First Command Financial Planning

First Command Financial Planning, Inc.
Privately held companies
Industry Financial Planning
Founded 1958
Headquarters Fort Worth, Texas
Key people
 James N. Lanier, Chairman of the Board
J. Scott Spiker, Chief Executive Officer
Products Mutual Funds, banking, life insurance
Website www.firstcommand.com

First Command Financial Planning, Inc. is an investment adviser and a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), all 50 states, and the District of Columbia. It is a member of the Securities Investor Protection Corporation (SIPC).[1] First Command is recognized in the financial planning industry as an FPA Alliance firm, one of only two companies ever to receive this elite recognition from the 27,000-member Financial Planning Association.

First Command provides personalized services through locally based trained and licensed Financial Advisors and through its Home Office in Fort Worth, Texas. The company offers advice on securities, with an emphasis on mutual funds, annuities, life insurance, and municipal funds (including Section 529 Plans). Through related companies it offers insurance and banking products and services.[2] As of December 31, 2009, First Command had more than 285,000 client families, $14.7 billion in managed assets, $51.7 billion in life insurance policies in force and $615 million in banking assets.[2]

The company has a long history of working with military officers. In 2004, a U.S. Securities and Exchange Commission (SEC) report noted "The great majority of the firm's agents are former commissioned or non-commissioned military officers.”[3] The report was part of the proceedings in reaching a settlement with First Financial over charges that the firm "willfully violated the Securities Act of 1933 Section 17(a)(2) dealing with inter-state fraud" in marketing financial instruments to veterans.[3]

History

Early years

First Command was founded in 1958 by Carroll Payne, a retired military officer who realized that military families needed assistance in planning for their financial futures. Payne wanted to create a company that recognized and dealt with the unique circumstances applicable to United States military personnel.[4]

The company began as a broker/dealer called United Services Investment Association Inc. (USIA), which later became United Services Planning Association Inc. (USPA). USIA’s membership in the NASD (now FINRA) was approved on Jan. 21, 1959.[5] In 1963, USPA began offering financial plans to its clients, designed to promote long-term saving and investing. Dollar cost averaging and a pay-yourself-first approach were also used to encourage clients to invest on a regular basis.[6] In the mid ‘60s, USPA expanded its product offerings to include life insurance, leading to the creation of the Independent Research Agency for Life Insurance, Inc. (IRA).[5]

In 1970, USPA and IRA began operating under the combined name of USPA&IRA, a name which remained in use for the next three decades.

International expansion and corporate growth

In 1979, the company opened its first office outside the continental U.S, in Hawaii; three years later international operations began with an office in Germany.[5] A charitable foundation, now known as the First Command Educational Foundation, began in 1983.[5]

Payne died in 1984 and was succeeded by Ralph Smith, who served as chairman and CEO until his retirement in December 1985. George Talley then served as chairman and CEO from 1986–1991.[5] During Talley's tenre, USPA&IRA grew to 500 advisors and exceeded 200,000 families.[6] Lamar Smith, company president and COO, was promoted to chairman and CEO in 1992.

First Command Bank opened for business on April 21, 1997. In less than six months, the bank was posting more than 100 new deposit accounts and 50 new loans weekly.[6] In 1998, USPA&IRA went “private,” transitioning from a C Corporation to an S Corporation and later, in 2002, become 100% employee owned.[5] USPA&IRA launched a tax services program in 2001.

Name change to First Command

USPA&IRA changed its name to First Command Financial Planning in 2001.[5] The company explained that it changed its name because:

We are sometimes confused with other companies that service the military and former military clientele and whose names also start with letters “US...”. There are several such companies, but none like us and we don’t want any confusion.[7]

Charges of fraud against veterans

In 2004, a New York Times investigative report by Diana B. Henriques named First Command as being one of several investment firms engaged in deceptive marketing of financial instruments aimed at military veterans.[8] On 15 December of that year, the U.S. Securities and Exchange Commission (SEC) determined that First Command had "willfully violated the Securities Act of 1933 Section 17(a)(2) dealing with inter-state fraud" in its marketing activities targeting veterans.[3] In particular, the SEC concluded that First Command had sold mutual fund investments to veterans termed "systematic plans" that bore very high sales charges termed "front-end sales loads", "by, in part, making misleading statements and omissions concerning, among other things: (a) comparisons between the systematic plan and other mutual fund investments; (b) the availability of the Thrift Savings Plan ("TSP"), which offers military investors many of the features of a systematic plan at lower costs; and (c) the efficacy of the front-end sales load in ensuring that investors remain committed to the systematic plan."[3]

In an independent investigation, the National Association of Securities Dealers (NASD) charged First Command "with inappropriately confronting a customer who complained, failing to maintain e-mail, failing to maintain adequate supervisory systems and procedures and filing an inaccurate Form U-5 regulatory report".[9][10]

In December 2004, First Command entered into a $12 million settlement with the SEC and NASD without admitting guilt.[11] As part of the settlement, First Command agreed to offer restitution to all clients who had purchased and sold a systematic plan between 1999 and 2004, establishment of educational programs, and monitoring or prefiling.[12] People who had not terminated their systematic plan were not covered in the settlement. In September 2007, a California judge granted "Class Action" status to a 2005 lawsuit filed by systematic plan holders whose plans were active when the SEC issued its ruling on December 15, 2004.[13] In October 2008, attorneys for the plaintiffs sought court approval for a settlement.[14] The settlement was approved by the court in April 2009.

Current operations

In the mid-2000s, First Command expanded beyond the military to serve federal employees and other consumers.[15] It then began to serve small business owners,[16] REALTORS,[17] and women.[6][18]

In 2005, First Command hired Adan Araujo, the Senior Counsel for the SEC, as its new Chief Compliance Officer.[19] To that end, they recruited Bachrach and Associates Inc. According to Financial Planning Magazine, Bill Bachrach is one of the four most influential people in the financial services industry.[20] Bachrach said,

Sales techniques are what have to be used with people who don't trust someone. We'll teach planners how to quickly and predictably earn people's trust so they don't have to sell. When a financial advisor is trusted, people will give them all of their money and follow their advice without having to be sold. Don't be a salesperson. Be a trusted advisor.[21]

In anticipation of an SEC ruling requiring that all firms whose primary business is financial planning must become a Registered Investment Advisor (RIA), First Command filed with the SEC to become one in the spring of 2005. This requires their agents to obtain additional training and certifications. As RIAs, the agents could now use the term "Financial Advisors" as compared to "Registered Agents", with the former being held to a higher ethical standard.[22] The higher standards require agents to document every client interaction in great detail and apply due diligence to all investment recommendations to ensure they are in the best interests of the client.[23] The company no longer offers the controversial systematic investment plans.[1]

As of August 2006, Mary Shapiro, the NASD Vice-Chairman and President of Regulatory Policy and Oversight, continued to be critical of First Command, calling it an "unscrupulous organization" with an "awful" product. First Command's new president, Marty Durbin, responded to her criticism by stating, "It’s unfortunate that settling these charges still doesn’t mean it’s behind us. But it’s a futile effort to try to fight negative press and so we decided not to put a lot of energy that way."[24]

In January 2007, First Command Board of Directors announced that they were separating the Chairman of the Board and CEO functions. Lamar Smith, who had held both positions since 1992, relinquished the Chairman of the Board and remained Chief Executive Officer. Jim Lanier, a former President and COO and 20-year board member of First Command, became the Chairman of the Board.[25] In April 2007, the First Command Board of Directors announced that CEO Lamar Smith was departing to become Chairman Emeritus. Chairman of the Board Jim Lanier assumed the role of interim CEO and Scott Spiker took over as the company’s new Chief Executive Officer on Sept. 1, 2007. Spiker had held top leadership positions at Norwest Corp., RBC Dain Rauscher, Definity Health, Stanton Group and Destiny Health.[26]

In April 2007, The Secretan Center announced a strategic initiative to assist First Command in the "continuing, expansive transformation" of the organization. The Secretan Center is a global consulting practice specializing in cultural and leadership transformation. First Command contracted with The Secretan Center for research, coaching and other services designed to "help achieve a cultural transformation that will raise the level of inspiration of all clients, financial advisors and employees and implement sought-after corporate changes and outcomes." Dr. Lance Secretan, founder of The Secretan Center, said:

We are excited and inspired to accompany First Command Financial Services on its journey of organizational change. First Command is regenerating itself, moving assertively in a bold, new direction. The Secretan Center is committed to helping them in every way we can because their values and their hearts are in the right place.[27]

Also in 2007, First Command introduced Tailored Professional Services, a fee-based planning program.[23]

Recognition as FPA Alliance firm

In 2009, First Command was recognized in the financial planning industry as an FPA Alliance firm, one of only two companies ever to receive this elite recognition from the 27,000-member Financial Planning Association. In an April 2009 announcement, FPA President Richard Salmen said First Command was being recognized for its “commitment to professionalism in financial planning. … First Command has publicly demonstrated a commitment to putting their clients' interests first. The company has registered with the SEC as an investment adviser and all of its financial planners are registered as Investment Adviser Representatives under First Command's RIA. And, First Command has met the program requirements, including adherence to the principles of professionalism for FPA Alliance. The firm has a strong commitment to lifelong learning and leadership development." [28]

Corporate governance

First Command’s Board of Directors is the governing body of the company. The Board selects the senior executive team, which is charged with the ethical conduct of the company's business. The Board acts as an advisor and counselor to senior executives, monitoring their performance and ensuring that high ethical standards are reflected in the corporate culture. Outside directors include Mark Brickell, Chief Executive Officer and a board member of Blackbird Holdings, Inc. in New York City; Logan Dickinson, president of The CSG Companies, a comprehensive group of employee benefit planning, consulting and brokerage firms headquartered in Fort Worth, Texas; and Robert E. Kramek, a retired U.S. Coast Guard Admiral who served as Commandant of the Coast Guard before his retirement in 1998.[29]

First Command Financial Behaviors Index

First Command has developed for the middle-income market the First Command Financial Behaviors Index,[30] a research initiative that provides timely consumer data to journalists and the news media. The Index assesses trends among the American public’s financial behaviors, intentions and attitudes through a monthly survey of approximately 1,000 U.S. consumers, ages 25–70, with annual household incomes of at least $50,000. Survey results are regularly reported on by national news organizations including the Wall Street Journal,[31] The New York Times,[32] McClatchy-Tribune News Service,[33] USA Today [34] and Financial Planning magazine [35]

Financial Planner Oath

In the Spring 2010 issue of First Command’s Journey magazine, the company reiterated its commitment to the FPA Alliance program with the introduction of The Financial Planner Oath.[36] Resembling in part the Hippocratic Oath, the document is intended help members of the financial planning industry publicly state their commitment to act in their client’s best interests at all times. The Financial Planner Oath [37] is provided to new First Command Financial Advisors as part of their training, and the document is made available online to financial planners at other firms free of charge as a public service.

Affiliated companies

First Command Financial Planning, Inc. is an affiliate of First Command Financial Services, Inc., a life insurance general agency licensed to sell in all 50 states, the District of Columbia and Guam. In certain states, First Command Financial Services, Inc. is registered as a separate domestic corporation; it does business in California as “First Command Insurance Services.” First Command Financial Services, Inc. offers liability, property and casualty insurance; life insurance; long term care insurance; disability income insurance; and annuities. First Command Financial Services, Inc. is also the parent company of First Command Bank, a federally chartered savings and loan association regulated by the Office of Thrift Supervision and a member of the Federal Deposit Insurance Corporation (FDIC).[1]

Other

Notes

  1. 1 2 3 First Command.Description of Services: First Command Financial Planning Inc. Accessed 6/19/07
  2. ↑ Accessed 8/23/10
  3. 1 2 3 4 UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION (December 15, 2004). "ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 AND SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934." (Securities Act of 1933 Release No. 8513; Securities Exchange Act of 1934 Release No. 50859). Securities and Exchange Commission. Retrieved 19 April 2015.
  4. ↑ History of First Command Accessed April 22, 2009
  5. 1 2 3 4 5 6 7 “Dream Boldly: First Command Financial Services Celebrating 50 Years of History” Designed by Anniversary Press, Copyright 2008 by First Command Financial Services
  6. 1 2 3 4 “In Pursuit of the American Dream: First Command celebrates 50 years of commitment to American families” Spring 2009 Journey magazine
  7. ↑ Spring 2001 issue of Independence (the company's monthly magazine now known as First Command)
  8. ↑ Henrique, Diana (June 20, 2004). "Basic Training Doesn't Guard Against Insurance Pitch to G.I.'s". New York Times. Retrieved 2007-04-16.
  9. ↑ NASD
  10. ↑ Henriques, Inquiry Stymied
  11. ↑ Schulz, James, Aging Nation: The Economics and Politics of Growing Older in America, p 123, 2008, JHU Press
  12. ↑ SEC p. 12.
  13. ↑ Karen Jowers. First Command lawsuit ruled a class action September 27, 2007. Accessed 1/7/08
  14. ↑ Declaration of Norman B. Blumenthal in support of motion for preliminary approval of class settlement, dated OCT. 16, 2008
  15. ↑ First Command Press Release. First Command Financial Planning Expands Services to Wider Market Accessed April 22, 2009
  16. ↑ First Command Press Release. First Command commits to serving small business owners, self-employed Accessed June 17, 2007.
  17. ↑ First Command Press Release. First Command promotes benefits of long-term financial planning at 2006 REALTORS Conference & Expo Accessed June 18, 2007
  18. ↑ First Command Press Release. First Command rolls out new Web resource for women Accessed June 18, 2007
  19. ↑ Araujo, Adan. Questions and Answers. First Command Magazine Summer 2005.
  20. ↑ Speakers Roundtable Access June 18, 07
  21. ↑ Business Editors. Financial Profiles, Inc. Hosts Bill Bachrach Seminars Nov 7, 2001. Accessed (sicsic) June 18, 07.
  22. ↑ Financial job titles clarified by ruling, licenses The Arizona Republic. April 15, 2007. Accessed June 18, 2007.
  23. 1 2 3 “The New Age Of Comprehensive Financial Planning.” First Command Financial Services. May 2008.
  24. ↑ Lee, Shelley. "Marty Durbin on First Command’s ‘Perfect Storm,’ Moving Beyond, and Serving Middle America" Journal of Financial Planning. November 2006. Accessed June 18, 2006.
  25. ↑ First Command Press Release. First Command Financial Services Announces Shift in Board Leadership January 29, 2007. Accessed January 7, 2009
  26. ↑ First Command Press Release. First Command appoints Scott Spiker as new CEO August 15, 2007. Accessed January 7, 2009
  27. ↑ Business Editors. The Secretan Center Announces Strategic Initiative with First Command Financial Services April 10, 2007. Accessed January 6, 09.
  28. ↑ FPA Recognizes First Command Financial Services as FPA Alliance Firm, April 28, 2009
  29. ↑ First Command corporate governance Corporate governance Accessed 1/7/09
  30. ↑ Financial Behaviors Index
  31. ↑ Fuel for Consumer Rebound: Lower Oil Prices, Wall Street Journal, May 25, 2010
  32. ↑ The Link Between Frugality and Health, The New York Times, May 26, 2010
  33. ↑ Frugality often dovetails with healthy lifestyles, McClatchy-Tribune News Service, July 6, 2010
  34. ↑ Boomers wanting to work past retirement age find limited options, USA Today, August 10, 2010
  35. ↑ Savings Rate Slides While Debt Reduction Rises, Financial Planning magazine, August 12, 2010
  36. ↑ Our Commitment to You, Journey magazine, Spring 2010
  37. ↑ The Financial Planner Oath
  38. ↑ First Command Press Release. First Command Bank partners with Armed Forces Bowl December 12, 2006. Accessed January 7, 2009
  39. ↑ Good Morning America The Package Brigade: one woman’s effort to boost her brother’s spirit started a movement July 4, 2008. Accessed January 6, 2009
  40. ↑ First Command press release. First Command Advisor receives 2007 realLIFEstories Client Service Award September 5, 2007. Accessed January 7, 2009
  41. ↑ First Command Press Release First Command named ‘Patriotic Employer’ by Department of Defense August 7, 2008. Accessed January 7, 2009

References

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