News Column

First Command Report Shows Financial Advisors Bump Up Savings Behaviors of Military Families

February 13, 2014

At a time when many military families are intensifying their savings habits, those who work with a financial advisor are putting away considerably more dollars than their do-it-yourself colleagues, according to new survey.

According to a release, the First Command Financial Behaviors Index reveals that middle-class military families (senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000) who work with a financial advisor are putting almost twice as much money into short-term savings as those who don't work with an advisor. During the fourth quarter, their average monthly rate totaled $1,228. In contrast, those without an advisor averaged just $683.

The impact of working with a financial advisor is particularly evident in long-term savings behaviors. The fourth quarter survey results reveal that military families who work with a financial advisor put an average of $1,133 per month into long-term savings. That's about four times the $278 per month socked away by those who don't work with an advisor. And the average monthly retirement savings rate was $1,657 for those with an advisor versus $1,055 for those without.

"All told, servicemembers who work with a financial advisor are saving an average of $2,000 more per month than those who go it alone," said Scott Spiker, CEO of First Command. "This dramatic savings gap highlights the positive influence a trusted financial advisor can have on the money habits and long-term financial security of our men and women in uniform. These financial professionals are helping to heighten fiscal discipline in a population that has become increasingly concerned about the impact that sequestration and defense downsizing may exert on military pay, benefits and career viability. Bumping up savings behaviors is an ideal way to help these families get their household finances squared away in preparation for an uncertain fiscal future."

The savings trend is expected to continue for at least the near future. Most survey respondents indicated that they do not foresee making a change in their savings behaviors in the coming months. These and other financial intentions, attitudes and behaviors that are tracked in the monthly surveys helped the quarterly Index score hold steady in the fourth quarter to close out the year at 118, virtually unchanged from 117 in the third quarter and a high for the year.

"Although military families continue to encounter challenges, they are steadfast in their proactive stance," Spiker said. "And it is especially worth noting that those who work with financial advisors are displaying many of the key behaviors we associate with financial security and feeling confident in the future."

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.

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