In certain states, Registered Investment Advisors (RIAs) must hold a surety bond. Additionally, if your duties involve offering investment advice to a participant of an ERISA plan, the U.S. Department of Labor requires you to post an ERISA Fidelity Bond. The following information explains what a surety bond is, what it covers and how to purchase one.
What is an RIA Bond?
As an investment advisor, you must follow the rules and standards of professional conduct set by the state in which you do business. Most states require you to have an Investment Advisor Surety Bond to ensure you perform your advisor responsibilities ethically and responsibly. While a surety bond is an insurance product, it works more as a line of credit.
A bond is a three-party contract between you, the obligee and the surety.
If your client believes they have been deceived or manipulated by you, they may seek to make a claim against your bond.
What happens if a claim is made?
The surety company conducts an investigation on any claims made against your bond. These claims could be due to you breaching fiduciary duties, providing inaccurate representation, violating federal securities law or any other unethical act against your clients. If a claim proves to be valid, the surety will pay out up to the full amount of your bond. As the principal of the bond, you are the responsible party for paying the surety back the full amount.
How much does the bond cost?
The cost of your bond (also called the premium) depends on a few factors, including the bond amount and your personal credit score. Generally, the bond amount is set by the obligee and can range between $10,000 and $50,000. If you are unsure of the bond amount to enter on your application, please contact the obligee. Please be aware that the premium is not the same as the bond amount. You will only pay a small percentage of the bond amount as premium.
The other important factor that determines the amount of premium you pay is your personal credit standing. Approved applicants with good credit can expect to pay between 1% and 3% of the bond amount.
How much do I select for the bond amount?
Getting quotes for your ERISA Fidelity Bond is quick and easy using our online application. Get started by selecting the bond amount you require.
Not sure what to select for your bond amount? We recommend contacting the U.S. Department of Labor to verify the amount of coverage they require of you. The amount you select needs to equal 10% of the total plan funds you handled last year or $1,000, whichever is more.
However, you will not pay the full bond amount. Depending on your bond amount requirement, your bond could cost as little as $165 for a 3-year term.
Why get my bond with Surety Solutions, A Gallagher Company?
Getting a surety bond is an important step in meeting federal and state requirements. The process of getting your surety bond doesn’t have to be complicated or time-consuming. By completing our quick and easy online application, you’ll have a quote within 48 business hours, upon approval.
As an investment advisor, you must follow the rules and standards of professional conduct set by the state in which you do business. Most states require you to have an Investment Advisor Surety Bond to ensure you perform your advisor responsibilities ethically and responsibly. While a surety bond is an insurance product, it works more as a line of credit.
A bond is a three-party contract between you, the obligee and the surety.
- The principal – As the investment advisor, you are the principal of the bond.
- The obligee – The government agency requiring you to submit a surety bond.
- The surety – This party issues the bond. They also investigate and settle claims made against the bond.
If your client believes they have been deceived or manipulated by you, they may seek to make a claim against your bond.
What happens if a claim is made?
The surety company conducts an investigation on any claims made against your bond. These claims could be due to you breaching fiduciary duties, providing inaccurate representation, violating federal securities law or any other unethical act against your clients. If a claim proves to be valid, the surety will pay out up to the full amount of your bond. As the principal of the bond, you are the responsible party for paying the surety back the full amount.
How much does the bond cost?
The cost of your bond (also called the premium) depends on a few factors, including the bond amount and your personal credit score. Generally, the bond amount is set by the obligee and can range between $10,000 and $50,000. If you are unsure of the bond amount to enter on your application, please contact the obligee. Please be aware that the premium is not the same as the bond amount. You will only pay a small percentage of the bond amount as premium.
The other important factor that determines the amount of premium you pay is your personal credit standing. Approved applicants with good credit can expect to pay between 1% and 3% of the bond amount.
How much do I select for the bond amount?
Getting quotes for your ERISA Fidelity Bond is quick and easy using our online application. Get started by selecting the bond amount you require.
Not sure what to select for your bond amount? We recommend contacting the U.S. Department of Labor to verify the amount of coverage they require of you. The amount you select needs to equal 10% of the total plan funds you handled last year or $1,000, whichever is more.
However, you will not pay the full bond amount. Depending on your bond amount requirement, your bond could cost as little as $165 for a 3-year term.
Why get my bond with Surety Solutions, A Gallagher Company?
Getting a surety bond is an important step in meeting federal and state requirements. The process of getting your surety bond doesn’t have to be complicated or time-consuming. By completing our quick and easy online application, you’ll have a quote within 48 business hours, upon approval.
Have a question about the required surety bond or our online application?
Send us a message using the contact form below, or email [email protected]. Our team of surety experts is available for any of your questions about Investment Advisor Bonds or our online application.
Send us a message using the contact form below, or email [email protected]. Our team of surety experts is available for any of your questions about Investment Advisor Bonds or our online application.
Ryan Insurance Strategy Consultants, A Gallagher Company, offers RIA E&O and Cyber insurance for
FPA members through NAPA Premier.
FPA members through NAPA Premier.