Saturday, July 24, 2004
The New York Times has this extensive article on predatory financial product sales practices targeting troops. Examples: Contractual plan mutual fund products with 50% front end loads on first year commissions. Life insurance salesmen posing as benefits counselors and VA reps, giving briefings to soldiers, and signing them up with expensive whole life insurance policies under the fraudulent pretense of official status.
I remember one guy who pitched to my unit a few years back, claiming to be a benefits counselor. He presented with some official looking brochures and pamphlets. He asked for and got some time on the training schedule.
When he was briefing, and it became clear he was a commissioned sales agent, and not a VA counselor, and he did not disclose that to the leadership of the unit from the outset, I told him to pack up and get his ass out of our armory.
It's been a problem for years. The Army press covers the practice from time to time. But Army leaders and NCOs are not financial services aces, and don't know how to separate the shite from the Shinola.
I'm not hostile to the idea. If someone from an organization with a long history of providing quality services to soldiers at a reasonable price wanted to come set up a table, or borrow a classroom to give a briefing AFTER duty hours, I'd be fine with it, and even help the guy publicize it.
By that I mean, if USAA or TIAA-CREF wanted to lend us a CFP for the day, I'd be very supportive. I think the military ought to encourage reputable financial services companies to make their pitches, right alongside the car salesmen from AAFES. I'd much rather see soldiers open an IRA or Section 529 plan at the end of a deployment than blow their money on a truck.
But while I saw many new car sales reps in Jordan, Iraq, and Kuwait, I didn't see a single serious effort to sell financial products or advice to soldiers at any price.
I wrote a brief guide to basic financial planning for E-1's to E-4's, which got passed around a lot. But the good low-cost financial services companies are not reaching out to the grunt demographic.
(knock knock knock...Helllooooooo!!! TIAA-CREF!!!!!! Barclays!!!!!! Vanguard!!!!! Are you there????)
The name of the company is First Command. The Times caught a lot of brass on its advisory board--Anthony Zinni, for instance. They missed the current Army Chief of Staff Peter Schoomaker, though.
Which gives you some idea of why these practices are tolerated on military bases. Because flag officers are the biggest ones drinking the Kool-Aid.
In all, this is the article that Army Times SHOULD have written ages ago. But failed. Instead, they were too busy cashing advertisement checks from those full color full page First Command ads.
The Army Times should be ashamed of itself. And kudos to the New York Times for catching on to it. It's not exactly a BRAND new story--Kiplingers hit it in 2002, and I hit it in January of last year) but this is easily the best and most thorough treatment of the subject I've seen.
Watch for a response on First Command's website attacking the credibility of the journalist, claiming she doesn't understand contractual plans and is biased against them.
Baloney.
She's a more than competent personal finance journalist, and knew exactly who to call. She called the Investment Company Institute. She called Jack Bogle, the inventor of the Index fund. She called a member of the National Association of Personal Financial Advisors.
She understands the issues. She did her homework. Don't let First Command drag her name through the mud on their website without calling them on it.
Splash, out
Jason
I remember one guy who pitched to my unit a few years back, claiming to be a benefits counselor. He presented with some official looking brochures and pamphlets. He asked for and got some time on the training schedule.
When he was briefing, and it became clear he was a commissioned sales agent, and not a VA counselor, and he did not disclose that to the leadership of the unit from the outset, I told him to pack up and get his ass out of our armory.
It's been a problem for years. The Army press covers the practice from time to time. But Army leaders and NCOs are not financial services aces, and don't know how to separate the shite from the Shinola.
I'm not hostile to the idea. If someone from an organization with a long history of providing quality services to soldiers at a reasonable price wanted to come set up a table, or borrow a classroom to give a briefing AFTER duty hours, I'd be fine with it, and even help the guy publicize it.
By that I mean, if USAA or TIAA-CREF wanted to lend us a CFP for the day, I'd be very supportive. I think the military ought to encourage reputable financial services companies to make their pitches, right alongside the car salesmen from AAFES. I'd much rather see soldiers open an IRA or Section 529 plan at the end of a deployment than blow their money on a truck.
But while I saw many new car sales reps in Jordan, Iraq, and Kuwait, I didn't see a single serious effort to sell financial products or advice to soldiers at any price.
I wrote a brief guide to basic financial planning for E-1's to E-4's, which got passed around a lot. But the good low-cost financial services companies are not reaching out to the grunt demographic.
(knock knock knock...Helllooooooo!!! TIAA-CREF!!!!!! Barclays!!!!!! Vanguard!!!!! Are you there????)
Another product heavily promoted to military people is a type of mutual fund in which 50 percent of the first-year contributions are consumed as fees, a deal considered so expensive that such funds all but disappeared from the civilian market almost 20 years ago.
The name of the company is First Command. The Times caught a lot of brass on its advisory board--Anthony Zinni, for instance. They missed the current Army Chief of Staff Peter Schoomaker, though.
Which gives you some idea of why these practices are tolerated on military bases. Because flag officers are the biggest ones drinking the Kool-Aid.
That argument does not satisfy people like Capt. James A. Shaw, commander of the Second Battalion's 325th Airborne Infantry Regiment at Fort Bragg, N.C.
In all, this is the article that Army Times SHOULD have written ages ago. But failed. Instead, they were too busy cashing advertisement checks from those full color full page First Command ads.
The Army Times should be ashamed of itself. And kudos to the New York Times for catching on to it. It's not exactly a BRAND new story--Kiplingers hit it in 2002, and I hit it in January of last year) but this is easily the best and most thorough treatment of the subject I've seen.
Watch for a response on First Command's website attacking the credibility of the journalist, claiming she doesn't understand contractual plans and is biased against them.
Baloney.
She's a more than competent personal finance journalist, and knew exactly who to call. She called the Investment Company Institute. She called Jack Bogle, the inventor of the Index fund. She called a member of the National Association of Personal Financial Advisors.
She understands the issues. She did her homework. Don't let First Command drag her name through the mud on their website without calling them on it.
Splash, out
Jason
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