The formula for developing a financial plan is simple. You visit an advisor’s office, discuss your financial assets as they are and how you’d like them to be and are prescribed a plan to help you get there. While this might work for civilian families, there are several reasons why this approach isn’t optimal for military families.
Well-intentioned advisors might have logos on their websites or social media profiles to show their support for the military or their companies might take pride in hiring veterans; but not all advisors have the knowledge and experience to help military families pursue their financial goals. Let’s dig into the reasons why military families should choose a financial advisor who knows the military lifestyle. We’ll also discuss how to ensure your advisor has what it takes to help you pursue your financial goals.
They understand military pay and benefits
Military pay and benefits are complicated. In addition to typical items like salary, deductions and taxes, military paychecks can include housing allowance, clothing allowance, cost-of-living allowance, hazard pay, special duty pay and more. Most of these things can change depending on your duty station and, even within that location, your assignment on a given base.
And then there are military benefits. Depending on rank, duty station, and time in service, service members can qualify for retirement, health coverage, educational benefits for themselves and their dependents, and more. At First Command, we believe the Thrift Savings Plan (TSP) should be the go-to option for service members investing in their retirement and our advisors coach their clients accordingly.
While these things can be taught, if an advisor isn’t intimately familiar with the military lifestyle and/or supported by a company that provides this specialized training, a lot can be left to the service member to understand and leverage on their own. Former active duty soldier and military spouse, Jennifer Berlin, knows this experience well.
“1% of the nation’s population will serve in the military. This 1% deserves 99% of our efforts,” said Berlin, First Command chief of staff, advisor operations. “Having an advisor who truly doesn’t understand the lifestyle, even if they have the best intentions, can be exhausting and tough for service members to work through the nuances.”
Having a financial advisor who can empathize with your experiences and lifestyle makes such a critical difference in the planning process.
They speak your language so you don’t have to translate
In a way, military families are bilingual. They speak civilian and an entirely different language that only military families know. Terms like PCS, TDY, household 6, military ranks and pay scales and countless more are common vernacular for the military, but foreign to others.
The task of financial planning already may seem arduous. Choosing an advisor familiar with military terminology can simplify the process for both of you.
They might suggest benefits you didn’t know you had
Because of the complexities of military pay and benefits, sometimes service members aren’t aware of everything they’re offered. If your advisor is familiar with the military lifestyle, they can truly serve in an advisory capacity — sometimes offering financial solutions the military family didn’t even know existed.
“There are so many nuances to the rapid pace of life for military families,” said Berlin. “If you have someone who hasn’t lived it themselves and hasn’t taken the time to study it, you can really mess up a very simple decision-making process.”
Examples of mistakes advisors might make include suggesting investing or saving money that’s only temporarily coming in, suggesting a Personally Procured Move (formerly known as a DITY or do-it-yourself move), without knowing the full scope of what’s reimbursed, or improperly advising on key benefits like Servicemembers’ Group Life Insurance (SGLI) or the Survivor Benefit Plan (SBP).
Find an advisor who knows the military lifestyle
Four out of five First Command advisors are veterans or military spouses. Organizations that serve a mostly-military population like First Command train all advisors on relevant factors like how to read a military pay stub, understanding current benefits, and even on common military jargon. We also waive financial planning fees for active-duty military members and have more than 170 offices worldwide.
Whether you’re planning for retirement, making a major purchase, building your savings or more, you can simplify the process by working with a financial advisor who is intimately familiar with the military lifestyle, military pay and benefits.