Military Advice

The Heroes Earnings Assistance and Relief Tax Act of 2008 implements numerous changes to the federal tax code that benefit military personnel and their families. But the new law has received little attention in the mainstream media and may still be under the advisor radar on a national level.

When Rep. Richard E. Neal (D-Mass.) of the House Ways and Means Committee held hearings on the new HEART Act last spring, anybody watching in the chamber or on C-SPAN would have known the bill would surely pass due to the powerful testimony presented.

A widow of a major in the National Guard killed in Iraq spoke of being denied her husband’s full pension because he never returned to his job after taking a leave of absence — being deployed to Iraq — as pension rules had required. The HEART Act changes that pension provision.

A wife of a Marine explained that the family lost their Supplemental Security Income when her husband was deployed to Iraq, leaving her to deal with thousands of dollars in medical bills to pay for their two children who have chronic disabilities. That too has been amended.

The congressional hearing in Washington put a human face on personal and financial sacrifices made by those who put so much on the line for the country. Witnesses included members of the military and their spouses who spoke of the burdens placed on families connected with wars in Iraq and Afghanistan. These are families struggling to maintain their finances amid such conditions as loss of income during call-up, multiple deployments, injuries, higher health care expenses and death of a principal earner.

Advising the MilitaryThe Heroes Earnings Assistance and Relief Tax Act of 2008 (also known as H.R. 6081) was signed into law June 16, 2008. It opens a new horizon of opportunities and challenges for advisors who want to begin or step up their involvement in serving military clients.

“Financial advisors should make themselves aware of the HEART Act and its provisions for military families,” says Sheryl Garrett, CFP, author of A Family’s Guide to the Military For Dummies. Garrett, a prominent industry leader and founder of the Garrett Planning Network, points to the importance of financial advisors becoming familiar with the military’s structure of benefits and cultural ways of communication.

“They have a very tight network, so word-of-mouth referrals are valuable and potentially plentiful,” says Garrett. Yet Garrett also points out that the tight camaraderie and informal networking that exists within the military community can be challenging for the financial advisor to penetrate.

Once an advisor understands the range of unique benefits service members possess and the implications of the new HEART Act, then their combination of prior industry experience and awareness of military-specific opportunities make the advisor a valuable contribution to that community.

Phil Dyer, CFP, deputy director of financial education for the Military Officers Association (MOAA), echoes Garrett’s point, but with a bit of hesitation. He gives a “qualified maybe” when asked if the military is a space opening more to financial advisors. The former Navy captain says those who work to learn the intricacies of the system and advisors who themselves have had experience in the military have a distinct advantage when it comes to courting military clientele. “The military speaks its own language and has a set of quirky benefits which really have no equal in any other sector,” Dyer adds.

HEART BenefitsWhat happens when the often unthinkable occurs?