FIRST COMMAND FINANCIAL BEHAVIORS INDEX

Transcription

1 FIRST COMMAND FINANCIAL BEHAVIORS INDEX Third Quarter 2015 FIRST COMMAND FINANCIAL SERVICES, INC. with SENTIENT DECISION SCIENCE, INC

2 POSITIVE TRENDING ON THE FINANCIAL BEHAIVORS INDEX SUSTAINED THROUGH THIRD QUARTER 2015 BY COMMITMENT TO SAVING AND DEBT REPAYMENT AMONG MILITARY FAMILIES. The Behaviors Index continues to rise among military families ( in Q215 to 158 in Q315). This increase is attributed to increases in the Behaviors and Intentions sub-indices this quarter (Behaviors: in Q215 to 177 in Q315; Intentions:146 in Q215 to 154 in Q315). The increase in the behaviors sub-index can be attributed to the median amounts deposited to savings and debt repayment growing from quarter to quarter. As seen in prior quarters, those with a financial planner are significantly more likely to make deposits to short-term, long-term, and retirement savings in Q315 than those without a financial planner (STS: 79% vs. 55%, LTS: 73% vs. 39%, Retirement: 78% vs. 56%). Additionally, those with a financial planner contribute $-$300 more in both long-term savings and retirement savings. Conversely, those without a are paying greater amounts towards their debt than those with a. % Taking Action and Median Contribution Advisor No Advisor Action $$ Action $$ Short-Term Savings 79% % 500 Long-Term Savings 73% % 200 Retirement 78% % 400 Short-Term Debt Paid 78% % 750 Long-Term Debt Paid 75% % 0 About half of military families do not anticipate changes in their savings or debt repayment behaviors in the upcoming months. However, families who use financial planners are more likely to indicate plans to increase their savings and debt repayments than those without a financial planner (Increase savings: 49% vs. 34%; Increase Debt Payments: 43% vs. 24%, respectively) FINANCIAL BEHAVIORS INDEX Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q FINANCIAL SUB INDICES Q214 Q314 Q414 Q115 Q215 Q315 Total With a financial plan Without a financial plan Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Intentions Behaviors Attitudes

3 Those with a financial planner are also more likely to increase the amount of life insurance they carry when compared to those without a financial planner (35% vs. 16%, respectively). In Q315 the top financial concerns among military families are the state of the economy and the ability to retire comfortably. Those without a financial planner are more likely to be concerned about the state of the economy, their ability to retire comfortably, the cost of everyday goods, personal debt, and their ability to send kids to college, than those with a financial planner. Top financial concerns in Q315 include: With Without The state of the economy 33% 44% Ability to retire comfortably 31% 48% Cost of health insurance 31% 25% Cost of everyday goods 30% 41% Personal debt 29% 37% Cost of gas 28% 28% The stock market 27% 22% Ability to send kids to college 26% 41% Ability to cover medical expenses 25% 21% Ability to buy a home 22% 22% Military families implement a variety of practical cutbacks to address their economic concerns in Q315, including cooking at home more often and increased couponing. With Without Cooking at home more often 21% 51% Increased use of coupons 20% 49% Reduced clothing purchases 20% 39% Reduced spending on junk food 20% 34% Shopping at discount stores 19% 42% Bring lunch to work 19% 41% Attempted to reduce electric bill 19% 30% Attempted to reduce cable bill 18% 35% Reduced leisure activities 17% 37% Reduced travel 17% 33% As seen in previous quarters, military families that are not working with financial planners are significantly more likely to cut back on their spending than families that do work with financial planners. The Behaviors Index survey shows that on average 74% of military households indicate feeling extremely/somewhat anxious about cuts to defense spending. The top concern among military families remains reduction in annual pay increases (33% on average) followed by healthcare and retirement benefits. This corresponds to basic pay ranking first again this quarter as the top military benefit, followed by retirement pay, healthcare benefits and education. Military families are split on how changes to retirement might impact their time of service (49% say no impact; 31% serve longer). In Q315 most military families continue to indicate that they are taking action to prepare for cuts in defense spending (86% vs. 47% of general population families taking some action to prepare sequestration). Despite these cautionary steps, military families approve of the government in general (45% approve of the way Congress is doing its job, vs. 7% of general population families). The majority have confidence that Congress will avoid a government shutdown this year (61% vs. 30% of general population families). confidence among military families is unchanged from Q215. Not financially stretched FINANCIAL CONFIDENCE Q314 Q414 Q115 Q215 Q315 39% 35% 32% 37% 35% ly secure 43% 39% 38% 41% 41% situation will improve 54% 53% 51% 62% 62% Ability to retire 50% 49% 51% 58% 59% Military families with financial planners are more confident that their financial situation will improve in the next year and in their ability to retire comfortably than those without a financial planner (65% vs. 48% Extremely/Very Confident; 65% v. 35% Extremely/Very Confident Will Retire Comfortably). Military families remain committed to their efforts to increase savings and decrease spending. As reflected in previous quarters, families with a financial planner have a particularly positive outlook.

4 % Taking Action and Median Contribution Q314 Q414 Q115 Q215 Q315 Action $$ Action $$ Action $$ Action $$ Action $$ Short-Term Savings 85% $500 79% $500 85% $500 72% $425 74% $500 Long-Term Savings 67% $400 67% $400 73% $500 61% $300 66% $500 Retirement Accounts 79% $400 77% $500 87% $500 69% $400 74% $500 Short-Term Debt 87% $500 81% $500 85% $500 74% $500 76% $500 Long-Term Debt 85% $1,000 78% $878 77% $1,000 68% $750 72% $772 METHODOLOGY The First Command Behaviors Index examines financial behaviors, attitudes and intentions among U.S. consumers. The Index, launched in February 2008, was created by First Command Services, Inc., and Sentient Decision Science, an independent market research and consulting firm, was commissioned by First Command to compile the Behaviors Index. The research is based on a monthly survey of approximately 530 U.S. consumers, ages 25 to 70 with annual household incomes of at least $50,000. Survey respondents are asked questions related to three separate measures: Behaviors: How much money did you put into savings and investments last month? (Dollar amounts) Short-term (savings accounts, CDs, liquid money market funds) Long-term (stocks, mutual funds, bonds, college savings 529 plan) Retirement (401k, 403b, Simple IRA, Personal IRA accounts, TSPs) How much did you pay on your short-term and long-term debt last month? Short-term (car loans, credit card debt, etc.) Long-term (mortgages, student loans, home equity loans/lines, etc.) Intentions: Will you increase or decrease the amount you put into savings and investments next month? Will you increase or decrease the amount you pay on your debt next month? Will you increase or decrease the amount of debt you carry next month? Attitudes: How financially secure do you feel month to month? How would you rate your confidence that your financial situation will improve in the next year? How confident do you feel about your ability to retire comfortably? How financially stretched do you feel month to month? The margin of error for a survey based on 530 interviews is +/-4.3 percentage points with a 95 percent level of confidence. The method for calculating the First Command Behaviors Index may be subject to change depending on data tracking history and correlations with movements in the U.S. economy. For more information about the Index and the monthly survey, please contact Mark Leach at First Command Services.

5 About First Command Services, Inc. Through comprehensive, personalized financial plans comprising investments, insurance and banking products and services, First Command Services has since 1958 assisted individuals and families in their efforts to reduce debt, build wealth and pursue their financial goals and lifetime dreams. 1 FirstComm Plaza Fort Worth TX, T F About Sentient Decision Science, Inc. Sentient Decision Science is a full service behavioral science and market research firm with special vertical expertise within the financial services industry. Sentient specializes in advanced research design and statistical analysis of behavioral and attitudinal data. One Harbour Place, Suite 3 Portsmouth, NH 031 T F First Command Services, Inc. parent of First Command Planning, Inc. (Member SIPC, FINRA), First Command Advisory Services, Inc., First Command Insurance Services, Inc. and First Command Bank. Securities and brokerage services are offered by First Command Planning, Inc., a broker dealer. planning and investment advisory services are offered by First Command Advisory Services, Inc., an investment adviser. Insurance products and services are offered by First Command Insurance Services, Inc. in all states except Montana, where as required by law, insurance products and services are offered by First Command Services, Inc. (a separate Montana domestic corporation). Banking products and services are offered by First Command Bank. Securities products are not FDIC insured, have no bank guarantee and may lose value. A financial plan, by itself, cannot assure that retirement or other financial goals will be met. First Command Services, Inc. and its related entities are not affiliated with, authorized to sell or represent on behalf of or otherwise endorsed by: any federal employee benefits programs referenced by the U.S. government, the U.S. armed forces or any other third party mentioned on this site. In Europe, investment and insurance products and services are offered through First Command Europe Limited. First Command Europe Limited is a wholly owned subsidiary of First Command Services, Inc. and is authorized and regulated by the Conduct Authority. Certain products and services offered in the United States may not be available through First Command Europe Limited.