Black Americans want to build wealth not just for themselves, but for the benefit of younger Black generations. But with only 8% of Black families receiving inheritances (compared to 26% of white families), that can be a difficult goal to achieve.
In a recent blog post from Nationwide, Kristi Rodriguez, senior vice president of thought leadership for Nationwide Financial, writes that financial professionals have a crucial role to play in helping Black Americans close the wealth gap and foster stronger financial legacies among younger Black generations.
Financial professionals must address a general lack of trust to attract and win over Black clients. Black consumers are more likely to have lower levels of trust than white consumers, 61% versus 32%.
“Many factors have contributed to these low general trust levels, including a long history in the U.S. of systemic racist policies and practices, including redlining, school segregation, and inequity in law enforcement, to name a few,” writes Rodriguez.
Financial advisors must build trust with Black clients. While there are important planning needs for Black clients across generations, the biggest opportunities may exist with Black millennials.
Black millennials feel the negative financial impacts of COVID-19 more than older generations. They report paying more for health care over the past year and feeling held back by excessive medical debt. Black millennials are also more stressed financially than older generations. Fortunately, they seem open to working with financial professionals.
Younger Black adults and the financial professionals working with them can take cues from their parents and grandparents. There are strong bonds that connect older and younger generations within most Black families. The older generation has much to share with their children and grandchildren, including financial wisdom. Likewise, the younger Black generation is aware of the struggles and sacrifices their parents and grandparents have made. They need guidance and are willing to listen to what the older generations have to say.
In a survey conducted by Nationwide, current Black retirees were asked about the one thing they wished they could redo about their finances during their working years. The most common answer was to save more for retirement (59%). Secondly, Black retirees wished they had taken on less debt.
Financial professionals should stress the connections between these financial issues, showing how managing health care costs and debt can help build wealth.
Managing debt is one area where financial professionals can help younger Black clients get on firmer financial footing. By more effectively managing debt, Rodriguez explains that younger Black generations can more easily boost how much they’re able to save for retirement.
“Client relationships with Black clients should start with a base of financial planning and wealth building,” Rodriguez writes. “To this, financial professionals should add the perspective of addressing the unique needs of Black clients. This is where a greater focus on empathy can help, so financial professionals overcome the long-standing barriers to trust and build the foundation for a strong client relationship through communication.”
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