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First Command Financial Planning, Inc.
Type Privately held companies[1]
Founded 1958
Headquarters Fort Worth, Texas
Key people James N. Fort Worth is the fifth-largest city in the state of Texas and the seventeenth-largest city in the United States. Lanier, Chairman of the Board and CEO
Martin Durbin, President and Chief Operating Officer
Products Mutual Funds, banking, life insurance
Website http://www. In Marketing, a product is anything that can be offered to a Market that might satisfy a want or need A website (alternatively web site or Web site, a back-construction from the Proper noun World Wide Web) is a collection of Web pages firstcommand. com/index. htm

First Command Financial Planning, Inc. , formerly known as USPA & IRA, is a financial services company that for decades catered primarily to U.S. military members and their families. Financial services refer to services provided by the finance industry. The United States Armed Forces are the overall unified military forces of the United States [1] Founded in 1958 and based in Fort Worth, Texas, First Command employs approximately 1,000 registered agents in the United States and other parts of the world, primarily in Europe and Japan. Fort Worth is the fifth-largest city in the state of Texas and the seventeenth-largest city in the United States. Texas ( is a state geographically located in the South Central United States and is also known as the Lone Star State. The United States of America —commonly referred to as the For a topic outline on this subject see List of basic Japan topics. [2] Prior to 2004, the company claimed to be "[t]he #1 independent provider of financial plans to the professional military family. "[2] They have since started to serve non-military families. [3]

Contents

History

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 circustances surrounding United States military personnel.

USPA&IRA, the previous name of First Command, received its broker/dealer registration from the U. S. Securities and Exchange Commission on January 2, 1959. On January 21, 1959, the National Association of Securities Dealers (NASD) approved the company’s application for membership. On April 21, 1997, "First Command Bank" opened its doors to expand the services of the company. Four years later, in 2001, the company changed its name to First Command Financial Service. The company explained that they changed their 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. [4]

In 2004, the Board of Advisors included General Anthony Zinni, the retired Commander in Chief of the United States Central Command;[5] Coast Guard Commandant Robert E. Kramek, General Lloyd "Fig" Newton, and Vice Admiral John R. Ryan, former superintendent of the Naval Academy. Anthony Charles Zinni (born September 17 1943 is a retired four-star General in the United States Marine Corps and a former Commander in Chief of U The United States Central Command ( USCENTCOM) is a theater -level Unified Combatant Command unit of the U Admiral Robert Edward Kramek (born December 15, 1939) served as the twentieth Commandant of the United States Coast Guard from 1994 to 1998 Lloyd W "Fig" Newton is a retired United States Air Force four star general who served as Commander Air Education and Training Command (COMAETC Vice Admiral John R Ryan (b August 15, 1945) is a Naval Officer who is most notable for having served as the Superintendent of the US Naval Academy and The United States Naval Academy is an undergraduate college in Annapolis, Maryland, United States that educates and commissions officers of the United States

As of December 31, 2006, First Command had over 294,000 client families, $17. Events 406 – Vandals, Alans and Suebians cross the Rhine, beginning an invasion of Gallia. Year 2006 ( MMVI) was a Common year starting on Sunday of the Gregorian calendar. The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been 4 billion in managed assets, $52. 2 billion in insurance products, and $567 million in banking assets. Insurance, in Law and Economics, is a form of Risk management primarily used to hedge against the Risk of a contingent loss A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money First Command states that out of all members of the U. S. military, their clients include 40% of the general officers, 33% of commissioned officers, and 16% of non-commissioned officers. [2] Most of First Command's agents are former senior enlisted personnel or retired officers.

Regulatory settlement

On 15 December 2004, the U. S. Securities and Exchange Commission (SEC) found First Command guilty of violating Section 17(a)(2) of the Securities Act of 1933, a section which deals with fraudulent activities and the mail. The US Securities and Exchange Commission (commonly known as the SEC) is an independent agency of the United States government which holds primary responsibility Congress enacted the Securities Act of 1933 (the "1933 Act" the "Truth in Securities Act" or the "Federal Securities Act", enacted 1933-05-27 In the broadest sense a fraud is a Deception made for personal gain or to damage another individual It was determined by the SEC that First Command "willfully" violated the law by making "misleading statements and omissions" concerning marketing, comparisons with other funds, the availability and effectiveness to military personnel of TSPs[6], and the ability of a large front-end load in keeping people committed to the systematic plan. [7]

The SEC was highly critical of the manner in which First Command's sales script compared their Systematic Plans with other mutual funds, in particular, the representation of no-load mutual funds. According to the script, no-load funds "attract only speculators" while the Systematic Plans were the "only five mutual funds that are designed to attract only dollar cost average investors. "[8] The advantage of the Systematic Plans, the company claimed, was that they maintained stable cash flow. No-load funds are portrayed as being highly volatile due to fund managers having to sell shares when speculators unexpectedly redeem their shares. This, the script posited, caused no-load funds to "frequently have some of the highest long-term costs. " The SEC, however, noted that no-load funds are lower than load funds or Systematic Plans. [8] The SEC found that when comparing TSPs with Systematic Plans, the literature "fail[ed] to account for the impact of the 50% upfront sales load on the long-term cost of systematic plans, both in terms of the actual costs and the lost opportunity costs in terms of overall return. "[9]

First Command "mischaracterizes the upfront sales load as the only way a fund manager can ensure that most of the shareholders are committed, long-term investors. A mutual shareholder or stockholder is an Individual or company (including a Corporation) that legally owns one or more shares of "[10] The SEC then goes on to indicate that the company knew that the sales charge has not "worked. " In fact only 43% of those people who purchased Systematic Plans between 1980–1987 completed their contract. [10]

In December 2004, First Command settled with the SEC and NASD without admitting guilt. As part of the settlement First Command agreed to restitution to all clients who purchased and sold a systematic plan between 1999 and 2004; establishment of an educational programs; monitoring or prefiling. For other uses of settlement including legal uses see Settlement. The law of restitution is the law of gains-based recovery It is to be contrasted with the law of compensation, which is the law of loss-based recovery [11]

Operations since settlement

After the settlement, First Command hired Adan Araujo, the Senior Counsel for the SEC, as its new Chief Compliance Officer. Adan stated, "My long-term goals include ensuring that First Command's legal compliance procedures are second to none, and to help provide the ultimate financial protection to our clients and employees. "[12] 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. [13] 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. [14]

As a result of its relationship with Bill Bachrach, the marketing techniques of First Command have changed significantly. The company no longer endorses the use of the introductory seminar/dinner.

In the spring of 2005, First Command filed with the SEC to become a Registered Investment Adviser (RIA). This requires their agents to obtain additional training and certifications. As RIAs, the agents are now "Financial Advisors" as compared to "Registered Agents",[15] the former being held to a higher ethical standard (similar to a CPA versus an accountant. ) The company no longer offers the controversial systematic investment plans. [16]

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. "[17] Since Shapiro's comments in August 2006, First Command has continued to strive to change its image.

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. [18]

Notes

  1. ^ a b First Command website About Us accessed 4/13/2007
  2. ^ a b c SEC p. 2.
  3. ^ First Command Press Releases:First Command commits to serving small business owners, self-employed Accessed June 17, 2007. First Command promotes benefits of long-term financial planning at 2006 REALTORS Conference & Expo Accessed (sicsic) June 18, 2007 First Command rolls out new Web resource for women Accessed June 18, 2007
  4. ^ Spring 2001 issue of Independence (the company's monthly magazine now known as First Command)
  5. ^ Henrique, Basic Training
  6. ^ the military's equivalent to a 401(b)
  7. ^ SEC p 10. The Company targeted senior enlisted personnel (E-6s and above) and officers as their target clientele. Smith, p. 3.
  8. ^ a b SEC p. 8.
  9. ^ SEC p. 8, 14-15.
  10. ^ a b SEC p. 9.
  11. ^ SEC p. 12.
  12. ^ Araujo, Adan. Questions and Answers. First Command Magazine Summer 2005.
  13. ^ Speakers Roundtable Access June 18, 07
  14. ^ Business Editors. Financial Profiles, Inc. Hosts Bill Bachrach Seminars Nov 7, 2001. Accessed (sicsic) June 18, 07.
  15. ^ Financial job titles clarified by ruling, licenses The Arizona Republic. April 15, 2007. Accessed June 18, 2007.
  16. ^ First Command. Description of Services: First Command Financial Planning Inc. Accessed 6/19/07
  17. ^ Lee, Shelley. "Marty Durbin on First Command’s ‘Perfect Storm,’ Moving Beyond, and Serving Middle America" Journal of Financial Planning. November 2006. Accessed June 18, 2006.
  18. ^ Karen Jowers. First Command lawsuit ruled a class action September 27, 2007. Accessed 1/7/08

References

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