Financial advisors with a military background should leverage their expertise to help military personnel and veterans plan their financial futures, says Lucila Williams, founder and president of Lotus Financial Partners in Denver, Colo.
Williams spent five years in the U.S. Army and has used that experience to build relationships with members of the military. Changes to the military pension system that go into effect in 2018 make it imperative that members of the military get advice before making financial decisions, she says.
“Clients are asking me if they should opt-in to the new pension system. I tell them to stick with the traditional, guaranteed pension,” says Williams, who established her firm four years ago and now has $25 million in assets under management. In addition to military personnel, Williams works with small business owners and others.
Studies by First Command Financial Network, a military financial services organization, have shown support growing for the traditional pension system, rather than incorporating elements of a defined contribution plan like the new plan would do.
“When working with members of the military, it helps to have a military background,” Williams says. “This is a real community: knowing the language and knowing that you served, helps in building a relationship.”
An advisor needs to understand there are two distinct military communities that need different financial services.
The enlisted members who entered the military straight out of high school may need financial training in the basics, says Williams. “They have never done a budget before and this may be their first paycheck.”
Officers and senior enlisted members are probably planning to stay in the military for 20 years and need different financial services.
“They have more financial literacy and need help maximizing their benefits. They also need assistance transitioning to a civilian job,” Williams says. “So many of their benefits are built in while they are in the military that they need assistance on how to keep their retirement on track.”
Another factor, according to Williams, is that the spouse, who remains at home during a deployment, is the one who usually ends up making the family financial decisions.