Serving Those Who Serve: Financial Coaching for Military Families with Sharon Watson

[00:00:13] Doug Heikkinen: Before we get into the questions, why don't, can we tell me a little bit about First Command?

[00:00:17] Sharon Watson: It's my pleasure. 67 years ago, Air Force Lieutenant Colonel Carroll Payne realized the challenges uniquely faced by our nation's military families. Some examples of that are of course the peril of loss of life, frequent relocations during a military career, the difficulties military spouses have starting a career.

And then when our service members separate from military service, the difficulty in starting another career. These are specific wealth management challenges for this demographic group. And so he founded First Command on the fundamental belief that coaching and financial planning is key to the pursuit of financial security for these folks.

And that is our mission today. Our home office is in Fort Worth, Texas. We've got nearly 600 advisors throughout the country, most of whom are former military person themselves. First Command is graciously large today. We've got over $46 billion in managed accounts and mutual funds, $70 billion of life insurance in force.

We have a bank, a billion dollar bank as well. So we consider our dedication to these noble Service families to be just the highest and best calling.

[00:01:36] Doug Heikkinen: That's fantastic. Let's talk a little bit more about your approach to financial coaching. How is that different to traditional wealth management firms?

[00:01:46] Sharon Watson: I think one of the things that makes First Command special is we start with folks who aren't affluent. Our young military service members often start their career in debt, with very little financial readiness or education. And so our cornerstone financial planning is basic money management. We teach folks about how to use bank, how to be responsible with debt, how to do budgeting.

The second cornerstone of our plan is basic risk management. How do you protect your family from risk? Dealing with that loss of life possible for our service members. and then the final piece of it is how do you start investing with small dollars over a long period of time? We are huge believers in dollar cost averaging with small amounts of money. And so we find that most traditional wealth management folks aren't interested in talking to that demographic in our society.

And that is where we live. That's the heart of our mission.

[00:02:45] Doug Heikkinen: First Command emphasizes a customer service centricity. How has client feedback directly influenced the design of your financial planning tools and advisor client interactions?

[00:02:58] Sharon Watson: I'm gonna skip to why we're here to Envestnet to answer that question. A couple, several years ago, we recognized that our clients are growing up and aging.

Often when they separate from military service, they go on to a second career as a federal employee or a government contractor, and as they actually follow the discipline of our planning process, they've ended up with some net worth and we need to do a much better job. We are great at talking to you while you're accumulating assets, but now while you're, shifting gears, you're ready to talk about decumulation or distribution strategies or more complex topics.

We needed to up our game. And so we asked our clients, What would a great engagement look like? What would a great experience look like now that you're at this phase of life? And we asked clients who did not come with us, but most importantly, we found a way to ask clients who left us. It's like, how did we let you down?

What was the final straw here that made you give up on us after so long? And we formulated a handful of hypotheses about what it is that whatever solution that we select here in terms of engagement and tools has to address these five things, and they became our North Star as we move through this selection process. And some of those things, Doug, were like, For heaven's sakes, please show me all my stuff in one place.

First Command provides a multitude of solutions. Banking solutions, insurance solutions, investment Solutions. Can I not see it? And we were not able to do that effectively. Please show me how the stuff that you've recommended to me fits my financial plan. Can you help me relate the two?

Can I see how the things that you've proposed to me actually helped me meet my goals? Can I, where can I see that visual? We were unable to do that. And it included other things like, a better digital experience. I want to be able to see my stuff live and updated in a manner convenient to me. We were falling short there.

And then a few of the other things had to do with pricing. Can I, I don't mind paying fees, but I would love to see the value of my whole relationship reflected in the fees that you charge me. And so that client feedback, especially the ex clients because that really stabbed us. And that's like a, that's like a stab in the heart, to hear that sort of feedback.

That's what started our journey to finding the tools to do the best engagement possible to be that future state client experience that we were looking for.

[00:05:47] Doug Heikkinen: And where did you find those tools?

[00:05:48] Sharon Watson: Yeah, we shopped a lot because we didn't know. And this was five or six years ago, and of course this industry changes on a dime all the time. But five or six years ago, we had no idea who these wealth platform providers were at all. And we would ask, because we're not alone in trying to solve these issues. So I would go to banking conferences and other wealth conferences and go, how are y'all solving this problem?

And we would begin to hear names. It's we better call them, figure out what the heck it is that they do. And so we must have gone through a dozen of them, trying to figure out what they needed. It also helped us identify what our requirements were. Whatever it is we pick has to deal with our other major strategic partners.

Whoever we pick has to meet our future state under understand the uniqueness of our market. We are not high high net worth. We're middle America. So when we talk about servicing the ultra high net worth folks, that's generally not who we are. We needed to find somebody who brought us applications that we could easily integrate together to provide that seamless and consistent experience.

Because Doug, one of the things that's interesting about First Command is, an active duty service member will start a plan with an advisor. So let's just say it's in California, for example. And we know that in a military career, that client is gonna change stations perhaps a dozen times in their military career.

So how First Command deals with that is that client, when they show up at their next duty station, simply is picked up by a local advisor there. That relationship with his original advisor ends, he picks up seamlessly with a new advisor at his new duty station, and he moves through his military career.

When he moves to Florida, the same thing will happen. A new advisor will pick him up and carry him through. Our military clients get that seamless, consistent experience because they transfer from First Command office to First Command office as they relocate.

[00:08:03] Doug Heikkinen: That sounds a little bit challenging to leave an advisor and go to a new advisor.

But in the military, they're leaving one command to a different command. So they're used to stuff like that.

[00:08:13] Sharon Watson: It, it, doesn't. It works. It works, right? Yeah. while they're on active duty and, doing all that transition.

[00:08:19] Doug Heikkinen: And it still maintains the personalized service.

[00:08:21] Sharon Watson: Exactly.

[00:08:24] Doug Heikkinen: How do you preserve face-to-face coaching?

an ethos of scaling digital tools like Money Guide Pro and Yodlee?

[00:08:34] Sharon Watson: We're looking forward to, I'm gonna talk about Money Guide first, and then remind me, we'll go back to Yodlee. Okay. What we're looking forward to with Money Guide, is an end to a one size fits all planning approach that we've traditionally had at First Command.

The tools that we've used before, don't allow us the flexibility, for example, to meet a young service man or woman who basically just needs some budgeting, a few little goal plannings and a way to get started on a savings plan. They don't need my entire questionnaire about estate planning or other things that aren't relevant to them, but we, tended to have this one size fits all engagement planning process. So the thing that we're most looking forward to, Money Guide, even though it feels digital, it's really just customization. It's the ability for me to take the pieces, the blocks, Money Guide blocks specifically, and go, young Lieutenant Smith needs these three things and I can put them together in a little planning block and send it to him.

And that's his engagement. Still knee to knee. It's still personalized coaching, but now he's engaged in it through a digital experience.

[00:09:49] Doug Heikkinen: Education throughout this process is really key because we know that if you're 23 years old and you save a hundred dollars a month for, until you're 60, you end up with a lot of money.

So is educating these service people really important?

[00:10:02] Sharon Watson: Yes, it's key to our success. we have a First Command Education Foundation. That's a separate entity from First Command that specializes in financial literacy. And then, yes, most of our client facing events are educational in nature, especially when we're focused on the younger parts of our market.

[00:10:23] Doug Heikkinen: So cybersecurity considerations. I mean, they're working globally. It's gotta be a big deal with sensitive financial data, military data. So what's that like?

[00:10:36] Sharon Watson: We are, as everybody is in our industry, acutely aware of the need to have a robust cybersecurity protection on our data. And First Command is right up there doing that.

We just have hyper awareness of it, I would say, given the nature of our clients.

[00:10:52] Doug Heikkinen: Yeah. Are there metrics that you use to evaluate real world impact on your financial guidance?

[00:11:01] Sharon Watson: I think we're working on that. We've got a, we have lots of CX metrics that we use. We have means of obtaining instant client feedback, through QR codes in our office. You know, How did we do? Grabbing instant feedback. We have a financial, First Command. I forget the name of it. It was a financial impact assessment where we could show that if you follow our discipline, if you stick with your financial planning, your outcomes will be superior. As if compared to if you don't.

Spending is better. We used to track that. More of our clients had better control over their spending, perhaps, with a plan than without a plan. Things like that. That stuff's hard to come by, but we've made a shot or two at it every time.

[00:11:50] Doug Heikkinen: Do you have a favorite story about somebody you all helped that comes to mind?

[00:11:57] Sharon Watson: We hear lots of clients tell us in my specialty at First Command, in the 14 years I've been there, I've tended to be at our older end of the spectrum, our older client markets. When I was in trust services at First Command Bank, you frequently hear stories of, You helped me when no one else would, when I was young, didn't have anything.

Now I'm at the end of my career, I've got children and grandchildren. I am able to support charities. We had a family create a foundation. Because they followed our financial discipline for all these years, they were able to start a foundation to support their favorite causes. We have lots of stories like that.

First Command also has tons of testimonies and stories about what happens in the worst case scenario when we've lost an active duty service member. That is where the rubber hits the road with our vision and our promise to be there for folks. And we hear time and time again how our First Command advisors step into the breach when the worst has happened, to support our service families.

those are the kind of testimonials that come our way frequently.

[00:13:12] Doug Heikkinen: So I imagine if they save from the beginning and you guys help them out until they retire, they get a pension and they've got their First Command accounts. And then they can serving our country, they're well rewarded at the end.

[00:13:27] Sharon Watson: I think so.

I've been in the industry a long time and I do think First Command clients have an edge. If they stayed in the military long enough to get a pension, they were young enough to start a second career in federal employment service, for example, could get another 20 years in. Have a second pension and they have social security.

And so we frequently talk about how our clients are guaranteed income sufficient, which gives them the freedom then to be, to enjoy, the fruits of their long-term dollar cost averaging, savings over many years.

[00:14:03] Doug Heikkinen: Yeah. The last one for you, if you could redesign one legacy system in wealth management tech from scratch to better serve military clients, what would it be and why?

[00:14:15] Sharon Watson: That's a great question. I don't know that it's specific to military clients, but I would say our experience in implementing Envestnet and gathering our data from a variety of product sources has been really difficult. So I wish our industry partners like DTCC or DTC, and I recognize that they are serving a swath of our industry with different needs. But trying to get clean, usable, portable data through these legacy systems to a single spot is still impossible in our industry. And I wish it weren't so. I had such high hopes that it would be a much better experience. But I would just say that the data aggregation partners in our industry, we could do such a better job for everybody, not just our military families.

[00:15:13] Doug Heikkinen: Sharon, thank you so much for joining us. It's been a pleasure hearing about First Command and everything you do.

[00:15:17] Sharon Watson: Thank you, Doug. Enjoyed it.

[00:15:19] Doug Heikkinen: For more information on First Command, please visit First Command.com. Follow us on X, LinkedIn and Facebook, all @Advisorpedia. For everyone at Advisorpedia, our producer Tory Miller and the Power Your Advice podcast team, this is Doug Heikkinen.