23 ways financial advisors can serve and hire more veterans

November 9, 2023 4:29 PM

Veterans Day, Arlington National Cemetery — Troops march during an honors procession on the centennial anniversary of the Tomb of the Unknown Soldier at Arlington National Cemetery in Arlington, Virginia, on Nov. 11, 2021. Experts say veterans often struggle financially after their time in the military.

Financial advisors and the wealth management industry can help veterans find jobs, get benefits, manage their cash flow and find much-needed support networks, according to experts.

The list of 23 tips below on working with more veterans as clients and hiring more to positions in the industry comes from servicemembers-turned-financial advisors and other industry professionals. They include practice management insights, key planning questions, benefit enrollment issues and a discussion of the financial challenges often facing veterans, caretakers and their families after military service.

In honor of Veterans Day, Financial Planning reviewed recent research from the AARP, the FINRA Investor Education Foundation and the Department of Veterans Affairs and spoke with a half dozen advisors and other experts:

Paul Stephens, a Navy veteran and the founder of Savannah, Georgia-based Paul the Advisor

Chet Bennetts, a Marine Corps veteran and free financial counseling and planning provider to servicemembers and their families who is the ChFC and CFP certification education program director at The American College of Financial Services

Ramona Maior, a Navy veteran who is a vice president and relationship manager at Phoenix-based Priority Financial Group

Annette Harris, an Army veteran who is the founder of Jacksonville, Florida-based Harris Financial Coaching

Derek Pszenny, a Marine Corps veteran and head of the Pinehurst, North Carolina-based chapter of a support network organization for veterans called Irreverent Warriors who is the co-founder of Greenville, North Carolina-based Carolina Wealth Management

Mark Steffe, the CEO of Fort Worth, Texas-based First Command Financial Services, an independent wealth management company specializing in working with active servicemembers and veteran clients

For 23 tips on working with and hiring veterans, scroll down the slideshow below. To see a deep dive into how pro bono services are important to advisors' professional development, click here. For a look at how advisors can help prevent domestic violence, follow this link.

The key financial challenge

The loss of housing, medical care and other services provided to active-duty servicemembers "is something that doesn't get discussed" and usually poses a big challenge to veterans, Maior said.

"I think the biggest thing is having expenses and liabilities that were covered by the military that now you have to take care of," she said. "You leave the military and now you have to create a budget, which you're not used to. Most of the time you're spending more than you have coming in."

Financial struggles

Housing and "basic allowance for subsistence" or "BAS" payments come to a halt at the end of a veteran's service time, Stephens noted.

"You don't get those when you leave the military," he said. "You need to make more money than you think you do when you're getting out."

Financial literacy among veterans

The transition to civilian life presents many financial challenges to veterans, according to Steffe.

"While on active duty, veterans' primary focus was to protect our freedoms," Steffe said in an email. "Unfortunately, that did not necessarily include maintaining strong financial readiness. To paint a picture about financial readiness among the military, a recent First Command survey revealed that military families scored 57% on a financial literacy quiz, compared to 69% for the general public. As veterans, many still need to get their 'financial house' in order as a result of their time serving, which included frequent 'permanent change of station' moves, military spouse unemployment, etc."

Online investment chatter

Pszenny gets worried when he reads "a lot of the talk on the Facebook pages and the chatter" about investing from veterans online, he said.

"They're more interested in the speculative investments, so they're trying to make that fast buck," Pszenny said. "Instead of putting together solid investment portfolios, they're all chasing the latest and greatest hot investment, and it just concerns me that many of them don't really realize what long-term investing is all about."

Professional development

Advisors trying to work with more veterans as clients should first do research on the military pay and retirement systems and key tax considerations for ex-servicemembers, Maior said. They also need an "understanding that, sometimes, it's beyond the financial part of it" and some "empathy to their situation," she said.

"A lot of it is education in basic things related to debt and credit card debt," Maior said. "A lot of veterans are receiving promotions for vehicles and credit cards that are not necessarily appropriate, and sometimes it's a little predatory."

Transition assistance on a ticking clock

Financial educators like Bennetts work with veterans using the Department of Defense's transition assistance program. The military branches do "a phenomenal job of providing resources to servicemembers and their families while they're serving," but only "for a period" after their time in uniform, he said.

"The problem lies in that the access to those services hard stops after 180 days," Bennetts said. "Speaking from first-hand experience as a veteran, you are trying to check those boxes as fast as you can. The retention of that information when you're just trying to get the heck out of there is very, very low."

Communication breakdowns

Many veterans confront barriers to getting jobs after their service is up, according to Harris.

"After leaving the military, veterans often face difficulties in finding employment that matches their skills and experience level," Harris said in an email. "This is because they struggle to communicate their military skills in terms that are understandable to civilian employers. As a result, they may be overlooked for jobs that they are qualified for. Conversely, recruiters may not know how military skills can be applied to the current job market. The misconception of transferable skills can lead to extended periods of unemployment for veterans, which can have negative financial impacts on their lives."

Veteran homelessness

At the end of 2022, there were 33,129 unhoused veterans, including 19,565 in shelters and 13,564 who "experienced unsheltered homelessness," according to the latest VA statistics. The number has fallen by more than a half since 2010, and the agency said in late August that it's on pace to top its goal of housing 38,000 veterans by the end of the year.

In remarks at a mental health summit in September with faith-based organizations and other community partners, VA Secretary Denis McDonough directed any veterans or caretakers to visit the website VA.gov/REACH to access available resources from the agency.

"You are the people they know and love. You are the people they trust. So, a recommendation from you can go a long way toward convincing a skeptical veteran to give VA a try. And doing that, well, it can change their life. I'll come back to this later. But please, check in with the Veterans in your life who may be going through a rough time," McDonough said. "Everyone can be part of the solution and help save Veterans' lives. Every interaction a vet has with clergy, friends, family, strangers, or loved ones has the potential to save a life."

Veteran suicide prevention

The organization where Pszenny volunteers, Irreverent Warriors, seeks to prevent suicides by connecting local veterans with one another. At least 6,146 veterans took their own lives in 2020, when the suicide rate among ex-servicemembers fell slightly to 31.7 per 100,000, according to the VA. The agency operates a veterans crisis hotline that's available free 24 hours a day, seven days a week, in addition to other suicide prevention resources.

"A lot of veterans struggle with depression and isolation and alcoholism and a lot of other things that can lead to suicide. Integrating back into civilian society is a big challenge for a lot of veterans," Pszenny said. "All of a sudden, you're out in the world and you're kind of on your own. … If you move to a community that doesn't have very many veterans and then you're out there kind of on your own, it's hard to get back into civilian society."

FINRA’s research on veterans’ financial health

More than one-third of veterans say it's difficult for them to cover their expenses, and 16% are spending above their income, according to a report this week from the FINRA Foundation. Black and Hispanic veterans were more likely to face financial difficulties than white ex-servicemembers, and female veterans displayed lower incomes and employment rates than males. However, Black and Hispanic women ex-military members displayed similar or better financial capability than white women.

"It shows that the financial experience of veterans is not monolithic. Continuing to understand the financial capability of distinct groups, like military veterans, can provide policymakers and stakeholders with the insights needed to best address the financial needs of important subpopulations," FINRA Foundation President Gerri Walsh said in a statement. "Financial education and counseling can be important tools to help close some of the gaps in financial capability we see among different populations, including among veterans."

AARP stats on the financial challenge of caregiving

More than 6.5 million caregivers to veterans and active-duty servicemembers perform $14 billion worth of unpaid labor while spending an average of $11,500 of their personal income every year, according to data released this week by the AARP. The advocacy organization and the Elizabeth Dole Foundation are hosting a free webinar next week called "The Caregiver Roadmap to Financial Security."

"The financial challenges veteran and military caregivers face are too often invisible or ignored," Pete Jeffries, the national director of AARP's Veterans & Military Families Initiative, said in a statement. "Caregiving responsibilities and expenses add up over time. From cleaning clothes at the laundromat or gassing the car for a medical appointment, these caregivers need support to make it easier for loved ones to live independently in their homes for as long as they can."

Helping caregivers

The VA "provides support, including financial assistance, healthcare and counseling, and respite services to family caregivers," Harris noted.

"Financial professionals can help military families prepare for the cost of caretaking by helping them identify government and employer benefits that may be available to them," she said. "If a caregiver is employed, their employer may also have benefits available to them. In addition to identifying benefits, financial professionals can help caregivers prepare financially by helping them create a budget, develop a savings plan, and explore options for long-term care insurance. By taking a holistic approach to caretaking support and financial planning, caregivers and military veterans can successfully manage their finances."

Encouraging veterans to get their benefits

Only 34% of veterans have used their VA healthcare benefits, according to census data cited by the AARP. That stat "blows me away, where we could do a great thing for clients in this profession," Bennetts said, pointing out the impact of advisors learning about veterans benefit programs such as waived state property taxes, VA disability payments, the Tricare health program and other issues. Advisors "could do a great service to their clients by being educated in it," he said.

"It took me a long time to feel like I earned the ability to go to the VA. A lot of veterans, especially in my generation of veterans, think, 'I didn't earn it,' or 'I'm broken, but only on the inside,' or 'I'll deal with it later," Bennetts said. "If you have these issues and they happened during the military, you need to talk to the VA. Even if they don't give you a penny of VA disability, it at least gives you access to health care resources."

The importance of disability benefits to planning

Veterans qualifying for VA disability benefits at a young age are essentially acquiring a "big fixed-income portfolio" and a net worth of $1 million, according to Pszenny. The administrative hurdles of receiving those benefits often prove daunting to veterans, he noted.

"I would literally have to go hire an attorney to get my disability benefits approved, because they lost my military records," Pszenny said. "I find that heartbreaking for that veteran who needs that money and he or she has earned those benefits. If you want to work with veterans, you should have an understanding of how that VA disability benefits process works. … There's red tape, and cutting through the red tape is a very big challenge."

Low-cost life insurance for veterans

As an advisor, the most surprising aspect of looking back on his military career is that "no one explains" benefits like the life insurance policies available to servicemembers, Stephens said. Earlier this year, the VA boosted the maximum amount of coverage by $100,000 to $500,000 through Servicemembers Group Life Insurance (SGLI), an automatic enrollment policy for eligible active-duty servicemembers, and the Veterans' Group Life Insurance (VGLI), which is available to veterans who transition their active-duty policies or apply within one year and 120 days of their exit from the military. Veterans get maximum coverage for $30 a month, with traumatic injury protection available for $1 more.

"A lot of people don't know how to sign up for the VGLI," Stephens said. "If you don't sign up, you lose it."

Empathizing with veterans

Besides learning the technical details of veterans' finances, advisors should display empathy to their situation, according to Steffe.

"It's important to recognize the unique needs of the military community," Steffe said. "We are focused on coaching those who serve to pursue financial security. Often the first step is building trust. Financial advisors can gain trust by taking time to understand clients' circumstances, military benefits and goals in order to provide tailored guidance. When advisors demonstrate a genuine commitment to veterans' needs, they can make real progress."

The same general planning knowledge applies to veterans

While Bennetts thinks advisors should get a sense of how "complicated and nuanced benefits can be within a veterans financial plan," he doesn't favor a "specific designation" for working with them as clients, he said. All of the professional planning topics advisors need to get started already come through in certification courses like the one he teaches at the American College of Financial Services or the CFP Board's curriculum, Bennetts said.

"It should be embedded in a lot of that content," he said.

Prospective veteran advisors

Veterans make great advisors and industry professionals because of "the skillset and the determination that you learn in the military to never give up and to never quit," Pszenny said.

"Lots and lots of people start out in this industry, and they just don't make it for whatever reason," he said. "They get really really close to success, and they give up."

An attractive potential post-service career

Financial companies should continue their "big push" to hire veterans, Bennetts said.

"As a community, the more that veterans can be in a vocation or a profession where they feel like they're making a difference, they can be part of a team and they can see that there's a greater accomplishment beyond just self-preservation," he said.

A veteran’s business

Since launching his own advisory practice last January, Stephens has been working with fellow veterans and business owners looking for assistance in building wealth over time, he noted.

"It's been really exciting," Stephens said. "I built my entire firm on the thought of, 'I would rather find a client who doesn't have any assets and needs help getting to that point.'"

Pathways into the profession

The idea of "starting out in an industry that's new to them" seems difficult to many veterans, Pszenny said.

"I think the biggest thing that veterans need is a chance or an opportunity, because they're the most determined individuals in the world," he said. "What I think they need is a foot in the door and some training. If you give them some training and you let them go, you're going to find that these are some highly successful, determined people."

Careers for veterans

Firms should make a priority of considering veterans as employees, in addition to a base of potential clients, according to Steffe.

"The financial industry can better serve veterans not only by making financial planning affordable, but also by actively recruiting and hiring veterans to advise military clients," Steffe said. "Veterans bring tremendous leadership, problem-solving, focus and discipline from their training — skills that translate powerfully to financial advisory roles. At companies like First Command that focus on the military, veteran advisors offer invaluable perspective. Their firsthand knowledge of military life helps them relate to clients and guide them in avoiding pitfalls and achieving financial security."

How to get involved

Advisors seeking to get involved with supporting veterans might consider acting as pro bono financial coaches or volunteering with local groups, Maior said.

"I would encourage advisors to look in their local communities about veteran services or veteran programs out there," she said. "There are programs out there where advisors could go and attend and understand a little bit more."