SEC Chairman Clayton offers insights on both investment, financial strategies Published Sept. 1, 2017 By By Senior Airman Joshua Eikren 375th Air Mobility Wing Public Affairs SCOTT AIR FORCE BASE, Ill. -- The Honorable Jay Clayton, Chairman of the U.S. Securities and Exchange Commission, gave Team Scott a unique opportunity to ask questions and gain insight into the SEC and financial preparedness during his visit here Aug. 23. He explained how the mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. “We’re charged with regulating financial markets,” he said. “You read about the stock market, the bond market, and then there are many markets that go beyond that, and we are charged with overseeing them. We’re really the referees on the field, with 4,500 people and 11 offices.” He said the SEC regulates about one million people who are active in the financial markets each day. They set the rules and if someone breaks them, they “throw a flag” to fix it. “We take a look (at both the good and bad) to see how tomorrow’s ‘game’ can go better and how we can referee it better,“ said Clayton. “Like you guys, the people who work at the commissions care about and know their jobs.” During Clayton’s visit, a question and answer session was hosted by Col. John Howard, 375th Air Mobility Wing commander. There they heard Clayton’s position as Chairman of the SEC and get his personal advice and counsel on financial issues. CONSUMER CREDIT To new Airmen, the chairman cautioned about consumer credit. “Consumer credit is a good thing ... being able to borrow some money on a credit card and get the particular thing you need, but don’t get in the cycle of paying high interest rates or carry high consumer credit balances. If you have a significant consumer credit balance, you are probably paying really high interest rates like 18, 19, or 20 percent, and that’s a lot of your money going to somebody else that you will never see back. “I can’t find you any investments giving you any kind of assurance that it will yield 18 or 19 percent, so try and get your consumer credit down.” SAVINGS ACCOUNTS Clayton advised young Airmen to start as early as they can putting some money aside for themselves. “I don’t believe there is anything better than paying yourself. For instance, taking part in the Thrift Savings Plan can yield another 5 percent for you, and that’s pretty much free money down the road. I encourage you to take advantage of that.” AVOID SCAMS Senior Master Sgt. Sherod Thompson, 375th Aeromedical Evacuation Squadron, asked about advice for junior Airmen on long-term investing and how to avoid Ponzi schemes and scams. Clayton said, “First, I’ve been doing this a long time, and I’ve never seen a sure thing. The most important thing you can do is know who you’re dealing with. It is so important to know that the person you’re dealing with is a straight-up person. “One of the things we’re working on at the SEC is to have a database available to you and anyone which lists the people who have been in trouble in the past. It’s called Investor.gov, so if you’re dealing with an individual who is giving financial advice or trying to sell a product go to the database and put the person in to find out if they have a disciplinary history.” Investor.gov is from the SEC’s Office of Investor Education and Advocacy. It is an online resource to help people make sound investment decisions and avoid fraud through educational material and programs. Another area fertile for fraudsters are affinity programs—people who appeal to a similar characteristic that you have. There are people who will say, “I was in the military and you’re in the military, so you should invest with me and trust me.“ Check them out because having someone that has a common experience is nice, but it can also be a red flag. He also raised his concern for quick loans or “cash now” places, as they can be a quick place for young Airmen to get extra money for certain situations without knowing how they work. “Just because something is legal, doesn’t mean it’s the right choice. In the appropriate circumstance, consumer debt can make some sense, but don’t get in the habit of that being how you live your life,” he said. “You will end up working for someone else really fast. Think of taking 15-18 percent of your income and giving it to someone else, and that’s what these places do.” He reminded Airmen who may be having personal hardships or financial crisis to contact their First Sergeant or the Airman and Family Readiness Center first. There are several programs to help Airmen such as the Air Force Aid Society to assist or classes about budgeting and money management to avoid the quick loan disasters. REPORTING SCAMS “If you or someone you know gets scammed, you can go to Investor.gov and report it,” said Clayton. “The smartest people get scammed. If you or someone you know get scammed, do not be embarrassed. Call us, we have a hotline that you can call to report it. “A big part of what I want to accomplish at the SEC is for ordinary investors to know that we have their backs. It’s a privilege to be able to offer investment advice and sell investment products, so I want the people who take advantage of others to be out of the system, and that’s why we’re putting them up on Investor.gov.” BUYING HOMES Airmen also asked for Clayton’s thoughts on buying or selling homes as military members who move every three to four years. “Everything like that is a personal choice. You may not feel like paying someone (rent) for your whole career, but then again you don’t want to be buying a home here and then having to sell it in another two years,” Clayton responded. “It’s one of the things that the rest of America probably doesn’t understand, but the longer you are in a home the more it makes since. I would say two to three years is pretty close to the inflection point, which is what makes it pretty tough, and unfortunately that isn’t a good news answer.” THRIFT SAVINGS PLAN He also explained how the whole country has been shifting to defined benefit plans from pensions. “For me and people at the SEC, it means we have to be particularly mindful that a greater percentage of Americans are going to be making their own investments decisions and relying on those decisions for their retirement, and that should inform how we regulate the markets,” said Clayton. “That direct connection with the markets is going to be something new for the next generation of retirees, and our view and regulation with how we approach things should reflect that.” Regarding the Blended Retirement System, Clayton explained, “For people between 12 years of service and just starting that has got to be an individualized choice that should be driven by your expectations on how long you plan to stay in the military. I think the benefits for the transition, for people who aren’t going to stay, you can use it to start putting money away and get it matched, then move into the next part of your career with some start toward a retirement. “With the old program, if you stayed 10 years and went into the private sector you wouldn’t have that. It does put some personal responsibility on folks, but I encourage people to put in as much as you can that gets matched because that is free and protected money, and you will probably be happy you had it when you retire.” Both Clayton and the wing commander urged service members and civilians alike to use resources available to them—be it the A&FRC or Investor.gov, for getting educated on finances and preparedness. Clayton added that “no civilian in the world should get mad at you guys for taking advantage of the benefits you have. You deserve them all, and you should take advantage of them.”