Why Soldiers Need Financial Help

Illustration by: Robert Carter

Drive by any military installation in the U.S. and you’ll see a similar landscape: used-car dealers, payday lenders and rent-to-own stores. Their signs blare at base residents: “We finance service members!”

Why are soldiers easy targets for financial predators? There are a couple of issues. Part of the problem is that, under Defense Department rules, commercial creditors can garnish up to 25% of a soldier’s wages — making service members an attractive target.

The other issue is ignorance — soldiers who don’t understand basic financial principles, who think that since they have checks in their checkbook, they have money. As a veteran, I’ve seen this myself. I’ve had to counsel soldiers in my unit to pay down debts on payday loans. And of course, the military is not a high-paying profession in the first place.

Compounding the problem, certain “financial services” firms hire former officers and senior non-commissioned officers to sell high-commission insurance products and front-loaded mutual funds to the soldiers and junior officers whom they’ve just led. The newly minted sales reps show pretty charts and explain that, if the markets go down, people who didn’t pay front loads would flee, creating more opportunity to buy more funds for those who did pay up front.

I fell for the pitch myself. The salesman was a former company commander in my battalion. He drove a convertible BMW. At the time, his charts and graphs all seemed to make sense.

I should have known better. Here I was, toting around a degree in engineering from West Point, and I fell for the fallacious reasoning. Soldiers with less education stood no chance.

It wasn’t until a couple of years later, when I started reading up on basic personal finance, that I realized what a raw deal service members were getting. That’s when I decided I wanted to be a financial planner.

Fast-forward about 10 years: I passed the CFP exam and, after completing the sale of another company, I established my own RIA as an hourly, fee-only firm. I wanted to be everything those “advisors” prowling military bases weren’t: independent, unaffiliated and conflict-free.

I didn’t want to feel the pressure of chasing dollars for commissions or AUM, which is why I built and sold a company before becoming a planner; I wanted to be financially independent.

Establishing my own RIA has allowed me to offer pro bono work for veterans and service members. Each Veterans Day, I give away my Winning With Money course to anyone affiliated with the military.

Challenges remain. There is no venue through which I could go down to the nearest base — in my case, Fort Hood — and spend a day giving free advice to anyone who walks in. The military distrusts the planning profession, and rightfully so. I hope they figure out a way to sort out those who view soldiers as walking piggy banks from those of us who truly want to help them sort out their money problems. 

Jason Hull is a financial planner in Fort Worth, Texas.

Read more:

Next in Industry
More in Industry See All »
Comments (8)
Great article. Sorry to commission based planners but most folks I encounter who have purchased a commission based product have no idea what they bought. Annuity living benefits are very complex.
It has also been my experience that most advisors do not understand the products themselves, particularly the annuities.
Not sure what volunteer opportunities are available to assist our service people - perhaps you could share some that you are aware of.
Posted by William t | Friday, May 16 2014 at 2:07PM ET
Great story, Jason, but you left out two other fixtures on the military installation landscape: pawn shops and tattoo parlors. It's a shame that businesses take advantage of the very young people who put their lives on the line so these business can stay open.
Posted by Jeb C | Wednesday, May 07 2014 at 4:33PM ET
This is reminiscent of the bad old days of USPA & IRA and the financial tumult they created through their 8.5% front load funds and the complete lack of any financial training of their 'advisors', most of whom were former service members, whose only training was their marketing material. Yes, it did get some service members, like me, saving....but at what cost?

I agree that investing is NOT what young service members need...they need fundamental personal financial education on such topics as personal debt, recognizing lifestyle and its costs, the concept of savings, household risk, guardianship of children and so forth.

As a retired AF Officer and Certified Financial Planner...and one who was made responsible for briefing all incoming personnel on the important matters of personal finance at my final assignment (Andrews AFB) in the late 90s, my sense is that young service members suffer from what all young people suffer from when it comes to personal financial responsibility: youth, short-sighted wants and live for today. The military is no different than any other employer....except that it has a much higher proportion of its workforce as youth, which amplifies this problem. Making personal finance a mandatory part of post basic-training education makes perfect sense to me.

Bruce Miller, MAJ, USAF, MSC (ret), CFP
Posted by Bruce M | Wednesday, May 07 2014 at 1:55PM ET
CHRISTOPHER D, while some of my thoughts ran along the same lines as yours (the advisors I'm aware of that ran heavy front-loaded plans or "systematics" can't anymore) I would still say that there are some people who are acting under the guise of being advisors and justify their actions by saying to themselves, "I'm helping these service members prepare for their future and they wouldn't have done that without me." Say what you want about a particular model or not, but the ultimate goal should always be to get the service member into investments that give them the best chance to meet their goals within their risk tolerance and at the lowest fee structure available so their money goes to work for them. If an advisor does that well, the rest should take care of itself. Oh, and the writer's name was Jason, not Jeff.
Posted by Keris S | Wednesday, May 07 2014 at 8:55AM ET
I am Michael Chindamo, Co-founder of Fautores Family Offices.

I support Jason Hull. The problem that I have seen over the past 35 years is that the approved vendors in this space are largely product driven and for the most part incompetent. In reflection on Chris's comments above, I would suggest that his intent might be good, but the infrastructure he is involved in requires far more disciplines, personal education as well as a FIDUCIARY only commitment.

The US Serviceman niche really needs behavoral counseling more than anything else. This is first and foremost. It is most important to understand the nuances of what the servicemen family dynamic is all about. Once the proper education about life, family values, life transitions and more is accomplished, then the basics of a written financial plan can be administered.

This process takes time, commitment by all advisors and all family members and counseleors and needs to be measured. Once the relationship matures, then basic financial planning concepts can be addressed. The US serviceman do not have the funds to support this process. Thus, the US would need to fund this type of required education. The US VA does address many problems, but that is not proactive. They are dealing with the after effects of war. What would be effective is pre-paid for life transition education that is required for all family members to attend. This would be most effective if not only immediate US serviceman and and family attend but also their parents as well. It is critical to establish a family and/or friend foundational network so that there is a constant support structure in place that can help address life changing events.

I know that this system would strongly help preventing the problems that develop in US Servicemans lives and families. I strongly believe that military families at least deserve this. They earn it every day and we all should be very supportive of this effort. Unfortunately, funds for projects of this nature are often not available as well as the red tape to get it started is near impossible to overcome.
Posted by Michael C | Wednesday, May 07 2014 at 8:48AM ET
Jason - I recently seperated from the military and am also trying to bring some change in this arena. Shoot me an email if you get a chance, at cdcampbell@wradvisors.com I would love to hear a little more about what you are doing.
Posted by Chris C | Wednesday, May 07 2014 at 8:29AM ET
To besmirch other honest advisors who have a different model (A-share or C-share load) to lift yourself up is shameful, Jeff. When will advisors realize that marketing yourself as a saint and everyone else is a charlatan or "financial predator" does the whole profession harm.
Posted by CHRISTOPHER D | Monday, May 05 2014 at 1:30PM ET
Good on you, Jason Hull. I have seen my fair share of servicemen in my part of the world being preyed on by financial product salespeople and getting into debt, though the situation is nowhere near the alarming state of affairs in the U.S. An hour's worth of financial education goes a long way.
-Geraldine Lam, CFP, Singapore.
Posted by Geraldine L | Monday, May 05 2014 at 11:03AM ET
Add Your Comments:
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.