Ask any employee benefits professional if they’d let a credit card company come into the office and try to educate and sign up their employees. We bet you’d hear a resounding “NO.”
Yet, many workplace programs that call themselves “financial wellbeing” make their money by selling financial products and services.
Most aren’t even very subtle about it.
What is an affiliated financial wellbeing program?
Affiliated programs appear in the form of education or financial coaching that’s sponsored - directly or indirectly - by a bank or financial services firm.
They often offer free financial wellbeing education or coaching for employees. These programs seem to be an easy win for employers, but they are truly a wolf in sheep’s clothing.
Once they have a foot in the door at your organization (often through your 401(k) provider, or under the guise of free financial coaching or benefits decision assistance) affiliated programs will sell, sell, sell.
The danger of affiliated financial wellbeing programs.
Affiliated programs aren’t just dangerous for your employees’ financial future. They can quickly get your organization in hot water, too.
It is your obligation as an employer to look out for the best interest of your employees.
If you allow a “financial wellbeing” program that’s trying to turn a fast profit to give employees advice on managing their retirement assets, things can go from questionable to illegal very quickly.
It might not always be easy to tell if a financial wellness program is independent or affiliated. Here at LearnLux, we pride ourselves on being a provider of industry-leading independent financial wellbeing, and we shout it from the rooftops.
As you start to research other programs and services, read carefully since they might (intentionally) not be as forthcoming about their status.
How to know if a financial wellness program is independent.
As you audit your current financial wellbeing program, and look to bring on new providers, ask the following questions to each vendor:
- How does your company make money?
- Do you collect referrals or commissions from any vendors?
- Do you have partnerships or arrangements with any financial services providers?
- Are you owned by or affiliated with a financial services company?
- How are your coaches / advisors compensated?
- Do you plan to stay independent and unbiased?
and, most importantly...
Ask if they are a fiduciary.
The important difference between independent and affiliate programs is their fiduciary responsibility to your employees.
While independent programs may also recommend products or services, they are doing so as a fiduciary, which means they’re legally required to act in your employees best interest.
Affiliates, on the other hand, do not act as a fiduciary and may recommend products where they get the most commission. A common example is recommending retirement products with unfavorable fee structures. Another affiliate strategy you'll see is financial coaches is pushing investment solutions before the employee has established their financial basics such as setting up an emergency fund.
With the long term financial health of your employees in mind, choosing a financial wellness program that’s independent (and plans to stay that way) is of utmost importance.
For more on independent, fiduciary financial wellbeing for the modern workplace, visit learnlux.com.