The warranty in the electronics business is gravy for the retailers who sell it. You\u2019ll be surprised how many people pay $20 to get a warranty on a $100 Blu-Ray player. When Best Buy was going national, they advertised how they wouldn\u2019t sell warranties and then realized that they couldn\u2019t turn down all that free money.<\/p>\n\n\n\n
A warranty is like insurance, so you should only insure those things that have a high-cost replacement. You insure your health, your life, your house, your car, and some appliances worth insuring.<\/p>\n\n\n\n
This isn\u2019t another diatribe about the fiduciary warranty that insurance companies used to give away for free even though their main business is insuring risk for a fee.<\/p>\n\n\n\n
This about plan sponsors who don\u2019t insure their risk by buying fiduciary liability insurance or buying a plan service that could review their plan expenses and\/or their plan document\/administration.<\/p>\n\n\n\n
Fiduciary liability insurance helps protect plan sponsors who find themselves also appearing as defendants in a plan lawsuit filed by an aggrieved plan participant in a town near you. I had clients sued in a class-action lawsuit where the insurance company paid $900,000 for a $1 million legal fee (there was a $100,000 deductible) and this plan sponsor won their case.<\/p>\n\n\n\n
So many plan sponsors don\u2019t want to pay for a plan review that can help them identify plan issues they wouldn\u2019t ordinarily find unless they were converting to a new provider. I have a plan review called the Retirement Plan Tune-Up for $750 and I can probably count on one hand how many I do a year. When I talk to plan sponsors and advisors, they seem interested but they treat a plan review like a trip to the dentist; something that they will avoid until it\u2019s too late.<\/p>\n\n\n\n
Spending some shekels on a fiduciary liability policy and a plan review is certainly well worth it to avoid greater harm later.<\/p>\n
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