“Attached is Our Standard Service Agreement...” Sound familiar? If not, it may shortly – it is widely expected that retirement plan vendors will soon be sending out updated “standard” service agreements along with the third cycle of defined contribution plan restatements.
Employers and others outsource services for their employer benefit plans to vendors, such as record keepers, third party administrators, custodians, and investment advisors, should be wary of so-called “standard” vendor service agreements. We work with many of our clients in reviewing and negotiating proposed service agreements, and in our experience, a vendor’s “standard” agreement has generally been designed by its attorneys to protect the vendor. Employers need to carefully review and negotiate proposed service agreement terms (even if their plans are not covered by ERISA) to ensure that they are balanced, fair and reasonable, comply with ERISA where applicable and other applicable law and do not create liabilities, duties and obligations that they, in hindsight, never would have “bargained for.” See a more detailed article by Deborah Fabricant which discusses the ten questions from the most common areas that should be scrutinized and negotiated with the help of business and legal advisors at 10 Questions to Ask Before Signing That New Service Agreement, as well as the recent webinar on the topic by Deborah and Sherrie Boutwell at https://attendee.gotowebinar.com/register/4889440660690831885.