First Command News & Media
FOR IMMEDIATE RELEASE — July. 19, 2017
First Command Reports: Military families with financial advisors primed to save under new retirement plan
The First Command Financial Behaviors Index® reveals that career military families who work with a financial advisor are more likely to participate in the Thrift Savings Plan than their do–it–yourself colleagues.
FORT WORTH, Texas – Career military families who work with a financial advisor are considerably more likely to contribute to the federal government's Thrift Savings Plan than their do–it–yourself colleagues, a dramatic gap that highlights the potential benefits of professional coaching under the new Blended Retirement System.
The latest results of the First Command Financial Behaviors Index® reveal that 61 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 participate in the Thrift Savings Plan, or TSP. That's 21 points higher than the 40 percent participation rate for families without an advisor.
Participation in the TSP will be key to making the most of the government benefits offered under the Blended Retirement System. The new system, which goes in effect in January, reduces the guaranteed lifetime income from the traditional military pension by 20 percent. That reduction will be offset in part by automatic and matching TSP contributions. To earn the full TSP match, service members must contribute 5 percent of their pay.
“These survey results suggest that financial advisors can play a critical coaching role in the new military retirement system by encouraging service member families to participate in the TSP,” said Scott Spiker, chairman/CEO of First Command Financial Services, Inc. “The current above–average participation rate is a compelling indicator that financial advisors are putting the long–term financial interests of career military families ahead of their own. Financial advisors do not earn fees or commissions for recommending the TSP. We see the results of this client-first commitment in our own company, where 68 percent of active–duty clients are participating in the TSP. This compares to government data showing an overall 45 percent participation rate. We are confident that financial advisors will play a key role in helping service member families make the most of the TSP and in turn the Blended Retirement System”.
Retirement concerns are top of mind for many career military families. The Index reveals that about three quarters of career service members have viewed online training to explain their options under the new retirement system. Most military families indicate they are likely to consult a financial advisor regarding their retirement system options – particularly those who already work with an advisor (64 percent are extremely or very likely to consult their advisor versus 13 percent without an advisor).
Survey results from the first quarter revealed that service members who work with a financial advisor were also more likely than those without an advisor to contribute to retirement and savings accounts. Those with a financial advisor reported roughly $45,000 more in accumulated savings and retirement funds than their do–it–yourself colleagues. Current holdings for the two groups were $158,913 and $113,365, respectively.
“Financial advisors are effective coaches, encouraging service members to focus on positive money habits today so they can feel more certain and sure about tomorrow,” Spiker said. “They are already helping many career military clients understand the new Blended Retirement System and take the kinds of positive actions that will help them feel more confident in their long-term pursuit of financial security”.
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.