FORT WORTH, Texas--(BUSINESS WIRE)--At a time of heightened concerns related to military retirement benefits, career service members who partner with a financial advisor are showing the greatest confidence in and commitment to their own lifelong security.
Third quarter 2017 results of the First Command Financial Behaviors Index® reveal that 77 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 receive financial coaching from a professional advisor are extremely or very confident in their ability to retire comfortably. That compares to just 21 percent of military families without an advisor.
That higher level of confidence lines up with a greater commitment to putting dollars away for the future. Sixty-two percent of middle-class military families who work with a financial advisor reported owning a retirement account during the third quarter. That’s 16 points higher than those who do not use an advisor. They also reported contributing more on average than their do-it-yourself counterparts – $995 per month versus $410. Also, these families were more likely to maintain long-term savings accounts (49 percent versus 28 percent) and they contributed more dollars than those without an advisor. Reported monthly average contributions for the two groups were $544 and $319, respectively.
“Retirement planning is hard for anyone, but it will be particularly difficult for service members in the months ahead as they deal with new uncertainties related to military retirement benefits,” said Scott Spiker, chairman/CEO of First Command Financial Services, Inc. “The military’s new Blended Retirement System represents one of the most significant changes to military benefits in 70 years. The long-term financial security of our service member families under the new system is built upon a transition from a simple, predictable benefit to a complex, option-laden program in which the retiree owns much of the risk. It’s no surprise that retirement readiness is at the top of financial concerns for many career military families. Our survey findings continue to reveal that those who work with a financial advisor are more likely to save – and put away more dollars – than those who save and invest on their own. By coaching their clients to build strong money behaviors, financial advisors help families deal with the uncertainties of the new system and pursue lifelong financial security.”
The Index reveals that most survey respondents say they are likely to consult a financial advisor regarding their Blended 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 22 percent of those without an advisor.
Near-term financial confidence is also stronger among those who work with a financial advisor. Seventy-eight 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.
About half (53 percent) of military families who work with a financial advisor report owning short-term savings accounts. That’s about the same rate as seen among do-it-yourself military families. But those working with a financial advisor put in considerably more dollars than those without an advisor. Monthly average contributions for the two groups were $631 and $318, respectively.
This ongoing commitment to saving for both short- and long-term needs is reflected in the financial assets of those who work with a financial advisor. They report an average of nearly $130,000 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.
The savings trend is set to continue. Military families with a financial advisor are more likely to say they will increase their positive financial behaviors in the months ahead. Fifty-seven percent intend to increase their savings. That’s considerably more than the rate reported by those without an advisor (32 percent). About half (52 percent) of those with an advisor expect to bump up their debt payments. In contrast, just 22 percent of those without an advisor expect to put more dollars towards paying down debt.
The mix of positive attitudes, behaviors and intentions during the third quarter helped push the overall Index score ahead seven points to 152. That’s the highest score since the third quarter of 2015, when the Index hit 158. (The Index is set to a benchmark of 100, which was assigned when the Index was launched in 2008.)
“Surging confidence among military families who work with knowledgeable advisors show the benefits of personal financial coaching on continued planning and preparedness,” Spiker said. “Military families who partner with a professional are ideally positioned to maintain feelings of financial confidence today as well as pursue their retirement readiness for tomorrow.”
About the 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. http://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.
First Command Financial Services, Inc., is the parent of First Command Financial Planning, Inc. (Member SIPC, FINRA), First Command Advisory Services, Inc., First Command Insurance Services, Inc. and First Command Bank. Financial planning services and investment products, including securities, are offered by First Command Financial Planning, Inc., a broker-dealer. Financial planning and investment advisory services are offered by First Command Advisory Services, Inc., an investment adviser. Insurance products and services are offered by First Command Insurance Services, Inc., in all states except Montana, where as required by law, insurance products and services are offered by First Command Financial Services, Inc. (a separate Montana domestic corporation). Banking products and services are offered by First Command Bank. In certain states, as required by law, First Command Insurance Services, Inc. does business as a separate domestic corporation. Securities products are not FDIC insured, have no bank guarantee and may lose value. A financial plan, by itself, cannot assure that retirement or other financial goals will be met. First Command Financial Services, Inc. and its related entities are not affiliated with, authorized to sell or represent on behalf of or otherwise endorsed by any federal employee benefits programs referenced, by the U.S. government, or the U.S. armed forces.