First Command Financial

[Guest deweygcc]

Thoughts ideas etc on it?

[Champ Kind]

Well, I might be able to offer to good perspective on this subject, because I just met with a First Command rep about 3 weeks ago....

First of all, let me say this....I am a USAA member. I have been one for 3 years. They are a great service. I've never heard anything bad about them, and they have always treated me GREAT. I do all of my banking through them, I have a credit card with them, did my car loan, and I'll also be doing my ROTH IRA, and car & life insurance with them as well.

That being said, as soon as I walked into First Command, and told them I was a USAA member, they immediately started talking down about it, and said that maybe I would "wise up" one day and shift over to First Command. The rep that I spoke to did give me some pretty sound financial advise, being a newly-commissioned 2nd Lt who has never lived on his own before. After that though, the sales pitch kicked in. These guys work off of commission (USAA employees are paid salary). The simple fact is, he has a product to sell.

I entered First Command first to gain some financial advise, and second to start investing. This was not enough for this rep, though. He insisted that I begin a life insurance policy with them. When I looked at the rates, and saw that the difference in premiums between now and when I'm about 23 was negligible, I told him I was going to hold off, and put more money into savings (just as he'd advised me to do). After some insisting, I just flat out told him I wasn't interested. He then resorted to scare tactics, and handed me a letter supposedly written by a 1LT, US Army ("Ret") that was diagnosed with some rare disease, not covered through SGLI, was medically separated from the Army, and now had "nothing to fall back on." I told the man that this was a very, very rare exception, and that if I researched this further, I would probably find that I would be more likely to be struck with lightning than to get some weird illness. That pretty much ended our meetings, aside from several more pressuring phonecalls that week, asking me if I would reconsider.

Bottom line....Those guys have to get people to buy their products, or they don't get paid. They have a 50% up-front surcharge on their investments. You don't make your money back until you're 5 years deep into it. They push life insurance because it is one more way to get money out of you. I feel much more comfortable with an organization such as USAA. USAA caters to the military (in my opinion), while First Command, well, tries to exploit. I know you didn't ask for a comparison between the two, but, I feel that USAA should be used as the benchmark from which to judge all other organizations, and most just simply can't offer what they can...

My personal advice...Steer clear from First Command. You can go to another organization (even if its not USAA, though I wouldn't recommend it) and receive almost the exact same products and services for less money, and certainly better treatment. Just my two cents, and besides, hey....you asked!

[Guest Cider]

Sounds like Phlash has had the typical 1st Command experience. They certainly are sales people and try to take advantage of uneducated 2nd LTs. These guys hate USAA with a passion, because its their only real competitor.

As a semi-wise Capt, this would be my advice: Go in and get a great financial education from these guys. Learn the best way to get money smart, its what they do best. The important part is to shop around for the best deal (not just USAA) You'll find that USAA and 1st Command aren't the only places to put your money.

The biggest turn offs are for me were; several phone calls to the point of harassment, they ask for friends phone #s even a copy of my recall roster to expand their customer base, their predator like tactics on new and non-informed officers and finally the insults of not being a wise officer for buying their products.

Like I said, the education they give is great and thats about all its worth. Turns out I used their advice against them by shopping around and finding better deals. You'll find that they are not really competitive in the finacial market. Oh yeah, I'll part with these final words. The time to invest is now.

[Guest RoninCo]

I would say that i had a somewhat different experience with First Command. I have a ROTH IRA and Mutual Funds with them. I will agree that they push hard on the Insurance. It is their moneymaker. I got in with a guy named DJ something or other in Pensacola. He pushed a little bit on the insurance, but didnt ram it down my throat. I said no 2 or 3 times, and he stopped...That being said, i can totally see someone not letting it go, and making a scene of it.

For new Officers, if you are single, SGLI will do just fine. But, I did find that the First Command Money Market Savings rate to be on average higher than USAA. Also, the mutual funds that i got in are through Fidelity (reputable investor).

PhlashNU04 said, "They have a 50% up-front surcharge on their investments. You don't make your money back until you're 5 years deep into it."

On the face, this is true. As a not so bright 2Lt, when i signed up for this i didnt pay much attention to it. It is called "Systematic" investing. After i got winged and was on active duty a while, i started to question why i was charged a 50% surcharge of the 1st year's initial investment (lots of big words there, i need to take a break!). Basically, their thinking is this. This type of fund performs well because it keeps short term investors out but frontloading the charges. I was shown proof of other funds (Load and No Load) and their comparative performance. The Systematic had a considerably higher return per year. But, after one year, your subsequent investments are no longer taken from.

Either way, I can TOTALLY understand how you could be turned off by them. All in all, my experience is good. Several of the things i like most about them are that they have offices near military installations ALL OVER THE WORLD. I have one 10 min away from me here at Kadena AB, Japan. I believe that they have one near Yokota too. Also, I am a LAZY investor. I like having someone look out for my money for me. Make no mistake, you do pay for it thru either insurance, mutual funds, money market savings, or all 3. Basically, you are paying for a financial advisor...

Hope that this answers some questions...

-RoninCo

[Guest TheBobGoat]

Originally posted by RoninCo:

The Systematic had a considerably higher return per year. But, after one year, your subsequent investments are no longer taken from.

-RoninCo

Also, everytime you increase your investment amount...they take 50% of what you increased. so if you did 300 a month the first year, and when you make captain you want to do 600 a month....they take half of what you increased for that year too. everytime you increase your investment, they take half for a year

[Guest deweygcc]

thats not true bob, they average it out to cover the fees. The FC guy I spoke with was pretty cool, and not at all pushy. Feel free to explain WHY life insurance is not a good idea? Sorry but SGLI aint gonna do much for the wife, neither are the other things she gets. Twould be nice to be able to know she doesnt NEED to ever work if she didnt want to.

From what I was told, insurance is not a sure thing. Combat deaths and any avaition death ISNT covered.... kinda sucks to pay 75.00 a month only to find out that your 10000000000 dollar policy wont pay up because you got killed in teh line of duty.

As an investor, the dollar cost averaging fund is the one to get in. I have been doing it on my own for a while and seem great growth. On the other hand, I had a 401k that lost 82.39% with the NO LOAD NO fee BS. You pay for what you get.

Now that I have heard some opinions this better prepares me for my next meeting I am going too.

Thanks,

[Guest TheBobGoat]

dewey - explain how thats not true please. have things changed since 1 yr ago?

i would reference my first command folder they gave me, but i threw that out a year ago =)

[Guest sbrewer]

You don't need to pay someone to invest your money. Get a brokerage account and buy some mutual funds and stocks yourself.

Whole life is for idiots...don't buy it.

First command sucks. That is my only advice.

If you have the discipline to set aside money, you will do better yourself almost every single time.

[Guest TheBobGoat]

agreed sbrewer - buy a wall street journal and barons and get started

[Guest tentoad]

I know little about this First Command gig.

Sounds like a repackaged version of USPA. a much dreaded organization that demanded your money and soul in exchange for a crappy steak dinner. Legions of military folks fell for their line of crap and invested in heavily loaded funds and didnt make much money.

This is my experience with USAA over 20 years;

1. Insurance. Good rates, excellent cutomer service. Have a claim they will not give you a bunch of bullshit- they will just pay it.

2. Banking.

Loans: I bought a car from a dealer once. Dealer was pushing his loans hard. Called USAA and got a loan at 4.5% for a used car and wanted to speak to the dealer. A couple minutes later he handed me the keys and told me he wished he could be a member. Took the car that night, USAA's rep is stellar.

3. Membership.

Rebates are illegal. Membership Subscriber Savings Accounts are not. Every year I get a couple hundred bucks from them.

Deployed to Desert Storm. Faxed Power of Attorney to USAA naming my Dad as POC. Next day they called him!!! Wished me well and asked what he wanted to do.

Customer service=Outstanding.

Investments:

Want Fidelity funds? Buy them through USAA!!!

Want Shwab or any stocks? Buy them through USAA!!! Transfer funds on the website and pay low broker fees.

Overall:

USAA folks are salary, true. They are mostly military or ex-military, so they want to treat you like family. Some commission based guy wants you to buy something/anything. They rape you as the market goes up and then when it comes down.

LOADED FUNDS ARE FOR CHUMPS, STEER CLEAR!!!!!!!!!

USAA has been around forever. They are constantly rated excellent by all the financial trades.

Good luck on your career Lt. Save some cash every month and invest in yourself.

Tentoad

[Guest Alex Chilton]

First of all, congratulations on starting to put together an investment strategy at a young age. You are way ahead of the power curve. Your small sacrifices now will pay huge dividends later in life.

Secondly, First Command IS, or rather, WAS USPA-IRA. They changed their name a few years ago – in part because of their shady reputation.

My advice regarding First Command: STAY AWAY!!!!!!!

When I was a 2LT, I looked heavily into their program. I talked to my father’s roommate from college about it…this guy is a broker with Edward Jones in Ft. Lauderdale. He said to me, “I swear to God, I didn’t think that program is still legal…”

Actually, the program shouldn’t be legal.

They take your money up front…essentially locking you into their services for life in order to re-coup those early fees. Investing with First Command is better than not investing at all – BUT – you can do a whole lot better…make more money…have more flexibility…and not be pressured to buy life insurance you don’t need by just using USAA or going direct through a reputable mutual fund company like Fidelity or Vanguard.

Here is my advice to any young 2LT:

1. Pay off all credit card debt

2. Max out the TSP. Invest it into the index stock fund (C Fund????). If your spouse is working, max out his or her 401K if it is offered.

3. Max out a Roth IRA. Call USAA and get set up. USAA is one of your best military benefits – a truly professional bank. Invest your Roth IRA into an index 500 fund – the USAA index 500 is a good choice. Later, as you become more educated about investing, you can decide to switch your money into an actively managed fund…but to get started…just use the index fund. If you have a spouse, max out his or her Roth IRA also. Use an automatic purchase plan from your checking or savings account.

4. Pay off any other outstanding debt like your car loan

5. If you have done every thing above, you are in good shape….now you can start saving for a house, vacation, wedding ring…whatever. You may want to invest a set amount every month into a mutual fund…or just use a savings account.

Best of luck to you!

[Guest joelovuola]

I'll be the first to admit my complete ignorance when it comes to financial matters. I've heard a lot about TSP. When I was a civil servant I never paid any attention to it and now that I'm in the military I figured it's time to get serious. How does it work? How does one become enrolled? Where can a novice like me find information that assumes no prior knowledge on investment and retirement planning. Someday when it's time for a wife I want to give her some confidence that I know what I'm doing. Thanks for your time.

[Guest deweygcc]

So im doing a LOT of research, and i have to ask do you guys even READ!!?

I know its supposedly a LOT up front, but I spent 7 hours talking to an FCF guy, usaa woulda charged me 1050 for that @ 150 an hour.

Their same plan is 975 per year. Broker assisted trades are around 50 bucks. When you get good and do it yourself you can pay 20 per trade.

Now you are talking to a guy that used to trade penny stocks at 18, my bro and I made 10k each on one .10 cent stock. I know how the market works, I still own my first ever stock I bought for .38 cents, I spent 495 bucks 95 was commission, its worth 3k now. Yeah I should have more, but I keep it because I went through hell with it.

Its not just " buying" any old stock and becoming a BILL GATES. I did a 401k planning over the phone and have a NEGATIVE 82% year end.

I have been NICKLED and DIMED, and it sucks. I'd rather pay 1500 in fees up front instead of 900+ per year for the same service.

I understand your points on the Insurance, but I did a search and so far they have the BEST rates. Insurance is like the military, a real expensive thing to keep, but well worth it when you need it.

I will adjust the numbers he used because I dont need it all.

I've won and lost picking my own stocks, and found to make money you have to be really lucky or spend countless hours researching. Of course you can buy the big companies at their 52 week low and hope for splits.

Im not trying to be an A$$ to you guys. I have a good friend thats a EJ broker, and I know they are INDEPENDENT and want your commission and they get a nice chunk. Heck I paid 124 to sell 5000 shares, cuz i knew the guy. Im all for DIY, but theres a point to it. I know a lot about cars, but nothing about boats, and Im not gonna tear down a 6k motor to save 200 bucks. Same with $$$ its worth 1500 in a lump sum fee to not have to worry later.

[Guest deweygcc]

oh I really appreciate your comments. It made me think and I found out what I needed to know.

You pay for what you get. Thanks, I did tons of research and found that FCF is actually quite competitive, it just has you pay the fees in different ways. EIther way I think we can agree, that ANY planning is better than nadda.

[Guest TheBobGoat]

Originally posted by deweygcc:

Same with $$$ its worth 1500 in a lump sum fee to not have to worry later.

Its not like paying the 1500 $$ upfront will take away your worries. All those charts and things First Command will show you are based on 'hypothetical 8 or 10% market gains over a period of time'

if you want to 'not worry' then try a CD at your bank or other low risk type investments...index traking stock or exchange traded funds or mutual funds.

pick up a barons and you can easily find some stuff to throw money at. as others have said - maxing out your TSP is a pretty safe way to invest some cash.

my advice (i know you dont want it) stay away from first command. if you want more info on my experience in the market and with first command, you can PM me

[Guest IAGuardWife]

sbrewer- Having been someone who used to sell life insurance for a living (and yes, I did say USED TO SELL) I am curious about your statement "Whole life is for idiots". What is your experience with it and why is it for idiots? Because believe me, I can go on all day about why term life is foolish, and I know what I am talking about....do you?

[Guest deweygcc]

I know about return. I know 12% is NOT going to happen. I also know that any fund with only 5 years and its GREAT return wont last.

I know its a lot to start with, but you guys are going to hammer yourselves if you arent careful. Im not advocating FCF. Im just saying that AFTER talking with you guys I went and did the research and its a good idea.

I have spent 1000 in comission. Trading penny stocks are cool but you have to realize brokers with school you if you sell/buy more than 5000 shares.

There are NO OTHER FEES!! and getting the money into a dollar cost averaging fund, which I have been painstakingly doing for quite some time is worth it. DCA will always work you just may not get AS much on a skying market

[M2]

I have discovered the secret to making a small fortune...

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...first, invest a large fortune. Then wait. :eek:

Seriously, my Merrill Lynch mutual funds, which were suppose to have provided a reasonable and steady return, have gone nowhere over the past five years. But, I bought and sold a house in San Antonio all in less than three years and expected to take a large bath on it, but in the end (sts) I made an easy $18K. If you have the time and can afford it, I would advise looking into real estate as a diverse area to also invest in. We also have a condo outside of Baltimore that we recently got an offer on, should stand to make a cool $54K on it. We've owned it for about eleven years. Not spectacular but when I tried to sell it about seven years ago I was looking at losing $12K.

Just some free advice...and you get what you pay for...don't invest money you aren't ready to lose! Be sure to tuck some away into a savings account or somewhere as well, you may need quick and easy access to it.

Cheers! M2

[ 08. July 2004, 11:38: Message edited by: MajorMadMax ]

[Guest deweygcc]

Max thats what I was thinking about and kicking myself for not doing when I was 18. I was thinking of buying a condo or smaller house near the base in a nice area, and renting it out.

I kick myself b/c I was about to sign on 3 condos that would have cost me under 84k. They are currently selling for 120 157 and 160.... AAAAAAHHHHHHH

[Guest TheBobGoat]

Originally posted by deweygcc:

and getting the money into a dollar cost averaging fund, which I have been painstakingly doing for quite some time is worth it. DCA will always work you just may not get AS much on a skying market

you can dollar cost avergage yourself man. you can even buy stock direct with nothing more than a 75 cent fee. and you can have it taken out of your paycheck.

[Guest Alex Chilton]

Scooter:

The website address for the Thrift Savings Plan (TSP) is:

http://www.tsp.gov/index.html

The next open season for enrollment begins Oct. 15. See your personnel section for the enrollment forms. You have to submit the paperwork through your unit.

The reason why investing in the TSP is a good deal is because the money you invest is pulled out of your paycheck before your check is taxed – effectively lowing your taxable income. For numbers ease, if you earned $50,000 and invested $5,000 into your TSP, you would only be taxed on $45,000. That would produce a tax saving for you of about $1250 (at a tax rate of 25%). Another way of looking at it is that the government is paying you $1250 to invest in your retirement. Free money is good.

Your cost = $0

Tax savings: $1250

Deweygcc: if you are already using FCF, you might as well see it through. I think if you can keep investing with them for your entire life, the program can work. The important thing is that you are investing. There is a reason the FCF guy spent 7 hours with you, and it isn’t because he likes you. You are paying him a crap load of money up front. Plus, in the future, any time you increase your investment amount…you pay them half of the increase amount.

If you want to lose weight you can do it yourself for free, or you can make a big financial commitment to Weight Watcher or Jenny Craig…sometimes the financial commitment is what keeps people on the program. You’ve already invested…you might as well keep going. If you feel like you need to plunk down a huge payment up front in order to keep you dedicated to investing – then go with FCF. But my advice is to diet on your own.

$1000 is A LOT of money in commission…especially if you consider that if you put $1000 into an IRA at age 20 it will be worth about $32,000 at age 70. (Rule of 72, 7% average interest rate).

I know too many people that say things like TheBobGoat: “my advice (i know you dont want it) stay away from first command. if you want more info on my experience in the market and with first command, you can PM me.”

[Guest TheBobGoat]

EDIT" ah, good luck and whatever

[ 08. July 2004, 14:30: Message edited by: TheBobGoat ]

[Guest AirGuardian]

For those of you wondering what a great deal TSP really is: Become a Technician in the Guard and probably the Reserves as well and get up to a 5% match on whatever you put in at 5% of your pay or more. Even if you put in 10%, they only match %5, but then again - it is basically free money and I firmly endorse this route for retirements sake! My Lt Col Bud has been pushing his TSP account since he signed up many moons ago and passed the million $ mark 5 years ago(took a hit after 9-11 of course), and he is doing very well still! Like MMMax said - Big investment, big returns at the end years - for the most part! Several funds to choose from, higher risk during your early years and start switching it to safer investments at the back end of your career. Just a note...

[Guest deweygcc]

Bob I DO DCA, and stock arent as easy as you seem to think, there is a lot htat goes into it. I was going for my series 7 etc to be a broker, I have a Clue.

I wish you guys would realize that to get money you have to spend it.

[Guest TheBobGoat]

what I was saying about the DCA - you dont have to pay someone to do it for you. there are hundreds of companies that will let you join a DRIP for free