Career military members performed worse than civilians on a financial literacy test, in a growing disparity between those serving the country and the general population, a new survey shows.
Officers and senior non-commissioned officers from all branches of the military received an average grade of 57% on a quiz of their proficiency with money and investing — well below the mean of 69% among civilians and the lowest grade in the 11-year history of the survey, according to the First Command Financial Behaviors Index released earlier this year by veteran and service member-focused wealth manager First Command Financial Services.
Service members reflect a U.S. adult population whose
Soldiers often lose sight of financial matters or don’t find time to attend to them simply because “most people get into the military to be part of a cause and support a cause bigger than themselves, and that's to defend this country and all of our freedoms,” First Command CEO Mark Steffe said in an interview. Servicemembers have viewed “a lot of PowerPoint presentations” since a 2018 change to their Thrift Savings Plan accounts gave them a higher match on their contributions from the government but a lower pension overall, Steffe said.
“In a sense, that transferred risk over to the military members, and it required them to be more informed about the decisions they’re making about their retirement,” Steffe said. “What we would like to see is for the military to strike up public-private partnerships. … We would love to see them outsource this and partner with private industry.”
First Command is an independent wealth manager based in Fort Worth, Texas, with a bank, brokerage and RIA spanning 600 advisors and $41.5 billion in assets under management. The company hired behavioral research firm Sentient Decision Science to conduct the survey, which reached about 200 officers and senior NCOs with pay grades of “E5” or above earning at least $50,000 per year and 300 other Americans aged 18 to 70 with incomes starting at that level. The company’s tests aim to track a swath of “military-focused Middle America,” Steffe said.
Career military members have taken part in financial education programming in much wider numbers than the general population: at least 73% of the service members said they had completed money literacy training, while just 21% of the civilians had done so. Still, among that group, 47% of the civilians answered at least seven of the nine queries correctly, and only 17% of the career military members got seven or more right. This year’s quiz covered topics relating to inflation, long-term investing, banking, credit scores and home buying.
Service academies should add financial literacy to their coursework for incoming service members, according to Edwards Wealth Consultants’ Cedric Edwards, an Air Force veteran whose wife is also an Air Force veteran. The Garden Ridge, Texas-based advisor’s family has two sons who are West Point graduates, a daughter who is an alum of the Naval Academy and another daughter who is currently an Air Force Academy cadet.
“I think the military needs to start a more in-depth program for financial literacy,” Edwards said. “These are basically on the level of Ivy League schools, but they're not teaching financial literacy.”
Since research has shown that family members of career military officers often make most, if not all of the day-to-day financial decisions during deployments, the guidance should include wives and husbands as well, Steffe said.
“It leaves the military spouse to run the household and take care of the kids,” he said. “A lot of this financial training is not geared toward the spouse.”
