| Type | 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 Martin Durbin, Chief Operating 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, the U.S. Securities and Exchange Commission (SEC) reported that First Command’s customers included “40 % of the current active-duty general officers, one-third of the commissioned officers, and 16% of the non-commissioned officers in the United States military. The great majority of the firm's agents are former commissioned or non-commissioned military officers.” [3]
Contents |
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.
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 Tally'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.
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]
On 15 December 2004, the U.S. Securities and Exchange Commission (SEC) determined that First Command had violated Section 17(a)(2) of the Securities Act of 1933,[8] which deals with fraudulent activities by mail. The SEC alleged that First Command had "offered and sold systematic plans by, in part, making misleading statements and omissions".[9] The key areas highlighted by the SEC centered around marketing, comparisons with other funds, the availability and effectiveness to military personnel of TSPs,[10] and the ability of a large front-end load to keep people committed to the systematic plan.[11]
In an independent investigation, the 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".[12][13]
In December 2004, First Command settled with the SEC and NASD without admitting guilt. 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.[14] 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 law suit filed by systematic plan holders whose plans were active when the SEC issued its ruling on December 15, 2004.[15] In October 2008, attorneys for the plaintiffs sought court approval for a settlement.[16] The settlement was approved by the court in April 2009.
In the mid 2000s, First Command expanded beyond the military to serve federal employees and other consumers.[17] It then began to serve small business owners,[18] REALTORS,[19] and women.[6][20]
In 2005, First Command hired Adan Araujo, the Senior Counsel for the SEC, as its new Chief Compliance Officer.[21] 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.[22] 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.[23]
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.[24] 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.[25] 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."[26]
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.[27] 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.[28]
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.[29]
Also in 2007, First Command introduced Tailored Professional Services, a fee-based planning program.[25]
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." [30]
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.[31]
First Command has developed a national reputation for thought leadership in the middle-income market through the First Command Financial Behaviors Index,[32] 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,[33] The New York Times,[34] McClatchy-Tribune News Service,[35] USA Today [36] and Financial Planning magazine [37]
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.[38] 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 [39] 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.
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]