First Command News & Media
FOR IMMEDIATE RELEASE — Oct. 10, 2016
First Command Reports: Financial confidence holding steady in military families
First Command Financial Behaviors Index® reveals that middle-class service members who work with a financial advisor are twice as likely as their do-it-yourself counterparts to feel their finances will improve over the next year.
FORT WORTH, Texas – Despite continuing concerns over cuts in defense spending, America’s career military families are feeling confident in the future with about half expecting their financial situation to improve and to be able to retire comfortably.
Second quarter results of the First Command Financial Behaviors Index® reveal that 52 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) expect their financial situation will improve over the next year. Forty-eight percent express confidence in their ability to retire comfortably.
Confidence levels are particularly strong in families that work with a financial advisor. Military families with financial advisors are twice as likely as their do-it-yourself colleagues to say they are extremely or very confident that their financial situation will improve in the next year (63 percent versus 31 percent) and in their ability to retire comfortably (59 percent versus 25 percent).
“These heightened levels of confidence underscore the positive influence of financial advisors as they coach service members to improve their money behaviors,” said Scott Spiker, CEO of First Command Financial Services, Inc. “We see this behavioral influence reflected in strong savings habits. Career military families who work with a financial advisor are out saving their do-it-yourself counterparts, reinforcing the value of working with a professional. Strong money behaviors are particularly important today when so many of our men and women in uniform are uncertain about how sequestration may impact their household finances.”
Seven out of ten career military households feel extremely or somewhat anxious about cuts to defense spending, and three out of four already feel financially affected by the cuts. The second quarter results reveal that most military families say they are preparing for cuts in defense spending, primarily by cutting back on every day spending and through increased saving.
The Index® reveals that 73 percent of middle-class military families who work with a financial advisor contributed to savings and retirement accounts during the second quarter. That’s 24 points higher than those who do not use an advisor.
Service members who work with a financial advisor are more likely to contribute to:
- Short-term savings (78 percent versus 54 percent for those without an advisor). Monthly median contributions for the two groups are $500 and $300, respectively.
- Long-term savings (66 percent versus 32 percent). Monthly median contributions for the two groups are $300 and $213.
- Retirement (74 percent versus 60 percent). Monthly median contributions for the two groups are $400 and $300.
Additionally, those with a financial advisor report $22,000 more in accumulated savings and retirement funds than those without a financial advisor, and they carry nearly $58,000 less in debt on average.
The financial behaviors, attitudes and intentions of career military families held steady in the second quarter. These results were reflected in the overall Index score of 134, which was statistically unchanged from the first quarter. (The Index is set to a benchmark of 100, which was assigned when the Index was launched in 2008.)
Looking ahead, positive financial behaviors are expected to continue in the third quarter. And military families who use financial advisors are more likely than others to say they will increase savings in the months ahead (40 percent versus 28 percent).
“Our survey data continues to reveal that career military families can enjoy greater financial confidence and readiness by working with a knowledgeable professional,” Spiker said. “Taking action to feel better about family finances is particularly important in the current environment of military budget cuts. Families working with a financial advisor continue to show far greater resilience towards the tumultuous changes facing their financial futures.”
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. Financial Behaviors Index
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 Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams—focusing on consumer behavior as the first and most powerful determinant of results. Through knowledgeable advice and coaching of the financial behaviors conducive to success, First Command Financial Advisors have built trustworthy, lasting relationships with hundreds of thousands of client families since 1958.