I want to give a big shout out to Kate Horrell.  She tirelessly provides information and support in the financial best interest of military families.  She recently had a conversation with me and my friend Adrienne over at Clear Insight Financial Planning about our new network of military-focused comprehensive financial planners.  [link to Kate’s post]

Here is my full exchange with Kate:

What is the Military Financial Advisor Association? And what are the qualifications to belong?

MFAA is a group of certified, fee-only financial planners who have lived the military lifestyle.  We speak the military language of acronyms.  We understand the unique pays and benefits that you can and should exploit as part of your long term financial plan.

The founding members of the association came together through their affiliation with the XY Planning Network, another larger group of fee-only planners.  All XYPN members are sworn fiduciaries who are able to serve their clients through virtual services.  No commissions, no product sales, no minimum asset requirement.  Your best interests and needs come first at all times.

Why is there a need for an association of military financial planners?

Let’s revisit the idea of “being a fiduciary”: advice that is always in the best interest of the client.  

Many financial advisors out there will work with clients and get them lined up with perhaps appropriate investments and products for their goals.  Often times, those financial solutions are what the advisor’s company sells and nets that advisor the best commission.  We call this the “suitability standard”, somewhat akin to buying a suit off the rack that just fits.  An advisor using a “fiduciary standard” goes further, advising a client on what would be in his best interest.  Not just a suit that fits but one that makes him look good, too!

The military community is a favored target for exploiting fears about securing the financial future of their families.  Life insurance products are sold as a solution for nearly every financial situation.  The military pension system and the TSP are amazing retirement solutions that sometimes get a bad rap from the financial services industry simply because they have no equivalent product to sell.

Aside from investment and insurance products, a good financial planner will understand the ins and outs of military tax advantages and use those consistently to help grow the assets of a military household.  The advisors in the MFAA will also have a broad knowledge of all the benefits due to veterans and their families and how to incorporate them into a good comprehensive financial plan.

How do folks know when they are ready to use the services of a financial advisor?

Most people seek the service of a financial advisor when the complexities of their financial situation start to outstrip their capacity to “know all the things”.  There is a dizzying array of financial services and products and information out there.  Your relative might know a great advisor and want to refer you, but even a financial advisor can’t know ALL the things.  That is why having an advisor who specializes in your military financial life makes a lot of sense.

All that being said, most installations offer the services of an Accredited Financial Counselor®.  If budgeting or credit/debt management are your main concerns, those needs can be met by the AFC® who serves your area.

It is time to engage a Certified Financial Planner™ when all the competing financial goals and priorities need to be developed into a longer-term plan.  This includes tax planning, risk management (appropriate insurance coverage), retirement savings and income planning, college savings, home financing, employment benefits, managing rental property, starting a business, and the BIG ONE, making the transition from military to civilian life.

In addition, the financial services industry is changing to serve more households than just those who have already accumulated significant investment assets.  The “minimum asset requirement” has been a barrier to access for professional planning advice because up until recently, advisors were paid by some percentage of the assets you invested with them and they managed.  A more modern model, being promoted in particular by members of XYPN, looks more like a monthly gym membership, taking an annual financial planning fee and splitting it out into monthly payments.  This works especially well for households with a steady income who are actively accumulating assets but would not meet the old minimum assets standard.  Members of MFAA know that you don’t get rich by joining the military, but they also know how to use the pays and benefits you have to build a secure financial future and be retirement ready!

What questions should people ask when choosing an advisor?

Choose an advisor who wants to EDUCATE you about your money and help you make INFORMED DECISIONS.  If you feel like you are being sold something that you don’t understand, then you are in the wrong place.

Some questions to ask might be:

Do you have any personal military background?

How long have you worked with military families?

How do you communicate with clients and how often?

How will we work together when I PCS again?

How are you paid for your work? (fee-only, commissions, etc)

Do you sell any products?

What is your investment management philosophy?  (hint: you want investments to serve a comprehensive plan)

How will our plan change as we approach retirement?

Do you advise on social security claiming strategies?

Do you look at my taxes?

If you think it’s time for professional help in managing “all the things”, you can schedule a call with me here.  It’s free.  It’s a numbers-free conversation.  It’s all about you!

Hope to talk to you soon!


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