First Command Reports: TSP Participation Strongest Among Military Families With A Financial Advisor

The First Command Financial Behaviors Index® reveals that
middle-class 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–(BUSINESS WIRE)–Career military families who work with a financial advisor are more
likely to participate in the federal government’s Thrift Savings Plan
(TSP), reinforcing the value of professional guidance in amassing
retirement assets.

The First Command Financial Behaviors Index® reveals that 53 percent of
middle-class military families (commissioned officers and senior NCOs in
pay grades E-6 and above with household incomes of at least $50,000)
with a financial advisor participate in the TSP. That’s ten points
higher than the 43 percent participation rate for families without an
advisor.

“These survey results strongly suggest that financial advisors are
reinforcing and encouraging participation in this valuable government
savings vehicle,” said Scott Spiker, CEO of First Command Financial
Services, Inc. “That is a notable finding as financial advisors have no
direct financial incentive to encourage this higher level of
participation in TSP. They do not earn the fees or commissions they
might receive from recommending mutual funds and other investments
commonly offered in the financial planning industry. The above-average
participation rate in TSP is a compelling indicator that financial
advisors are putting the long-term financial interests of career
military families ahead of their own. We see the results of this
commitment in our own company, where 68 percent of active-duty clients
are participating in TSP. This compares to government data showing an
overall 42 percent participation rate.”

These findings are particularly important today as lawmakers are
changing the traditional military pension to a blended program that
includes government matching contributions to TSP accounts. As part of
the 2016 National Defense Authorization Act, Congress has approved a
major overhaul of the military retirement system that includes:

  • Automatic government contributions of 1 percent of a new entrant’s
    annual salary to the TSP with full vesting after two years of service.
    Government matching (up to 4 percent of military pay) will be
    contributed to a service member’s TSP account, with a 26-year sunset
    on matching contributions.
  • Reducing the post-20-year military retirement from 50 percent of
    high-three salary to 40 percent. This reduction will be offset by a
    continuation bonus at 12 years of service.
  • A lump sum payout option of 25 percent or 50 percent of total
    anticipated retirement pay until the retiree reaches 60 years of age.
    The remaining reduced pension amount will be paid monthly.

“Under the new law, the TSP will become an even more important and
valuable retirement savings tool for our men and women in uniform and
their families,” Spiker said. “A reduced lifetime pension benefit means
that service members will need to become increasingly diligent about
saving for their own retirement future. We are confident that financial
advisors will play a key role in helping service member families
negotiate the new retirement landscape and make the most of the TSP
benefit.”

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 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.

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.

Contacts

First Command Financial Services, Inc.
Mark Leach, 817-569-2419
Media
Relations
msleach@firstcommand.com