Fiduciary Liability Exposure Checklist
Pitfalls for Attorneys, Business Managers and CPAs
- Providing investment advice to clients whether or not you receive compensation
- Drawing the line between investment advice and legal, financial or tax advice
- Serving as trustee to accomodate a client who doesn’t want heirs to know or be involved
- Recommending any investment, stockbroker, financial planner or insurance agent to a trustee then failing to monitor the situation, among other things; personnel turnover happens and compliance may erode.
- Receiving any remuneration or compensation for referrals, investments or insurance, etc.
Steps to consider to insulate your professional practice
- Identify potential fiduciary risk exposure areas in your practice
- Review E&O insurance for coverage or exclusions related to investment fiduciary activities
- Inform clients who act as trustees of fiduciary responsibilities and liability
- Alert clients of potential liability before they accept a trustee or board position on a non-profit
- Become familiar with federal and state laws concerning investment fiduciary standards of care:
- Uniform Prudent Investor Act (UPIA)
- ERISA, Taft Hartley Act (Union, multi-employer plans)
- Uniform Management of Public Employee’s Pension Systems Act (state, county, city plans) (UMPERs)
- Uniform Prudent Management of Institutional Funds Act (UPMIFA)
Seek an independent, third party opinion from us; it counts as due diligence.
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