- The Washington Times - Thursday, February 16, 2006


Marketing of overpriced, unsuitable mutual funds and life insurance to military personnel has prompted an effort to educate service members and their spouses about financial matters.

The campaign was announced yesterday by the National Association of Securities Dealers (NASD) — the brokerage industry’s self-policing organization — as well as several members of Congress and government officials.

The NASD’s $6 million program will provide financial-training programs for military spouses and for financial counselors located on bases. A new Web site, www.SaveAndInvest.org, will provide information for military personnel and their families, and a global advertising campaign is planned.

About 2,000 military spouses have applied to become financial counselors, according to the NASD.

“We know that military personnel need objective, unbiased information to help them make sound financial decisions,” said NASD Chairman Robert Glauber.

At a time when troops are fighting and dying in Iraq, lawmakers have denounced widespread instances of financial companies targeting military personnel with high-pressure sales tactics and exorbitant fees. Legislation that would curb sales to military personnel of exploitive mutual fund plans, insurance policies and other investment products passed in the House in 2004 and 2005, but has not been voted on in the Senate.

The $6 million for the education program is coming from fines imposed by NASD and the Securities and Exchange Commission in December 2004 against First Command Financial Planning Inc., a company that sold high-fee mutual funds to military officers. First Command, based in Fort Worth, Texas, agreed to pay a total of $12 million, with the other $6 million going to compensate certain customers.

The company neither admitted nor denied the regulators’ charges that it used misleading sales material to promote the so-called “contractual plan” mutual funds, but it did agree to be censured and to refrain from future violations of securities laws.

The NASD has issued a warning to investors regarding contractual plan mutual funds, which charge commissions that can take 50 percent of the investor’s contributions in the first year. Also called systematic investment plans or periodic payment plans, they allow investors to accumulate shares of a fund by making monthly payments, usually as little as $50, over a long period of 10, 15 or 25 years.

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