New programs offer servicemembers better financial advice
WASHINGTON — Servicemembers buying a car, getting a home mortgage or starting a college fund will soon get better financial advice through a series of new programs announced Thursday.
And they could be getting that financial savvy from their spouses, too.
The programs, sponsored by the securities regulation agency NASD, are an effort to educate troops in response to growing reports of military personnel being taken advantage of in insurance sales, mutual fund marketing and other financial schemes.
One of the centerpieces of the program will be financial management fellowships for base financial managers and military spouses. NASD Vice Chairman Mary Schapiro said that for the military finance experts, the classes will be mostly refresher courses, highlighting some common pitfalls and abuses troops face in financial transactions.
But the military spouses fellowship will be a full 18-month program to certify participants as accredited financial counselors, allowing them to return to their bases and teach classes to other military families.
“One of the things we’re learned is that we have to educate the entire family when we’re talking about the military because of the frequent duty station changes, the deployments,” Schapiro said.
“One spouse is often out of town, out of the country. It’s important that the spouse who remains at home has the ability to handle the family finances.”
Applications for the spouse fellowship are being handled through the National Military Family Association. Chief Operating Officer Bonnie Fedchock said the group already has nearly 3,000 applications for 200 spots, but officials are looking to expand the program. The group began taking applications last month.
A Web site, www.saveandinvest.org, is designed to give military personnel the basics of financial management. The new site also includes links so they can research insurance companies and mutual funds, to see if they’re being taken advantage of by an unscrupulous salesperson.
Funding for the program, nearly $7 million, came from a settlement in December 2004 with First Command Financial Planning for improper sales of certain mutual funds to servicemembers.
Other cases involving payday lenders and illegal insurance sales prompted defense officials last fall to revise policies governing marketing on military bases, including the creation of an online list of blacklisted, frequent-problem vendors.
Undersecretary of Defense for Personnel and Readiness David Chu stopped short of supporting a full ban of such salespeople from military bases, citing legal problems, but did voice support for legislation putting a cap on the rates payday lenders can charge.
“And the best defense for these cases is the servicemember understanding, ‘This is a bad deal, I should not make this,’” he said.
The new education programs also got a boost from several members of Congress, who said troops and their families deserve this type of financial advice for their service and sacrifice.
“We’re hearing from young women — 18, 19, 20 — who were being given responsibility for all the payments, all the credit cards, all the financial aspects of the family,” said Sen. Hillary Clinton, D-N.Y. “…These families have a big enough burden to bear already.”
Assistance is available to avoid financial schemes
Among the tools unveiled Thursday to help troops learn more about paycheck management is a new Web site, www.saveandinvest.org, which provides information on a variety of financial topics:
The site calls them “legal loan sharks” and warns troops to “avoid these money drains.”
Along with a list of questions all troops should ask before buying a car, the site features information on leases and used vehicles.
Included in this section is a “How Much Home Can You Afford” tutorial and a list of pros and cons of mortgages.
The site offers advice on how to start a college fund, including information on tax-friendly investments.
Features here include both information on the Thrift Savings Plan and other investment options for troops planning ahead.