Financial Wellness: Are You Legally Fit? By: Alan HahnEsq.

As employers continue to embrace financial wellness programs, many are solicited by vendors that want to meet with employees and present information or products to them.  A cautious employer will recognize that interactions between an outside vendor and employees carry certain legal risks. This is made all the more serious if the vendor will address topics that relate to retirement planning.

Employers clearly have a vested interest in offering access to appropriate financial wellness vendors.  Employees can become less productive when they are burdened by monetary concerns, so offering financial wellness programs can help employees work more efficiently. While promoting employee financial health can be a worthy goal, employers should also consider any potential legal obligations that may be triggered by offering a financial wellness program.  Employers that have adopted wellness programs relating to health care will recognize that similar scrutiny needs to be taken when offering services to employees relating to financial matters.

Employers should be careful when selecting a financial wellness vendor. Too often, financial wellness programs are implemented based on a business relationship, a recommendation from a friend or relative, or some other ad hoc development. Instead there should be a thorough and formal process, taking into consideration the appropriate legal risks. Some diligence steps that an employer may want to consider is a formal RFP; consideration of what credentials and qualifications are necessary for the project at hand; related data use, confidentiality and cybersecurity risks; identifying the metrics for success; and determining if the vendor has appropriate insurances. Identifying any conflicts of interest is often an important exercise to take before selecting a vendor.

Before the vendor is formally engaged, an employer should consider executing an appropriate service agreement that includes various provisions that are important to the employer. The agreement should ideally include appropriate indemnities so that the employer will be protected if things go wrong. Additionally, the vendor may need to represent in the document that it will not state or imply that the employer is endorsing or monitoring the services provided by the vendor. From a practical standpoint, an employer will want to identify where any on-site presentations will take place and consider whether it will be responsible in the event of an incident between the vendor and employees while on-site. 

Employers should evaluate both federal and state laws. As part of this effort, depending on the facts and circumstances surrounding the financial wellness programs, care should be taken to determine if the program may be covered under or otherwise implicated by the Employee Retirement Income Security Act of 1974 (ERISA). If a financial wellness program is governed by ERISA, then the employer could have additional fiduciary duties related to the program, including a duty to monitor the program.  As a result, any financial planning services should be vetted to determine if the advice will include any information that might relate to the company’s retirement plan. In this regard, employers should be mindful of the new Department of Labor “fiduciary rule” that has been the subject of much public discussion.  In some cases, it may be appropriate to have an affirmative agreement that the vendor will not make any statements relating to investments under the company retirement plan.


As more and more employers are implementing financial wellness programs to help employees manage their finances, employers should consider whether any legal risks are implicated in the selection of vendors. Financial wellness programs may be beneficial to both employees and employers; however, employers should discuss with their counsel any legal risks in offering these programs to their employees. Aside from considerations that apply in regard to any vendor that is allowed on-site, particular care should be taken in regard to financial advisors that can  trigger certain ERISA obligations and fiduciary duties.  In many cases, an appropriate agreement should be executed between the parties identifying the exact nature of the relationship. The bottom line is that an employer should be mindful of its own legal health before offering a financial wellness program to its employees. 

A big thank you to my colleague William Szanzer, an associate in our Benefits & Compensation Group, for his assistance in the preparation of this article.

Alan Hahn is a partner in and co-chairs the Benefits & Compensation Practice Group of Davis & Gilbert LLP.

Alan can be reached at or 212-468-4832.

Alan Hahn

Alan Hahn is co-chair of the Benefits & Compensation Practice Group of Davis & Gilbert. His practice is devoted to advising clients in the design and implementation of creative, unique and tax-effective employee benefit plans and programs.

Mr. Hahn's broad practice covers all types of employee benefit...

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