For many years, financial wellbeing has been automatically associated with the salary banker or insurance broker given its perceived relationship to personal finances. Financial matters are often thought to be about insurance or tax, thus the tendency to lean on existing banking/insurance partners for the same.

Some of these partners also offer financial wellbeing programs as a complimentary service to employers. However, this value add poses significant risks to companies.

The risks of financial wellbeing programs

The biggest risk is that these partners have vested interest in selling a product, and hence sessions may be used to promote products rather than being educational. The organisation might insist on not promoting a product or service, but it is inevitable that such promotion will happen even with precautions taken.

Another major related risk is that the products suggested may not be in the best interest of employees who attend. There have been numerous cases of banks and other partners using such sessions to suggest insurance products due to high commissions earned on insurance schemes. Most trainers brought by these partners are financial advisors and use these sessions for indirect marketing. The problem comes when the trainers give biased advice focusing on the Institutions’ product interests, which leads to sub optimal returns and becomes a burden on employees' hard earned income. 

Furthermore, because the session is hosted by the organisation, thus the employer seems to be providing a platform for external parties to market their products. Employees can blame the organisation for exposing them to this misselling or for losses that are incurred due to the way certain information was provided during the free session.

Even if promotion and misselling does not happen, the banking/insurance partners also may not address all areas which employees require information on. For example, if employees need information on taxation of stock grants (ESOP/RSU) or would like to create a retirement plan, these topics may not be covered in detail in free sessions. Typically, most of the sessions are basic and employees do not have anybody to reach out to in case of further queries. 

Is there a better way?

The hidden costs of free sessions can hamper financial wellbeing programs and need to be evaluated thoroughly. Instead of hoping for a cheap and easy short cut, organisations must understand that building financial aptitude is a process.

Every individual has a unique financial situation and goals. Making employees financially capable requires the right subject matter expertise and a strong understanding of how to deliver the relevant information in a way that is easily understood. A couple of one-hour webinars can provide some information but often leads to more questions instead, the need is to answer those questions as well. Employees can learn new things but must also be given the opportunity to take their knowledge forward.

In reality, driving a change in financial habits requires readily available, unbiased learning resources, nudges and someone to talk to.

This is not to say that all free programs are bad. But while evaluating a free training session or offering on financial wellbeing, do assess the following points. 

1. How does the fiduciary responsibility organisations have for their employees get impacted with these complimentary programs?

2. Is employee interest being compromised by indirect marketing of the financial wellness provider?

3. Is there a risk of employee backlash?

4. Do these one off programs actually lead to a financial behaviour change? 

5. Who can employees reach out to for clearing doubts or getting further information? 

6. How would the financial wellness education needs of the diverse workforce be met through these programs?

Remember, nothing comes free, and especially not good things.