Vet News: DoD Helps to Launch Military Financial Education Program

WASHINGTON, Feb. 16, 2006 – A general lack of financial knowledge makes servicemembers an ideal target for predatory money lenders, so the Defense Department is helping to do something about it, officials said here today.

"Equipping servicemembers with the tools and resources they need to make sound financial decisions is integral to both military readiness and the strength and stability of our servicemembers and their families," David S.C. Chu, undersecretary of defense for personnel and readiness, said at a news conference held at the U.S. Capitol building.

To meet these ends, the Defense Department has partnered with the National Association of Securities Dealers Investor Education Foundation to launch the Military Financial Education Program. The NASD Foundation was started in 2003, and is part of the Defense Department’s financial readiness campaign. NASD is the largest private-sector provider of financial regulatory services.

"We know from research we’ve conducted that a high percentage of servicemen and women lack basic financial knowledge," Robert Glauber, chairman and chief executive officer of NASD, said. "We are here to unveil an important new program that will help members of the armed services and their families manage their money, and save and invest it wisely."

Unscrupulous financial institutions often use deceptive tactics such as hidden fees and exorbitant interest rates to take advantage of unsuspecting investors, officials said.

"Military families on or near base are a captive audience for everyone from used car salesmen to payday lenders," said Mary Schapiro, vice chairman of NASD.

The education program will teach basic investment necessities such as how to buy a car, saving for retirement, and the tradeoffs between risk and return on investment, Glauber said.

The genesis of the program came when First Command Financial Planning, a Texas-based financial lending company, was fined $12 million for making misleading statements while selling investment plans to military families.

About $4.5 million of the fine money was returned to investors, while the rest of the money was set aside for the Military Financial Education Program, Glauber said.

The program will not use any taxpayer money.

"This initiative started with our disciplinary action against First Command Financial Planning. We and our partners want to make sure that that sort of thing never happens again," Schapiro said. "We believe the Military Financial Education Program will move us a long way toward that end."

The multifaceted program includes:

• An online resource center that will serve as a centralized, trusted source for unbiased information on saving and investing, including original content, interactive tools, links to financial education resources;
• On-the-ground training to support the military’s current Personal Financial Management Program by establishing a coordinated and uniform financial education program, including the training and continued certification of personal financial managers and other volunteers;
• Educational tool kits for trainers and investors offering multiple levels of personal financial information;
• On-base activities and events to motivate families to take responsibility for their financial well-being; and
• A long-term public outreach campaign, including print, radio and television public service announcements and media outreach to raise awareness of the tools, information and services available to military people and their families.

New York Sen. Hillary Clinton spoke at the news conference and said she learned about financial scams perpetrated against military personnel from her constituents.

"It’s a national problem that deserves a national solution," the senator said. "This program is one of the best answers that we could come up with."

Chu expressed high hopes for the program. "It is our hope that with programs like this, that in the future our military personnel will be as well known for their financial savvy as they’re known today for their military prowess," he said.

SOURCE: VNIS - American Forces Press Service