Income fluctuations, driven largely by frequent relocations, are a big part of financial planning for military members.zabelin/iStockPhoto / Getty Images
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Developing physical and mental resilience is a big part of the training Canadian military members receive to deal with the stress that comes with the business of war. Yet, relatively little emphasis has been placed on financial stamina for those in the service and transitioning to civilian careers or retirement.
The Canadian Armed Forces (CAF) is looking to fill that gap, driven partly by the rising cost of living and an overabundance of financial information – and misinformation – available online through social media and other sources.
“We’ve been working on financial literacy and now we’re connecting the dots and endeavouring to build a financial resilience program for our members,” says Brigadier-General Virginia Tattersall, director general, compensation and benefits, at the CAF.
The plan is being developed in conjunction with SISIP Financial, a division of Canadian Forces Morale and Welfare Services (CFMWS) – which provides insurance, investment and financial counselling for CAF members – and Bank of Montreal (BMO), the official bank of the Canadian defence community.
The CAF says the financial resilience program is aligned with the National Financial Resilience Strategy, with a goal to support mental, physical and familial resiliency – which it says, in turn, helps enable military readiness. The CAF is also hoping financial literacy and resilience will help recruit and retain members amid a shortage.
The financial resilience piece comes as Canadians struggle with higher inflation and interest rates, particularly the rising cost of renting or buying a home. Military members can be affected more than most as they often have to relocate for their jobs.
“In the military, we want you focused on what’s in front of you and not on the stuff around you, or bad things can happen,” says retired Major-General David Fraser, a defence and security sector advisor for BMO.
Military personnel also receive allowances when assigned overseas postings, which can amount to several thousands of dollars depending on the risk and their experience. Experts say many could benefit from more information on the best use for those funds.
Often, the money is used to buy big-ticket items, like a new truck, when it might be better used to pay off debt or invest in a tax-free savings account, first-home savings account, or registered education savings plan.
“It’s one thing to just give people training and say, ‘Spend less than you make,’” to help manage or avoid debt, Brig.-Gen. Tattersall says. But the CAF wants members to understand what they make and the benefits they receive “so they can make smarter short- and long-term decisions.”
Tax and income planning for military members
Income fluctuations, driven largely by frequent relocations, are a big part of financial planning for military members, says Jill O’Neill, senior vice-president of SISIP Financial, which has financial counsellors, financial planners, and investment and insurance advisors across the country.
“That causes a lot of disruption for the member and their family,” she says, noting the average longer-term military member moves about seven times in their career, which also affects spousal employment and household income.
There are also specific tax-planning considerations for members deployed in other countries.
“If somebody is posted to Latvia, Germany or the U.S., for example, they have different tax treaties to consider depending on the country,” Ms. O’Neill says.
When a member leaves the armed forces, financial planning considerations include the insurance and transfer of pension and benefits, the terms of which will depend on their years of service.
“When someone is released from the military, there’s all sorts of nuance and complexity involved,” says Ms. O’Neill, highlighting a program at her organization that supports members shifting to civilian careers or retirement.
“Decisions made when released from the military have a lasting financial impact, and the advice and the depth of the analysis that we’re able to perform has really helped to contribute to their overall financial wellness.”
‘Without a trusted advisor, people can get into trouble’
Mr. Fraser says today’s military personnel have more choices and arguably more challenges, which can complicate financial planning.
“People are struggling with housing costs, with debt, or they’ve never had so much money in their life and don’t know how to manage – those are the big things I’m hearing from members across the country,” says Mr. Fraser, a 30-plus-year veteran and former commander of NATO coalition troops in Afghanistan who joined BMO in 2017.
He says members are also more independent with their finances. Having more sources, such as the internet and social media – which aren’t always relevant to them or accurate – makes professional advice even more important.
“Without a trusted advisor, people can get into trouble,” Mr. Fraser says, and that can affect their personal lives and their careers.
He says the military has “come a long way” in helping older veterans and those newly entering the forces early in their careers.
“We spend most of our time educating and teaching about financial resilience and just resilience in general,” he says.
How advisors can serve military members
Brig.-Gen. Tattersall says advisors who want to work with military members can offer value by helping them navigate the profession’s unique pay, pension and benefits.
Military members will likely choose – and stay with – advisors who understand their needs now and in the future, whether they remain in the forces or pursue a different career.
“One of the greatest challenges for CAF members is trying to build that trusted relationship with any financial advisor,” Brig.-Gen. Tattersall says, which can be especially challenging given their nomadic lifestyles. “[Most] don’t want to constantly find someone new as they move around during their career.”
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