Considerations for Advising Military Veterans
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Military veterans seeking the guidance of a financial advisor have a background and career that is different from civilian clients. But veterans have similar goals and motivations for seeking your help. However, the differences in their career journey and lifestyle often lead to unique financial circumstances, compensation structures and other considerations that all advisors should be familiar with before working with any military or veteran clients.
Understand what’s important to your client
Getting to know your client should always be the first step in any new relationship. Make your first encounter as casual and conversational as possible and ask not only about your new client’s tangible goals (i.e., putting away money for college tuition, purchasing a new home) but the deeper meaning and motivation behind those goals. You’ll learn not only why they’ve come to you for guidance, but you’ll gain a deeper understanding of what’s important to them as a person.
During service, they answered to a higher, collective purpose. Now that they are out of the military, they may be rediscovering old passions or exploring new career paths or hobbies that motivate them. Understanding the inspiration behind their financial goals will help you and your client identify the most appropriate and effective means to achieve them. Goals can change over time, particularly if your client is a veteran navigating a new career post-service. Check in often to ensure you’re still on the same page.
Understand the nature of their service
Once you’ve covered your client’s personal history and motivations for seeking your assistance, dive into some specific questions about their military career to help you gain a broader picture of their financial situation. The first and most important topic to cover is the nature and length of their service, as this determines what defined benefits and compensation they are receiving or will receive.
A military veteran can be an individual in their early 40s, looking to pursue a second career with a life-long pension available from their time serving. These circumstances are a bit different than the traditional concept of a civilian retiree. At minimum, when working with a new veteran client, ask how long they served and if it was active duty or reserve. Most clients will receive their retirement pay through the military’s legacy retirement system, which offers a defined monthly pension after 20 or more years of service. Time served and retired monthly base pay are factors that determine the veteran’s pension in retirement. While less likely to be a factor for your veteran clients in the near future, you should also be aware of the new blended retirement system (BRS), which new service members are automatically enrolled in and includes a matching contributions option.