First Command Financial Services

4200 S. Hulen St. # 534

Fort Worth, TX 76109

www.firstcommand.com

1958 – Year founded in Fort Worth

1985 – Year moved to current location

600 – Number of employees in Fort Worth

280,000 – Approximated number of military families served

74 – Percent of customers active duty or retired/separated military

$27.2 billion – Funds in managed accounts and mutual funds

$59 billion – Life insurance coverage in force

500 – Approximate number of financial advisors

8 of 10 – Ratio of veterans or military spouses among financial advisors

5 – Ranking among military brands

179 – Number of offices worldwide

25,000 – Approximate number of house donated to military and other charitable causes by First Command personnel in 2018

2 – Number of days company gives of paid time in addition to vacation and holiday leave for volunteer work

Hundreds – Number of events local offices sponsor on military bases across the country and abroad

7 – Percent of profits donated to current charitable organizations.

Source: First Command Financial Services

As commander of a B-29 – the City of Attleboro – in the 20th Air Force’s 39th Bombardment Group on Guam during World War II, Carroll H. Payne learned about the collateral wages of war in perhaps the most difficult of ways.

Of the 44 crew members in his flight of four aircraft, 24 were killed in action. It fell to Payne – who was older than many other officers – to make contact with the surviving family members back in the United States.

That taught him that not only had the families lost a husband, father or son, many had also lost the breadwinner.

After the war, at Eglin Field in the Florida Panhandle, he noticed that at the end of a month, military retirees were buying meals on credit at the Officers Club because their retirement pay had run out.

Payne swore that this would not happen to him and that it shouldn’t happen to others, and when he retired from the service in 1958 as a lieutenant colonel, he founded a company called USPA, which became First Command Financial Services, based in Fort Worth but still dedicated to the founding principle.

Scott Spiker, a 1977 graduate of the United States Naval Academy, is now chairman and CEO of First Command Financial Services, presiding over a company that now has 179 offices, about 80% of them in close proximity to a military base.

“And in some places you wouldn’t expect a company like ours to be,” Spiker says.

Like in Germany, England, Japan, Korea and Guam.

“Because our military deploys and because they transfer every three years, we want to ensure we have advisors that are face-to-face, working with them,” Spiker said.

First Command Financial Services is a financial planning company that principally serves people in the military at the start of their careers but continues to serve them throughout the rest of their life.

It is, he says, coaching those who serve in their pursuit of financial security.

“That’s why almost everybody who is working for this company is with us,” Spiker said.

“We are the most mission-driven company I’ve ever seen in a for-profit enterprise. I’ve been involved with lots of not-for-profits, our zealotry is on-par with the best of them.

“There’s never a day where I have to get up in front of our 500-some advisors and say, ‘You guys really need to go sell more, because you can get rich.’

“I get in front of my advisors and say, ‘Look at all the deserving Americans willing to sign a check that says up to and including my life. And look at all those people, and we’re barely scratching the surface,’ ” Spiker said.

“And what’s great is the people who are attracted to this company, that is a compelling message to them and they go out and get after it. And it is such a joy in a world where the cynicism of what does it take to be successful pervades everything. It is such a joy not to be that company,” he said.

First Command Financial Services is also the parent of First Command Bank.

Also associated but independent is First Command Educational Foundation, founded in 1983 originally to provide scholarships to military families.

Over time, that mission has morphed to educating all military service members – particularly the junior enlisted – on financial readiness. That organization is led by retired Army Sergeant Major Bill Johnson and is an independent 501(c)3 with a separate board of directors.

“They’re not dependent on us, but we’re the biggest contributors, both as a corporation and as individuals who provide that support,” Spiker said. “A couple of our employees are on their board of directors, but it’s important that they have their own mission. Our job is to make sure we’re funding if we believe in them, and we happen to believe in them an awful lot.”

Most people who join a military service won’t go on to make it a career.

“These are people that have modest means. And what we find is if they have the right behaviors, for a long period of time, they can have abundance in their life. They can get to wherever they want to go,” Spiker said. “Consequently, we take coaching very seriously.”

But even highly educated career officers also need help and direction.

Payne noticed when he was stationed in Florida after World War II that many officers who had moved to the state to retire were unhappy because they simply did not have enough money to maintain their accustomed standard of living on a retirement of 50% or less of active duty pay.

Spiker tells a story of a former general officer who made perhaps $200,000 a year meeting with a CEO of a company where their responsibilities and duties were roughly comparable. The CEO was making $40 or $50 million.

“And so even the officers haven’t got this right,” Spiker said. “The enlisted folks have a harder time with it. They don’t walk in with the same education, they don’t have the same resources until they’re kind of mid-way through their career. So, we especially have to make sure we’re thinking about them.”

A comparison to San Antonio-based USAA is natural, and Spiker says that question comes up frequently.

“Their principal business is car insurance, home insurance, things you have to have. Either the state law requires it, or your mortgage holder requires it. And that’s the vast preponderance of their business,” he said. “That’s their roots. They’re also in our business.”

“Where USAA excels is the company’s call centers. They are broadly recognized for delivering excellent support and value. Call in and they’ll figure out what you need, and how to get it to you,” Spiker said.

“Our business is face-to-face, wherever you are. We’re going to be there to be your financial coach. They’re a way bigger company than we are. They’re really a fine company, but they’re really not a direct competitor,” he said.

A requirement for USAA is that a policyholder – or his or her parents – has to have been an active member of the military.

“We are not nearly as exclusive as they are, and yet we end up being far more concentrated,” Spiker said. “What we’ve found is, we’re financial planners and people’s lives go in multiple different directions. So we need to be making sure that we’re ready to serve them wherever they go.”

He’s an example.

“I’ve spent most of my life as a civilian. My military time was relatively short compared to my civilian time. And there’s a lot of people like that,” he said.

He graduated from the academy with a five-year active duty requirement. He did that, and spent some time in the reserves, and then decided to get an MBA from the University of Chicago – he grew up in that area ¬– and get on with the rest of his life.

Spiker thought he’d be a pilot, but his ears failed to clear in a depth chamber test and that ruled out aviation, so he picked surface warfare, initially in San Diego, because he wanted to be on a small ship that would be deployed frequently.

He was aboard the USS Stein, an anti-submarine warfare frigate, accompanying the aircraft carrier USS Kitty Hawk in the Indian Ocean on Nov. 4, 1979, when a group of Iranian students stormed the U.S. Embassy in Tehran and took more than 60 American hostages.

“So we got to drill a hole in the Sea of Oman for 100 days and be part of that,” Spiker said.

Something different about First Command is how it handles client-advisor relationships when dealing with a highly transient population that may move halfway around the world every couple of years.

“We are very unusual in that our advisors do not own the clients. They are responsible for serving the clients. It is our intention that every time you move, you get a new advisor, because we believe so strongly in that face-to-face relationship,” Spiker said.

Some offices outside Fort Worth are small – in some places a single person – while others may have as many as 40 people.

The government has now transferred more risk onto the shoulders of the service members and their families through the new Blended Retirement System, so First Command’s job is to make sure they understand that and they’re planning for it.

“We’re always looking forward. We’re barely scratching the surface of the audience that we touch. With this new blended retirement system that the military has imposed in the last couple of years, our work has gotten a lot more serious,” Spiker said.

There are some great benefit programs within the retirement system, he said.

“There’s the Thrift Savings Plan. We’re big proponents of it. But you can’t get to a satisfactory retirement without supplementing that pretty substantially. And that’s where this behavior change comes in,” Spiker said.

Regardless of where a client transfers to he or she is assigned an adviser who knows the client’s specific plan and can help keep it current.

Spiker tells new advisors the important thing is to get into the discipline of planning and know that there is going to be a string of other advisors that come along behind them.

“And we will perfect and perfect and perfect. I think the thing that people don’t understand who don’t have their own financial planner is the plan itself is not worth very much. It is the act of planning. It’s the act of having the discipline. It’s saying, ‘What are my alternatives?’ Because life comes along every 15 minutes and you’ve got to make new changes and you’ve got to decide,” Spiker said.

And something unusual happens.

“As those plans come in, we have a pretty big team of principals, and their job is to review the plans. They provide a second set of eyes to make sure our recommendations are exactly addressing the stated needs of the client.

“How do those stack up? We want to recommend actions that are not just compliant, but also in the best interest of the individual. I’m really proud that we have that belt and suspenders way of looking at it,” he said.

First Command Financial Services is a private company owned by the employees through an employee stock ownership plan, the culmination of a program started more than two decades ago by the founding family. It’s now a Subchapter S ESOP.

The company has around 600 employees and 50 officers. Together, all the officers own less than 20% of the shares.

“We have people who have worked here for a long time that maybe never had been a supervisor or manager and walk out the door millionaires,” Spiker said. “We have a lot of longevity in our company. People come and they stay. Because the company’s share price has grown steadily since 2002, people have done exceptionally well.”

It takes six years to vest in the plan but now there are around 450 owners.

Spiker describes the business model of the company as a three-legged stool.

“The seat of the stool is recurring financial plans. For military people, for military families, those are complimentary. We never charge for those. That’s part of getting clients to identify their goals,” he said.

And then there’re the legs of the stool.

The first leg is banking.

Many clients come to the table at first in financial disrepair, perhaps because of credit card debt.

“What we’ll do is give them a term loan at substantially lower interest rates. Right now, those rates are about 8%. So, imagine you’ve got 22% and you bring it down to 8%, and then you term that out, that creates extra monthly cash flow,” he said.

The second leg is insurance.

People need to protect themselves and their ability to earn a living.

“We start with insurance. There’s a really good program called the Servicemembers’ Group Life Insurance that the military offers, but that’s a group benefit. It will go away when you leave military service. We believe our job is to wrap that, make sure that there’s permanent insurance so that you can always have it,” Spiker said.

Something like 70% of service members retire with a disability, sometimes small like hearing loss or big, serious injuries that are service related.

First Command is not an insurance company but it is a very large general agency and gets the premiums any insurance agency would get.

The third leg is investments.

“We get people started on whatever they can afford. Let’s get it going. It’s not, ‘Gee I’ve got $25,000 here.’ Sometimes it is re-enlistment bonus or whatnot; sometimes it’s 50 bucks a month until you can afford 100, until you can afford 200. I’ve got any number of clients I talk to that say, ‘I live on my spouse’s income and my money just keeps going into savings and that’s how I’ve gotten to where I want to go,’ ” Spiker said.

First Command is not an investment company, per se.

“We’re a registered investment company and we’re a broker/dealer but we don’t manufacture our own products. We’re using Fidelity, Franklin-Templeton, MFS, and Invesco. We have had great relationships with those partners.

“The companies, in spite of our small size, tend to love us because when our clients put money into an account, it’s not in there for three years. It’s in there for 13 years. So it stays on the books and it grows and it grows and it grows,” he said.

The advisors are 80% former military or military spouses in background, and that’s not by accident, because coming from the military they already have a hard work ethic and if they’ve been clients for a while, they know that the process works.

Former service members understand the lifestyle and the language. Often they want to work in the city where they retired, which means it is near a military base.

“Right now, about 35% of those that are coming to us are clients. Another 35 percent are also military folks, but not clients, and so we’re working job fairs. We’re the smallest full company participant in Hiring Our Heroes. It’s a great market,” Spiker said.

There’s an increasing focus on military spouses, who are underemployed or unemployed.

“They move every three years and their careers end up being pretty difficult and so we have a ready source of those folks.”

Most of the business is by referral because people don’t make decisions about a financial coach based on some advertisement or sponsorship or endorsement. They make decisions based on peer, workplace and family recommendations.

“We’ve got a problem in our society of trying to get 18-year-olds or 23-year-olds to think about being 65,” Spiker said. “That doesn’t often happen because fun gets in the way.”

Instead, the company concentrates marketing resources on sponsoring those things that appeal to the target market – the military.

“Every new client we want to bring in has some connection to that marketplace. We’ll get others that aren’t from that background too. We do a lot of on base sponsorships, we do a lot of sponsoring service recognition programs. We participate in military charities.

“We are a very philanthropic company. I’ve not seen another company that plays at the level that we do. What we find is the folks that we serve want to know that we’re interested in the stuff they’re interested in, so lots of local decisions,” he said.

But there also is national outreach, sponsoring football and other athletic endeavors at each of the service academies – Army, Navy, Air Force and Coast Guard.

Spiker was recently named to the board of directors of CaringBridge, an Eagan, Minnesota.-based global nonprofit social network that has a formal working agreement with the U.S. Department of Veterans Affairs.

Spiker’s route to First Command was not a direct line.

The man who hired him, a “delightful guy named Jim Lanier,” first tried to recruit him around 12 years ago.

“He goes through my whole resume and says, ‘What this tells me, Scott, is you’ve spent your whole life preparing to come and work for this company,’ ” Spiker said. “I said it would have been nice if I’d known this company existed. I could have been a little more deliberate about it.”

So instead his post-service career started with a bank in Missouri and then he moved on to Wells Fargo in Minnesota. Then he got into the broker dealer business.

“I got to a point where I didn’t love what I was doing. It was more about climbing the corporate ladder and maximizing my return than it was contributing to society. So, in 2000, at exactly the wrong time, I jumped off the roller coaster and went to work for a startup health company,” he said.

The idea was to figure out the tax code to create what’s now health reimbursement arrangements and health savings accounts inside health plans.

“We broke that code,” Spiker said. “But my timing couldn’t have been worse. I hit right at the ‘dot.com bomb’ time. Went in as president of the organization and a short year and a half later we were not able to raise round two financing and I ended up eliminating everybody that I brought in, including myself.

“That,” he says, “was hard to explain to my wife. ‘I got let go today.’ ‘You got let go? You’re the president,’ she said. Yeah. But the company’s not going to survive.”

Then it was a trust company/broker dealer/insurance business in Minnesota as CEO, followed by another shot at health savings accounts in Chicago. The South African owners of that company couldn’t comprehend how complex the regulatory environment was in the United States on the insurance side – vastly different rules in different states, for example.

“These were the brightest actuaries in the continent of Africa, by far,” he said, but “they just couldn’t comprehend that.”

That company, too, failed.

“The experiences I had, both good and bad, helped me understand the complexity of being in this kind of a company, that has the reach that it does. The adversity I had two different times, really firing myself out of a startup that I thought was going to be a big success. Then, getting let go because the decisions that had been made, some of them before I got there, were untenable,” he said.

“It caused me to really do a gut check and say, ‘What is it I want to accomplish with my life? Is this just about having a great job? Is this about having a great title? Or, is about finding the right kind of place?’ ”

And then First Command came calling.

“I am so fortunate that the headhunter was able to find me and knock on the door and say, ‘You ever heard of this little company down in Fort Worth?’ I just consider it a blessing every single day that I’ve been here,” Spiker said.

Spiker is a story-teller and there’s a Navy connection to his marriage.

His wife, Nancy, was a dentist in the Navy, just coming into service as he was getting out. They met in Chicago.

In 1983, she got orders for a ship at Alameda Naval Air Station in California.

“For a female dentist who was a reservist to get orders to a ship that was going to go to sea was a big, big deal,” Spiker said.

“I came to visit her one weekend and she had a smile a mile wide. And I said, ‘What’s going on with you?’ And she said, ‘Well I’ve got orders. And Alameda’s cool. Being on a ship is really interesting. We’re going to go to the western Pacific.’ I looked at her for maybe 10 minutes and said, ‘So this is the play me or trade me clause, right?’

“So, a ring appeared on her finger shortly thereafter and those orders were declined,” he said.

They have two daughters, Margaret and Madeline.

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