By Cyril Tuohy
The level of life insurance protection accumulated by an African-American household is twice as important an indicator of financial confidence as in the general U.S. population, a new Prudential study of the financial habits of African-Americans has found.
African-Americans also are less likely to rely on a professional financial advisor compared with the rest of the general population, the study found.
Life insurance accounts for 22 percent of African-Americans’ total financial confidence score, compared with 11 percent for the rest of the population, according to the study. Having enough life insurance to protect loved ones was cited by 38 percent of the respondents, compared with 21 percent for the rest of the population, the survey also found.
Survey results show that African-Americans, as well as the general population, rate family members and professional financial advisors are the two most important sources of information for making financial decisions.
A total of 33 percent of African-Americans said the family was the most important source for financial information, compared with 40 percent for the general population. A total of 29 percent of respondents said a professional financial advisor was the most important source of financial information, compared with 37 percent for the general population.
Sharon Taylor, senior vice president and head of human resources at Prudential, said the results show how important the family is to African-Americans when making a financial decision.
“African-Americans also report managing more financial priorities than the general population, despite doing so with lower incomes,” Taylor said in a statement. “African-Americans have a greater number of family-oriented financial priorities, like adequately protecting loved ones, leaving an inheritance and funding education.”
Nearly half of African-Americans say they have a 401(k) or other workplace retirement plan, the survey also found. But many African-Americans still contribute less than their employer match either because workers are confused or because they simply don’t know how employer-sponsored plans work, according to the survey.
The survey of 1,153 African-Americans with household income of $25,000 or more was conducted March 7-19.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].
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