Fewer minority consumers receiving advice, but more are open to it

Fewer Americans who identify as BIPOC (Black, Indigenous, and People of Color, including Hispanic and Asian/Asian Americans) are receiving professional financial advice than they did a year ago, according to Allianz Life’s 2022 Retirement Risk Readiness Study.

But BIPOC populations are more open to working with a financial professional even though fewer BIPOC Americans are getting that professional advice.

Each BIPOC community identified in the study noted a decline in working with a financial professional from 2021. At the same time, the engagement of white Americans with financial professionals remained steady (48% in 2022 vs. 49% in 2021). A breakdown by subgroup showed:

• 24% of Black/African Americans worked with a financial professional, down from 38% in 2021.
• 35% of Hispanics worked with a professional advisor, down from 44% in 2021.
• 32% of Asian Americans worked with a financial professional, down from 36% in 2021

Fewer BIPOC respondents said they feel prepared to support financially the various things they’d like to do or the passions they’d like to pursue over the course of their life compared to white respondents (62% of Black/African Americans 68% of Hispanics and 72% of Asian vs 78% of whites).

Why are fewer BIPOC Americans getting professional financial help?

One reason is that the pandemic caused a large percentage of this population “to put things on pause,” said Travis Walker, Allianz Life business solutions and diversity consultant.

“A lot of BIPOC I interviewed said they weren’t prioritizing planning for future financial needs at that time,” he added. “They were busy taking care of what was immediately in front of them.”

Engagement down but consideration up

Although fewer BIPOC respondents are currently getting professional help with their finances, the number who are open to working with one in the future is on the rise.

The percentage of BIPOC respondents who have never used a financial professional but said they would consider using one grew for each group: 37% of Black/African American respondents, up from 32% in 2021; 34% of Hispanic respondents, up from 30% in 2021; and 39% of Asian respondents, up from 34% in 2021.

Why is there such a gap between those who are interested in receiving help and those who actually sit down with an advisor?

Walker said he believed one reason for the gap is misinformation about the industry.

“People tend to believe you need to have a certain amount of money to be able to use an advisor, or they don’t understand what an advisor can do for them,” he said.

Specialized assistance to meet evolving needs

Greater interest in working with a professional is a positive trend for the financial services industry as specific financial planning needs for each BIPOC community have likely evolved during the pandemic, dictating the need for more specialized professional assistance.

For Black respondents, declining confidence in being able to financially support all the things they want to do (71% vs 77% in 2021) has them finding more value in working with a financial professional on short-term planning issues as well as pursuing a nontraditional “work to retirement” path. Black respondents also listed the following as areas in which they would be interested in working with an advisor:

• 37% of Black respondents are interested in getting help with balancing a budget.
• 31% of Black respondents want help with paying down debt.
• 57% of Black respondents are interested in pursuing a nontraditional path to try different things at different times in life, such as taking breaks from work, going back to school or volunteering.

 

Hispanic respondents are more likely than others to regret some financial decisions they are making during the pandemic, and more likely to seek assistance with managing finances to support their family:

• 21% of Hispanic respondents said they regret taking money out of their retirement account.
• 28% of Hispanic respondents are likely to seek assistance with leaving a legacy to family.
• 20% of Hispanic respondents are likely to seek assistance with staying in their home.

 

Asian American respondents are more likely than others to find appeal in working with a financial professional who provides holistic financial services to help them meet their retirement goals and are more worried about maximizing their financial benefits in retirement.

• 73% of Asian American respondents are worried that the rising cost of living will prevent them from enjoying retirement.
• 69% of Asian American respondents are worried about market downturns hurting their nest egg.

Walker said he is encouraged by the findings showing how many BIPOC respondents are open to receiving financial advice.

“To me, that signals that they do understand the importance of it and that they can’t go it alone.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

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