Since plan participants have been inundated with articles and retirement plan providers talking about increased fiduciary risks, a number of bundled plan providers have decided to cash in on this hoopla by offering what they call a “fiduciary guarantee” or a “fiduciary warranty” as part of the services they offer.
The word guarantee in business carries a whole lot of importance such as a money back guarantee. Of course, as with any guarantee, there are terms and conditions that limit that guarantee that people who don’t read the fine print, find out in most unfortunate circumstances that they won’t be covered.
When they hear the words “fiduciary guarantee”, I assume most plan sponsors think that these plan providers will either serve in some sort of a fiduciary capacity or indemnify the plan sponsor in any lawsuits brought by plan participants for any claim for a breach of fiduciary duty. Of course, these providers go out of their way to make sure that they are not identified as serving in any fiduciary capacity and the fine print in these guarantees indicate that the providers will only defend plan sponsors only in rare instances.