By Monica C. MeinertToday, more than 1.3 million men and women serve on active duty in our country’s military—both at home and abroad in more than 170 countries—with an additional 865,000 in reserve.
The American fighting force is constantly changing, with about a third of the force turning over each year. It also skews young—at any given time, a little more than 40 percent of the force is comprised of enlistees age 25 or younger. Most of them have some or no college experience, and for many, it’s their very first job.
Because of this, members of the military and their families face unique challenges when it comes to their finances, notes retired Army Col. Paul Kantwill, director of servicemember affairs at the Consumer Financial Protection Bureau and a panelist at ABA’s 2018 Regulatory Compliance Conference. “Military life makes it hard to achieve financial well-being, because of frequent moves, deployments, the fact this is a first job for folks. They don’t have a wealth of financial acumen.”
One key challenge: existing debt. “Most of our enlistees arrive on active duty with between $14,000 to $18,000 in debt—typically medical debt, credit card debt or student debt,” Kantwill says. In addition, “payday and title lenders target military members because they know they get a steady paycheck and in many cases, especially among our youngest military members, don’t really have the savvy to manage their affairs well,” observes Steve Lepper, president and CEO of the Association of Military Banks of America and a retired major general in the U.S. Air Force.
Poor debt management can have serious consequences for active duty service members, adds James Kim, EVP and head of consumer banking at First Command Bank—a community bank that specializes in serving the military community. For example, a poor track record with debt can prevent service members from receiving top secret security clearances.
At First Command, “education is a huge priority for us,” Kim says, adding that bankers nationwide “can take up that responsibility to teach our young men and women about financial literacy.”
As one of the nation’s largest banks, Wells Fargo has made a strategic commitment to serving military members and their families, says Lt. Col. Jerry Quinn, SVP and military affairs program manager, who is the active-duty deputy commander of a U.S. Army Reserve brigade. The bank has created several resources for servicemembers, including a pre-deployment checklist. Quinn also emphasizes to his bankers the importance of discussing not just military status with service members but digging deeper and looking at their whole financial picture.
“We really need to start with this entire concept of financial readiness for the servicemember. I’m trying to ensure my bankers know how to have that conversation,” he says. “It’s not a conversation about opening a checking account, it’s a conversation about their financial well-being. When we can have that honest conversation with our servicemembers, not only do we learn more about what their needs are, we can give them good quality information.”
Deploying for a new career
Banks can also play a role in helping active duty service members transition back to civilian life.
When Capt. I-Hwei Warner was transitioning out of active-duty Army service, he found an opportunity to enter the banking sector through J.P. Morgan Chase’s Military Pathways Development Program. Through the program, military veterans have the opportunity to do rotations in different departments to find a role that suits them best. Warner recalls that “the breadth of opportunity in the financial services industry was what attracted me to it.”
First Command’s James Kim—who transitioned out of military service at age 28 and was hired into a management training program through M&T Bank—notes that such programs help position military members for success.
“In the military, there’s a considerable amount of training that prepares you for your first job,” he says, recalling the eight months he spent preparing for his first posting as an Army platoon leader in Germany. He spent about the same amount of time learning how to become a banker. “At the end of eight months, I felt that I was ready,” he says, adding that for military vets, “the transition through a program like that is so important.”
To help encourage military veterans and active-duty military spouses to transition to banking as a career, the American Bankers Association is launching a new suite of online training courses that cover the basics of customer service, lending, payments and ethics.
Banks stand to benefit significantly from their veteran hires, who bring a unique skill set and mindset to their work. During his interview with M&T Bank, “I focused on things like my leadership skills, the discipline that I learned. I talked about the work ethic, the loyalty to the team [and] my chain of command,” Kim says. “By hiring veterans, it’s not just good for the country, it’s good business as well.”