The pandemic has taken a toll on the economy, markets, and individuals in an untold number of ways, but its impacts are being felt acutely amongst the Black community in America. A survey done by Nationwide Retirement Institute found that over half of Black Millennials had suffered due to the financial stress the pandemic has created, while one out of every five young Black adults reported that the financial stress had affected their health, according to a Nationwide blog post by Cynthia “Cindy” Hoes, associate vice president of business and program strategy.
At the top of the list of specific stressors regarding retirement for Black Americans are inflation and rising prices, as well as concern about Social Security funding, the rising costs of healthcare, and higher taxes. Saving for retirement is consistently the top financial goal for Black individuals, with half of Black consumers surveyed reporting that they believe their financial situation is not better than that of previous generations.
The buying power of Black Americans is only increasing, with the growth of Black-owned businesses and employment, as well as estimates from the U.S. Census Bureau that the U.S. population will be majority minority by 2045. It’s an opportunity to create economic equality for Black consumers, according to Hoes, and financial advisors can help teach financial literacy and empower their Black clients.
The Importance of Transparency and Respect
“Financial professionals can lead the way by encouraging Black Americans to save early and invest in tax-advantaged savings vehicles and protection products. Providing culturally relevant financial education about the social and cultural impact of wealth building and wealth transfer is imperative. Financial professionals can make significant inroads with Black consumers by delivering support and advice that is both transparent and respectful,” writes Hoes.
These two qualities of transparency and respect are the top ones that Black consumers reported when looking for a financial professional; the Black community has lower levels of trust for financial professionals and institutions, with over a third reporting that they had interviewed five or more financial professionals before choosing one. Black clients are more likely than their white counterparts to have a written retirement plan but are much less likely to have a legal will; that area is a key one for financial professionals to act on their opportunity to help ensure generational transfer of wealth and help to bridge the wealth gap.
“This demographic is an under-served market. However, they are ready and willing to embrace financial guidance and solutions,” explains Hoes. “As such, financial professionals can—and should—focus on building strong relationships with Black consumers to help them improve their financial wellness, close the racial wealth gap and create legacies for future generations. Together, we can change the trajectory of financial stability and security in Black America.”
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For more news, information, and strategy, visit the Retirement Income Channel.