Serving with honor

J. Scott Spiker of First Command Financial Services tells us about how his organization helps military families succeed during and after active duty.

By Carol Patton

As an Air Force lieutenant colonel who served in both World War II and the Korean War, the late Carroll Payne experienced the hardships of battle. But his recognition of the hardships of day-to-day life for some military families would mark the beginning of a story that continues to this day.

In the early 1950s, he worked closely with a number of military families who had lost loved ones in a training flight and combat. He felt their pain and financial despair. Likewise, while stationed at Eglin Air Force Base in Florida, he observed military retirees eating at the officer’s club on credit because they had depleted their limited retirement funds for the month.

“[Payne] left the service with an impression that these military families were not paid a lot even though they served a cause bigger than themselves,” says J. Scott Spiker, chairman and CEO of First Command Financial Services (FCFS), a holding company based in Ft. Worth, Texas, comprising a financial planning, brokerage and insurance firm and First Command Bank.

“It was his mission in life to help these folks be prepared to have an adequate or ample retirement [fund].”


of company shares are owned by non-officer employees

In 1958, Payne launched FCFS and dedicated his career to servicing the financial planning needs of military families. As FCFS grew over the following decades, it partnered with many banks in the communities it served to help military families restructure and pay off debt, save money, build their credit and make smart investments.

Early on, the company worked with independent financial advisers. Many were veterans. Then, in 1997, FCFS opened the doors of First Command Bank, an FCFS fully owned subsidiary.

“[FCFS] did not start out as a bank but as a financial planning company, broker-dealer and insurance agency,” says Spiker. “We really grew between the 1960s and 1980s with those component pieces.”

With $787 million in assets, the 20-year-old bank supports one branch in Fort Worth, Texas, and continues to honor Payne’s legacy of catering to military families around the world. What makes the bank so unique is not only its dedication to veterans but also its status as one of the few banks in the country that is fully owned by its employees through an employee stock ownership plan (ESOP).

Collective ownership

Over the decades, Carroll Payne was generous to the people around him, including the independent financial advisers who referred their customers to the bank as part of their financial planning process. He rewarded these advisers with company stock.

By 1998, the FCFS workforce had grown significantly. Senior officers began realizing the tax benefits of forming an ESOP, and did so in 2002.

“At the time, we got the advisers who owned [FCFS] stock and the Payne family who owned stock to sell their stock to an employee stock ownership trust,” says Spiker. “Employees at the holding company would now have the opportunity to own 100 percent of the company’s shares.”

We’re in a narrow niche market. Our business model works. There’s lots of local competition, but no one is organized on a national basis like we are.”
—J. Scott Spiker,
First Command Financial Services

In exchange, Payne family members received a cash buyout, while the independent financial advisers participated in a deferred compensation plan, which is a cash benefit distributed over time.
Today, the holding company supports 607 employees: 521 at the financial planning, brokerage and insurance firm and another 86 at the bank. Spiker says employee turnover is approximately 8 percent annually, which is a sign of a healthy employer.

Serving military families—J. Scott Spiker, chairman and CEO of First Command Financial Services, sits with Michael Morrison, chairman of the board of First Command Bank. Opened in 1997, the bank is the newest addition to the holding company, which began as a financial planning, brokerage and insurance firm for US military families.

“What makes our ESOP unique is the breadth of the holding,” Spiker says. “Across 600 people, the 45 officers only own 15 percent of company shares, which means the rank and file own 85 percent.”

Moving with its customers
Of the 300,000 families that the bank counsels, Spiker says at least 37 percent, or more than 100,000, are also bank customers. Nearly 80 percent of the bank’s new clients are millennials; since technology is native to this population and many are veterans stationed overseas, the bank continues to evolve its digital support services, enabling all customers, wherever they are in the world, to perform a wide variety of banking transactions online.

Portable services
When military customers are transferred to other bases, Spiker says, FCFS also transfers the financial planning relationship to another independent adviser in their new local market, enabling veterans to receive continuity in the financial planning advice they receive.

FCFS now supports 170 financial planning centers in the US, along with additional offices overseas in Great Britain, Germany and Guam. Spiker says the majority of centers are in close proximity to a military base.

First Command Bank

Fort Worth, Texas
Assets: $787 million
Retail location: One
Employees: 86
Founded: 1997

Working with military families offers ample rewards. Spiker gives the example of some customers who accumulated $25,000 or more in debt on their credit cards prior to becoming clients. The bank approved them for debt consolidation loans. Yet, he says, the bank’s charge-offs are “next to nothing.”

He believes that military families are deserving, disciplined and prone to take action. Given the opportunity, they update their financial plans and take steps to prepare for their future.

“We’re in a narrow niche market,” Spiker says. “Our business model works. There’s lots of local competition, but no one is organized on a national basis like we are.”
He adds that the goal of FCFS and First Command Bank has never been about “getting rich” but about serving people who have honorably served their country.
“There’s nothing better,” Spiker says, “than when you wake up in the morning [and] you talk about the company’s mission, not the financials.”

Carol Patton is a writer in Nevada.