Astute advisors know that simply because a client or prospective client is in the office, the reasons for being there differ.
There are obviously differences regarding financial goals and planning based on age, employment, marital status and yes, race. That is to say advisors shouldn’t expect linear expectations and needs across the various racial groups.
With February being Black History Month, the occasion is a reminder that there desires and needs for financial advice in the Black community. However, advisors should also remember that those goals are plenty pertinent in the other 11 months of the year.
Advisors know that race in the U.S. is, to say the least, a sensitive topic. They should also know that while the bulk of their clients are probably Asian and white, all races, ethnicities and demographic groups need and want financial advice.
However, the unfortunate reality is some advisors aren’t answering the call when it comes to broadening their client bases. They should alter that thinking and simple math explains why that’s the case. In 2020, the combined Black and Hispanic population in the U.S. was 109 million, according to the Census Bureau. Fortunately, an expert provides insight regarding how advisors can better connect with African-American clients.
Focus on Financial Wellness
As Nationwide’s Cynthia Hoes points out, the coronavirus pandemic laid bare some of the sources of financial concerns among Black Americans.
“A recent Nationwide Retirement Institute survey found that the majority of Black Millennials (57%) felt they had been negatively impacted by financial stress during the pandemic,” wrote Hoes. “In fact, one in five young Black adults said financial stress impacted their overall health. While the numbers were lower for older generations of Black Americans, the negative financial impacts were still significant for 46% of Black Gen Xers and 27% of Black Boomers.”
While the pandemic may be fading in the eyes of some, it’s negative financial consequences are still raw for consumers across a variety of races. Add to that, inflation is persisting and that’s another source of consternation for Black clients that are looking to get ahead when it comes to retirement planning.
“Among Black Millennials, Gen Xers and Baby Boomers, inflation and rising prices ranked highly as either the first- or second-highest stressor. Worries about Social Security funding, rising healthcare costs and higher taxes also scored among the top stressors for Black Americans when planning for retirement,” adds Hoes.
Speaking of Social Security…
This subject is most applicable to older clients and with thousands of baby boomers retiring on a daily basis, Social Security is a pertinent subject for a broad swath of clients and as advisors know, owing to the various ages at which a client can claim Social Security benefits, there’s no one-size-fits-all answer here.
Nationwide’s Hoes highlights the fertile territory Social Security can be when it comes to nurturing relationships with African-American clients, noting four of five surveyed by Nationwide would seek the help of a financial advisor if that professional can help them better understand Social Security. A compelling data point to be sure.
“We found that two-thirds said that they expect Social Security advice from their financial professional. However, more than half reported that they are not confident in their knowledge of Social Security which could be, in part, because 35% said their financial professional had not provided them with any advice on how and when to file for Social Security benefits. This is a huge opportunity for financial professionals to make sure they are providing the knowledge their clients are seeking,” concludes Hoes.