plan ($1 million for plans holding employer securities). The plan’s annual Form 5500 asks whether the bond is in place, and a missing bond can draw attention from the Department of Labor.
A pension bond differs from a fidelity bond: A pension bond pays the plan, while your fidelity bond pays the fund. The insurance company that Liftman works with can typically expedite the issuance of a pension bond. The pension bond includes inflation guard coverage to always remain in compliance.
Call 617.439.9595 to Apply Now
Not sure which coverage your firm needs?
Talk to a Liftman specialist. We will review your current program, point out gaps, and get you a quote. Even if you are not a client, you will like how quickly we understand your situation.
