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Is First Command a Pyramid Scheme?

First Command

Pyramid Schemes vs. Our Ethical Best Practices

Like many financial services firms, First Command is often asked questions about how we go about providing products and services to our clients. On rare occasions, we’re even asked: Is First Command a pyramid scheme?

While it’s always advisable to investigate before placing your confidence in any financial organization, we can unequivocally state that in no way are we a pyramid scheme. Our employees and leadership take great pride in holding ourselves to strict standards of ethical behavior in everything we do.

In fact, First Command currently maintains an A+ rating with the Better Business Bureau, and over 100 First Command Advisors have earned the CFP®1 designation.

As an Investment Advisory firm, First Command is held to a fiduciary standard in all client relationships, meaning we have an obligation to always put our clients’ interests first. We’re proud that we have consistently been recognized as a Military Friendly® employer and brand.

What is a Pyramid Scheme?

A pyramid scheme is an unethical business practice where a handful of top-level members recruit new members, who in turn pay fees to those who enrolled them. As new members recruit people under them, a portion of the fees they receive are shared with members above them. Also known as pyramid scams, these types of businesses are illegal in many parts of the United States.

Is First Command a Pyramid Scheme?

First Command is not a pyramid scheme. We do not maintain any type of pyramid structure in our recruiting practices or client relationships. In fact, it’s quite the opposite. We actively recruit transitioning service members, veterans, military spouses and experienced professionals who are passionate about making a difference in the lives of military families. In all cases, we offer competitive compensation and benefits packages.

In addition, we embrace time-tested financial principles and a client-first philosophy, advocating consistent saving, disciplined investing and a thoughtful insurance strategy. For more than 60 years, we have adhered to these principles in carrying out our mission of coaching those who serve in their pursuit of financial security.

Below are a few statistics that illustrate our commitment to serving those who serve:

  • Complimentary financial plans for active-duty military
  • No minimum net worth required to be a client
  • 97 percent of our current Advisors are also clients
  • 67 percent of current Advisors started as clients

Is First Command a Scam?

We understand the importance of doing your due diligence when searching for an investment company. Let us address any concerns you may have. In 2004, financial regulators fined First Command $12 million for accusations of misleading sales practices and other regulatory violations. Details of the settlement, and the class action lawsuits that followed, can easily be found here.

After the events of 2004, we embarked on a mission to re-establish trust with our clients and the military community by strengthening our company in a number of important ways. Our actions included:

  • Registering with the U.S. Securities and Exchange Commission in Spring 2005 as a Registered Investment Adviser (RIA)2 and required all our Financial Advisors to become Investment Adviser Representatives (IAR). These registrations require our company and our Financial Advisors to adhere to what is referred to in our industry as the "fiduciary standard," i.e., a legal obligation to put clients’ interests first when providing investment advice and making financial recommendations.
  • Expanding our Legal and Compliance team
  • Restructuring our Board of Directors to feature more outside and independent directors.
  • Establishing a new Military Advisory Board, a select group of retired senior flag officers and senior enlisted leaders from each branch of the military to advise us on how to best serve the interests of our military clients.
  • Reshaping our management team of long-term, home-grown leaders to include new experts from outside the company.
  • Expanding and diversifying our product offerings.
  • Investing millions of dollars to modernize the systems by which we serve clients.
  • Incorporating an independent review for all product and service recommendations to ensure suitability for the client.
  • Encouraging Advisors to pursue advanced credentials.
  • Developing and adopting a Code of Ethics for everyone at First Command.

We continually strive to improve as a company and earn the trust of military families.

What is a Multi-Level Marketing Company (MLM)?

Multi-level marketing is a type of legal business strategy used by direct sales companies to earn money by selling products and recruiting participants. Products are sold through a network of sales representatives which is why it’s often referred to as network marketing. Participants receive a portion of their recruits’ sales. The Federal Trade Commission investigates MLM companies to ensure they are not pyramid schemes.

Is First Command an MLM?

No, First Command is not an MLM. We do not utilize any form of a multi-level marketing structure across our recruiting or client relationships. Our primary focus is on building client relationships and coaching our clients toward their pursuit of financial security.

Supporting the Military Community

First Command is committed to enriching the lives of service members even beyond their pursuit of financial security. We partner with other outstanding organizations dedicated to serving the military community, including:

  1. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
  2. Registration as an Investment Adviser with the SEC does not imply a certain level of skill or training.