60% Of Black Women Report Difficulty Finding Trusted Advisors: Survey

The financial services industry is overlooking or underserving a potentially huge and growing market, according to a new study from the Center for Economic Empowerment and Equality, part of The American College of Financial Services.

The study, “Black Women, Trust, and Financial Services,” surveyed 3,500 middle-income Black women and found three in five expressed difficulty finding financial professionals or advisors they trust.

The research concluded that engagement of the Black community within the financial services industry is largely transactional – not advisory – and that Black women are less aware of the different types of relationships they can have with financial advisors and institutions, an especially concerning finding, it said, given Black women play prominent earning and financial decision-making roles in Black households.

The study’s authors said the existence of the issues are well known, but they hoped to probe deeper.

“Knowing it is one thing, but understanding the root causes is another,” said Pamela Jolly, senior strategist at The American College of Financial Services. “And so, we sought to understand the financial behaviors, experiences, and actual causes of it so that we could help the financial services industry navigate a way beyond that. So, while on the surface, it may seem like ‘tell me something I don't know.’ But underneath that are some real opportunities for the financial services industry.”

Tailored Advice Needed

The study concludes that the industry must start providing trusted advice that is tailored to Black women who desire to better navigate the current economic climate.

“I don't think it requires the industry to change its business,” said Karim Hill, executive director of the Center for Economic Empowerment and Equality. “I think it does require it to change its outlook and requires it to recognize the opportunity and to go about making those changes in more of a culturally relevant way. There needs to be a different level of intentionality.”

Black women are aspiring for financial stability for themselves, and at the same time they want to use their economic power to build a better future for their families and their communities, he said.

“The financial services industry has an opportunity to increase awareness of what is possible for Black women and their wealth with trusted advisory services, products, professionals, and investments in advisor diversity and Black-owned financial institutions,” he said.

The center is having discussions with industry groups and individual companies about the study’s findings, he said, declining to identify which ones.

While the industry may need to catch up to this notion, some financial service leaders may already be convinced. Ted Mathas, the chairman and CEO of New York Life, said recently that as rival insurers are expanding globally, NY Life has retreated in favor of building business in minority and immigrant populations domestically.

Mathas told the Wall Street Journal he believed Black communities within the U.S., along with Latino and Asian neighborhoods -- what he called “cultural markets" -- held more promise for growth than has been generally realized.

“We made a pivotal move,” he said. “Exit the international market but double down on the internationalization of the US population where there is growth of young families and the need for insurance.”

'A Real Opportunity'

Jolly agreed that the growth of young families, particularly among the Black community, is an underserved or under realized market. She notes that 11 percent of the American population is African American, and more than half are women.

“The white American population is aging, but when I look at the window of wealth building for African Americans, it starts at age 34 or 40 and you have a 14-year window in which incomes are increasing in that population,” she said.

The research underscored three cultural norms critical to Black women and their financial decision-making and relationships with the financial services industry. The three emerging themes were:

• Importance of trust in decision-making
• Priority of community and family over individualism
• Value of interpersonal community and relationships

“There's a real opportunity here to really get it right, to build the right relationships, meet them where they are. and help them get further down the road to wealth,” Jolly said. “Because beyond the transaction and the advisory relationships are wealth accumulation and transfer. And so often we don't get there because we don't know how to get there. And so that's where the relationship really comes in.”

Given the overall racial makeup of the industry and general cultural divisions in the country, shouldn’t the industry already be aware of possible shortcomings in servicing the minority market?

“My grandmother used to have a saying,” said Dr. Jolly. “You can’t see the whole picture if you’re posing for it.”