Mark Steffe became president and CEO of First Command Financial Services Inc. Jan. 1, 2020, in a planned succession years in the making.
It’s a big although somewhat under-the-radar Fort Worth company that provides personal financial coaching to more than 280,000 client families around the world, primarily and by design to members or former members of the United States military services.
Steffe and the executive team figured the biggest immediate challenges were to guide a smooth transition from former CEO Scott Spiker who had served almost 13 years, continued development and enhancement of the company’s digital capabilities and being compliant with the SEC’s Regulation Best Interest (Reg BI) by June.
First Command holds a strategic planning offsite meeting every March, and the most recent one dealt with those three issues.
“It was roughly one week later that we sent 95% of our 600 home office employees and our entire field force to work from home. So, in just a few days, the world changed dramatically, and on Day 70 as the CEO, … we were dealing with the global pandemic,” Steffe said.
Then there was a market correction, and a kind of a flash crash that followed and in June the racial and social inequalities issues following the death of George Floyd.
“What we thought we were getting into in the beginning of 2020 quickly changed by the time we got into that March to June timeframe,” Steffe said.
Steffe sat down – on Zoom, of course – with the Fort Worth Business Press. Lightly edited excerpts from that conversation follow:
FWBP: What kind of stress did this throw onto your IT department?
Steffe: Our IT department has been working on our business continuity/disaster recovery plan for years. And in that plan is planning for a global pandemic. We thought [the chance] was small to minuscule, but it’s in the plan. And so when we sent everybody home on Friday, our IT department assured me that everything was going to be fine on Monday.
We actually had our call centers up and running over the weekend, and we asked our home office employees to test their equipment over the weekend, so that when Monday rolled around, we wanted our call centers as clear from home office employee calls, as we could, so that we could be taking field and client calls and not sort of have a conflict of trying to answer home office employee questions, when we really wanted to turn our time and attention to our field force and our clients.
We had an incredibly smooth transition from that Friday to the following Monday. And that has everything to do with the prior planning and preparation.
Where we saw this strain, in a positive way, on our IT department, was this really pushed us forward in our digital transformation. We were trying to move through things like straight-through processing, paperless delivery, electronic signatures, those sorts of things. And it’s interesting what a global pandemic will do for you when you think you’re already running and converting as quickly as you can.
When your feet are held to the fire, and you’re up against these global challenges and things that really challenge your business, you find a way to get things done a whole lot quicker and more effectively than in the past. And I’ve got to say our home office team did exactly that.
We got things done in weeks to months that might have historically taken several months to maybe a year.
One of the best compliments I’ve heard about the home office team over these nine months, from both the field and our clients is, no one can tell that our home office is working virtually. The productivity is incredibly high. The service levels are incredibly high. I’ve seen them really step up and rise to the challenge. And the fact that no one can really tell that everybody’s working virtually, I think, is maybe one of the best compliments we can get.
FWBP: Productivity can be high in a virtual environment because the employees are technically always in the office, but isn’t there an issue of burnout?
Steffe: That’s been our concern. Initially it was productivity. Would our productivity stay high? Would we still be able to get our work done? And we cleared that hurdle early on. You could tell that people were stepping up. You could tell that the systems were working. We were getting the compliments around, “We can’t tell people are working remotely.”
Our attention quickly turned to the mental wellbeing of our employees. We became very focused on communicating to them that we didn’t want them to burn themselves out, because the time they had been using for commuting, the time that you might’ve gotten away at a break at the office or things where you would see a normal break in your day, or just, “Hey, it’s time to go home,” people would be on their computers earlier. They weren’t getting off them during the day, they were staying on later, they were working on weekends.
And we certainly appreciated that effort, but our concern became burnout. And so we’ve talked to our employees a lot about getting away from your computer during the day. Not getting on too early, shutting it off at night and taking your vacation.
A lot of people are reluctant to take their paid time off, because there’s nowhere to go. We are really encouraging folks to take that time off, because we all need that time away from work to spend time with our families and recharge our batteries and just clear our minds.
So we’ve been communicating heavily on, “Don’t let work consume you. We certainly appreciate the effort and the commitment and the productivity.” We want to be very careful to guard against burnout and making sure that just like we’ve taken care of their physical health, we want to make sure that their mental or psychological health is at the forefront as well.
FWBP: A big part of your company – in fact the Business Press gave you an award for this – has been your philanthropy, hosting parties on military bases, helping with Toys for Tots or similar. Has this cut in to your ability to do that kind of voluntary service?
Steffe: It’s cut into our ability to do the in-person service in many ways, but the field force, has been very creative about finding other ways to support the military, to improve morale, to do charitable work.
We may be a medium-sized company, but we are proud that our philanthropy is on a “big company” proportion. We already have scarce resources overcommitted in a business structure which gives us no tax benefit from charitable contributions. We are running near 7 percent of profits already to our current charitable organizations.
We still went forward with our annual spirit of giving campaign in October, supporting United Way of Tarrant County, our First Command Educational Foundation and Project Sanctuary. We did everything virtually, and we’re very much of a face-to-face, knee-to-knee type of company. And we were all curious as to how that was going to go.
We really pushed on participation, not so much as focused on how much money we were going to raise this year, but on getting everybody to actively participate. Our participation rate was over 85%, 90% somewhere in that range. We raised almost as much money this year, doing it virtually, as we did in our prior year. Last year was a record setting year for us in terms of the money raised.
I was incredibly proud of the team and the participation. We used the creativity of the people who were leading our annual Spirit of Giving Campaign to figure out how you can keep people engaged and kind of upbeat during COVID and during this remote work. So we had a successful participation rate and a real successful fundraising year as well.
I think the great news about our employees through the Spirit of Giving Campaign is they just realized we’re all fortunate in the positions we were in, to work for a company like First Command, to be able to support our military families. And a lot of folks weren’t as fortunate as us. And this was a year, I think, when a lot of people stepped up and were able to maybe give a little bit more than they have in the past.
FWBP: Did you have any layoffs?
Steffe: We’ve not had any layoffs. As soon as COVID hit, our chief financial officer, Sunday Grace, was all over this. We ran stress tests on our income models and our portfolio on a regular basis. And we’ve always been aggressive in testing those and putting them through some extreme circumstances. And certainly COVID really put them through some extreme circumstances.
What we saw is that, as bad as we were predicting things could be by the end of September, which is our fiscal year end, we felt that we were going to take a hit to our bottom line profitability. And we thought bonuses would be down and deferred compensation contributions at the end of the year would probably be down. But we still felt like we could pay year-end bonuses. We still felt like we could contribute to the deferred compensation plan. And we didn’t see a need, even back in that April-May timeframe where we would need to do considerable layoffs.
And that’s exactly how it mapped out. We didn’t have a round of layoffs. We weren’t cutting hours. We weren’t cutting people’s income. Everyone stayed employed. And while we didn’t pay 100% in bonuses or make the same deferred comp contributions we have in the past, we still held them at incredibly high levels.
We couldn’t provide normalcy. There was no such thing as normal anymore. Everything was up in the air. But what people really hope for is some version of stability. And so we could go to our employees and our advisors and do as much as we could to provide stability for them. It allowed them to not have nearly as much stress or worry about, “Am I going to have a job? Are my hours, or my income going to get cut. Will I get a home office bonus? Will I get my deferred compensation contributions?”
So we wanted to try to take as much of that worry off of their shoulders as we could, provide as much stability as we could, which then allowed our employees to focus on servicing our advisors and our clients. And for our advisors, our field force, to focus on finding military families to put on a path to financial security and continue to coach and counsel our existing clients.
So, by clearing that emotional aspect for them, as much as we could, it allowed them to focus on the work at hand. And that’s a huge reason, I think, we had such a successful year.
FWBP: Did you apply for PPP or any of those types of programs?
Steffe: We didn’t need to as a company. We felt with the size and the stability of First Command, we didn’t need to do that. But our field force, our advisors, our district advisors, they’re all independent contractors. And clearly, with the market down 35% from its high in February, the S&P from its high in February to the trough in March, our advisors, our field force rode through that and it put a substantial hit on their income. And so, many of our advisors looked into the PPP loan and many not only qualified, but applied for it and received PPP loans.
FWBP: Did your finance department assist with those?
Steffe: Through First Command Bank. Our commercial lending department got qualified as a Small Business Association lender right away, and then we were able to provide those PPP loans to our clients and to our field force through First Command Bank.
Our commercial lending department was literally working around the clock to get the applications completed, to get them processed, to get those funds out to our clients and our field force. They stepped up in a big way. That SBA processing system is not the easiest thing to get the loans processed through.
FWBP: I’m not surprised that there was planning ahead of time for the events of 2020. That’s a process common to the military.
Steffe: That’s very much our nature. Financial planning is the core of our business. And every interaction with our new clients starts with a financial plan. We’re all about planning. Understanding where you are now, where you want to be five, 10, 20 years from now and what you’re going to do to get there.
And so having a plan and contingency plans makes a lot of sense from a corporate perspective. As you said, many of our field force, our advisors, 80% of our field force are former military or military spouses. They’re used to planning and contingency planning and adjusting on the fly as they need to.
We don’t think we can predict the future for sure, but we think we’ve got a robust plan in place. And we build that plan and then we execute the plan. And as we get more information, we’re not afraid to adjust course when necessary. We don’t get so locked into something that we’re afraid to take on that new information and make the necessary adjustments.
We write a five-year business plan every year. And every time, in that five-year business plan, we know there’s a bear market in there somewhere. Somewhere there’s a big drop in the stock market. I don’t know when it’s coming, but somewhere in five years, you’re probably going to have one. And so, we embed that into our financial plan.
So, when it hit this year, even though there was a quick recovery of that flash crash, we’d already baked a bear market into our financials. And so, it doesn’t rock our business like it might some others.
FWBP: Direct communication is important in dealing with a situation like this. Would you agree?
Steffe: That’s exactly how we approached COVID. We tried to be very sensible, rational, thoughtful as we went through COVID as we were getting new information. We communicated honestly, directly, transparently to our field force, to our employees, to our clients. We communicated frequently.
When we knew something and had the answers, we told them. When we didn’t have the answers, we told them. And I think that built even stronger credibility with our clients, our advisors and our employees because we were shooting straight. We were frequent communicators.
Prior to COVID, we would send out maybe 30 communications a month. And I think by April, May, we were up to 50, 60 communications a month, going out to everybody. We were just sort of serial communicators, certainly during the early days of COVID. Just to provide that stability, to remove anxiety where we could, to ensure our clients knew that we were here to take care of them and to ensure that our field force and our employees knew that we had their backs and we were doing whatever we could to sort of steer this company through this pandemic and make sure that everyone was going to come out all right, on the other side.
FWBP: Did you get any complaints about too much communication?
Steffe: We were really aware of that. And our marketing department was great at it. We knew that we had to spike those communications in the early days, but it wasn’t long into that, we actually had that discussion more than once.
There is a time in the near future, most likely, when those communications need to start tapering off again, because you can only handle that volume for so long. And if you’re not careful, people are going to stop reading the messages and hearing the messages because you’ve just overwhelmed them with volume.
So I thought our marketing department did a phenomenal job of hitting that just right. They spiked those communications in the early days and got us over that hump, probably for four to six or seven weeks. And then we started tapering those communications off, and really tried to allow things to settle into their new rhythm. I don’t want to say normal, but into a new rhythm. And we just did what we could to keep people updated at that point and keep the volume to a manageable level.
FWBP: Is the fact that you’re closely held a big advantage?
Steffe: I think it’s a huge benefit for us. It goes back to the planning discussion we were having earlier. As a privately held company, we have a board of directors that understands our business and is supportive of our business. We’ve got a management team that is experienced and committed to our mission and our vision. And by being privately held, we get to plan for the long-term and we don’t have to react to quarterly earnings, all sorts of things.
So that five-year business plan I was talking about before, to be able to sit down and think strategically and execute strategically, is a big advantage for us. I think that’s why we’ve been so consistent in our growth and our earnings every year, because of that planning approach, that methodical approach to growing the business.
Now, clearly during the pandemic, you can’t just focus on strategy.
Over the last nine, 10 months, our executive leadership team has spent a lot of time executing that strategy, still planning for the future. But at the same time, you have to deal with the here and now. I’m really proud of our executive leadership team for finding what I think is the perfect balance of those two things: Dealing with the here and now, the COVID pandemic, and all things that came with it, but still looking to the future and never losing sight of where it is we’re trying to go over the long-term.
That balance for us has been critical. So we were very careful not to do too much in the short term that would deteriorate the long-term or put too much focus on the long-term that we weren’t addressing the urgency of today. And we’ve got a great team that’s really struck the right balance over the last nine to 10 months.
BY THE NUMBERS
First Command Financial Services
4100 S. Hulen St.
Fort Worth 76109
- 1958 – Year founded in Fort Worth
- 1985 – Year moved to current location
- 600 – Number of employees in Fort Worth
- 280,000 – Approximated number of military families served
- 74 – Percent of customers active duty or retired/separated military
- $30 billion – Funds in managed accounts and mutual funds
- $60.2 billion – Life insurance coverage in force
- 500 – Approximate number of financial advisors
- 8 of 10 – Ratio of veterans or military spouses among financial advisors
- 5 – Ranking among military brands
- 178 – Number of offices worldwide
- 25,000 – Approximate number of hours donated to military and other charitable causes by First Command personnel in 2019
- 2 – Number of days company gives of paid time in addition to vacation and holiday leave for volunteer work
- Hundreds – Number of events local offices sponsor on military bases across the country and abroad
- 7 – Percent of profits donated to current charitable organizations.
Source: First Command Financial Services
Mark Steffe, President/CEO
First Command Financial Services Inc.
Mark Steffe is the president/CEO of First Command Financial Services Inc., which provides personal financial coaching to more than 280,000 client families around the world, seeking to make lifelong financial security possible for all military families.
Steffe joined First Command as a Senior Vice President and Chief of Staff of Advisor Operations in 2010. He was promoted to president in 2017 and expanded COO responsibility in 2018, and became president/CEO in January 2020.
During his tenure at First Command, Steffe has visited more than 50 military installations in 23 U.S. states and three countries. He consults regularly with First Command’s Military Advisory Board, a select group of retired senior flag officers and senior enlisted leaders from the nation’s military services. The 10-member board provides First Command with an independent perspective on issues relevant to First Command’s work, as well as advice on how to best serve the interests of military clients.
Steffe has spearheaded inclusion initiatives for First Command. He committed to the CEO Action for Diversity & Inclusion™ pledge in 2020 and championed the hire of the company’s first Diversity & Inclusion Director.
Steffe actively supports several charitable endeavors, including the annual Spirit of Giving campaign by United Way of Tarrant County and the First Command Educational Foundation (FCEF), a separate 501(c)(3) public charity. FCEF offers approximately $130,000 in annual scholarships and financial education to America’s military servicemembers, civilian federal employees and their families. In addition to his philanthropic pursuits, Steffe is active in Leadership Fort Worth LeaderPrime, which fosters connections among Fort Worth business leaders new to the city or to their roles.
Steffe graduated with high honors from the University of Illinois, earning a bachelor of science degree in finance. He holds Series 7, 8, 23, 63 and 65 securities registrations, plus life and health insurance licenses. He completed the Harvard University Advanced Management Program in 2015.
Steffe lives in Fort Worth with his wife and five children. On any given day off, you can find him attending one of his children’s sports games or cooking family dinners.
– First Command Financial Services Inc.