In 2021, people that identified as Black comprised 14.2% of the U.S. population, or 47.2 million people. Using process of deduction, it’s fairly accurate to assume that Black women make up more than 7% of the population, or 23.6 million people.
Indeed, that’s a large demographic group and one that’s growing and increasingly educated. That’s the good news, but there’s plenty more for advisors to be mindful of when working with Black women. Like their counterparts in other ethnic groups, Black women want to learn more about investing and retirement planning and they’re increasingly open to working with advisors.
Today, Black women are still contending with income gaps relative to men and women in other demographic groups, but advisors shouldn’t be dismissive of working with Black females. The Black community, including men, has spending power north of $1 trillion and the primary reasons more Black women aren’t investing or clients of advisors are easily ameliorated by advisors.
At least of the three can be addressed by financial professionals. Those factors are lack of money, lack of confidence and knowledge, and aversion to risk.
Black Women Can Benefit from Working with Advisors
Financial freedom is a concept likely to resonate with every member of an advisor’s current client base and everyone in the “prospective” camp. However, women are likely to be highly receptive to learning about how they can attain financial freedom and bolster their long-term financial outlooks. That’s important, but this is where the dichotomy starts.
Data confirm that the percentage of women that are investing in some form or fashion is well below the percentage of men participating in financial markets. Lack of financial literacy, capital and trust in the process are among the reasons why women are skittish about investing.
Specific to Black women, Goldman Sachs’ One Million Black Women released in late October highlights some of the financial issues Black women face – many of which advisors can help them improve.
“The survey’s findings illustrate that fewer Black women have full-time salaried jobs and are seeking gig work at higher rates than the broader population,” notes the bank. “Additionally, according to the survey, Black women have less career advancement opportunities, fewer have health insurance coverage through an employer, retirement savings plans and paid sick leave. They also disproportionately face barriers such as access to quality, affordable childcare when compared to the general US population.”
Fewer than half of Black working women have access to employer-sponsored retirement plans, well below the 62% national average. Additionally, 39% of Black females have emergency savings compared with 47% across all genders and races. Point is advisors are needed.
Black Women: An Increasingly Astute Demographic
As noted above, Black women are increasingly attaining higher education. That much is confirmed by 64% dealing with student loan debt of $25,000 or more, according to Goldman. That’s a near-term headwind, but over time, higher levels of education open the door to closing the wage gap and having more investable assets.
Additionally, Black women, broadly speaking, are civically and politically engaged as confirmed by the point that 89% expect to vote in the 2024 presidential election, observes Goldman. That could signal elevated awareness of macroeconomic issues, which could make for savvier clients.