FORT WORTH, Texas – Career service members who work with a financial advisor are considerably more confident in their family finances than their do–it–yourself counterparts.
Second quarter results of the First Command Financial Behaviors Index® reveal that 72 percent of middle–class military families (commissioned officers and senior NCOs in pay grades E–5 and above with household incomes of at least $50,000) who work with a financial advisor are extremely or very confident in their ability to retire comfortably. That compares to just 29 percent of military families without an advisor.
Near–term financial confidence is also stronger among those who work with a financial advisor. Seventy–one percent of these families are extremely or very confident that their financial situation will improve in the next year. In contrast, just 38 percent of families without an advisor report the same feelings of confidence.
“Our survey findings continue to highlight the positive effect that financial advisors can have on service members and their families,” said Scott Spiker, chairman/CEO of First Command Financial Services, Inc. “By coaching their clients to build strong money behaviors, financial advisors are playing a key role in encouraging the actions that shape confidence in the future.”
The military's new Blended Retirement System is keeping retirement readiness at the top of financial concerns for many career military families. The Index reveals that most survey respondents say they are likely to consult a financial advisor regarding their retirement system options, particularly those who already work with an advisor. Sixty–seven percent of military families who work with an advisor say they are extremely or very likely to consult their advisor for help making retirement system choices versus 14 percent of those without an advisor.
The Index has consistently revealed that military families who work with a financial advisor show the greatest commitment to saving for retirement. More than half (56 percent) of middle–class military families who work with a financial advisor reported owning a retirement account during the second quarter. That's 8 points higher than those who do not use an advisor. And they contributed more on average than their do–it–yourself counterparts – $511 per month versus $326.
Service members who work with a financial advisor were also more likely to maintain long–term savings accounts (47 percent versus 29 percent), and they put in more dollars. Monthly average contributions for the two groups were $400 and $254, respectively.
Do–it–yourself military families were more likely to report owning short–term savings accounts (54 percent versus 40 percent). Still, those who work with a financial advisor put in more dollars. Monthly average contributions for the two groups were $421 and $262, respectively.
This ongoing commitment to savings is reflected in the financial assets of those who work with a financial advisor. They report an average of nearly $200,000 more in accumulated savings and retirement funds than those without a financial advisor. Despite higher debt levels (mostly associated with a mortgage), those with a financial advisor are in a stronger net worth position than their do–it–yourself counterparts.
Look for the trend to continue in the months ahead. Military families with a financial advisor are more likely to say they will increase positive financial behaviors in the future. Fifty percent intend to increase their savings. That's about twice the rate reported by those without an advisor (26 percent). Forty–nine percent expect to bump up their debt payments. In contrast, just 29 percent of those without an advisor expect to put more dollars towards paying down debt.
These positive intentions helped to push the overall Index score ahead seven points to 145. (The Index is set to a benchmark of 100, which was assigned when the Index was launched in 2008.)
“Maintaining strong money habits is always a smart move, but it will be critical for our career service members as they deal with lingering worries over sequestration and the future of defense spending as well as new uncertainties related to military retirement benefits,” said Scott Spiker. “Our survey results emphasize the significant contribution a financial professional can make in the lives of service members. Military families with a financial advisor by their side will be in the best position to maintain feelings of confidence today as they continue to pursue financial security for tomorrow.”
About First Command Financial Behaviors Index®
Compiled by Sentient Decision Science, Inc., the First Command Financial Behaviors Index® assesses trends among the American public's financial behaviors, attitudes and intentions through a monthly survey of approximately 530 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 4.3 percent with a 95 percent level of confidence. https://www.firstcommand.com/fbi/
About Sentient Decision Science, Inc.
Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index®. SDS is a behavioral science and consumer psychology consulting firm with special vertical expertise within the financial services industry. SDS specializes in advanced research methods and statistical analysis of behavioral and attitudinal data.
About First Command
First Command Financial Services and its subsidiaries, including First Command Financial Planning and First Command Bank, coach our Nation's military families in their pursuit of financial security. Since 1958, First Command Financial Advisors have been shaping positive financial behaviors through face–to–face coaching with hundreds of thousands of client families.
Contact: Mark Leach