Fewer Americans who identify as BIPOC (Black, Indigenous, and People of Color, including Hispanic and Asian/Asian Americans) receive professional financial advice than a year ago, Allianz 2022 study finds Life on preparing for retirement risk.
But BIPOC populations are more open to working with a financial professional, even though fewer BIPOC Americans receive such professional advice.
Every BIPOC community identified in the study noted a decline in engagement with a finance professional starting in 2021. At the same time, white American engagement with finance professionals remained stable (48% in 2022 compared to 49% in 2021). A breakdown by subgroup showed:
- 24% of Black/African Americans worked with a finance professional, up from 38% in 2021.
- 35% of Hispanics worked with a professional counselor, up from 44% in 2021.
- 32% of Asian Americans have worked with a finance professional, up from 36% in 2021
Fewer BIPOC respondents reported feeling willing to financially support the various things they would like to do or passions they would like to pursue in their lifetime compared to white respondents (62% of Black/African Americans 68% of Hispanics and 72% Asian vs. 78% White).
Why are fewer BIPOC Americans receiving professional financial aid?
One reason is that the pandemic has caused a large percentage of this population to “put things on hold,” said Travis Walker, business solutions and diversity consultant at Allianz Life.
“Many of the BIPOCs I interviewed said they were not prioritizing planning for future financial needs at this time,” he added. “They were busy tending to what was immediately in front of them.”
Commitment down but consideration up
Although fewer BIPOC respondents are currently getting professional help with their finances, the number who are willing to work with a professional in the future is increasing.
The percentage of BIPOC respondents who have never used a finance professional but said they would consider using one increased for every group: 37% of Black/African American respondents, compared to 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 getting help and those who actually sit down with a counselor?
Walker said he believes one of the reasons for the discrepancy was misinformation about the industry.
“People tend to believe that you need a certain amount of money to be able to hire an advisor, or they don’t understand what an advisor can do for them,” he says.
Specialized assistance to meet changing needs
Greater interest in working with a professional is a positive trend for the financial services industry, as the 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, loss of confidence in their ability to financially support all the things they want to do (71% vs. 77% in 2021) leads them to find more value in working with a finance professional on issues short-term planning as well as pursuing a non-traditional “work-to-retirement” journey. Black respondents also indicated the following areas where they would be interested in working with an advisor:
- 37% of black respondents want help balancing a budget.
- 31% of black respondents want help paying off their debts.
- 57% of black respondents are interested in taking a non-traditional route to trying 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 certain financial decisions they have made during the pandemic, and more likely to seek help managing their finances to support their families:
- 21% of Hispanic respondents said they regret taking money out of their retirement account.
- 28% of Hispanic respondents are likely to ask for help leaving a legacy for their family.
- 20% of Hispanic respondents are likely to ask for help to stay at 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 achieve their retirement goals and are more concerned with maximizing their financial benefits at retirement.
- 73% of Asian American respondents fear that the rising cost of living will prevent them from enjoying their retirement.
- 69% of Asian American respondents worry that market downturns will hurt their nest egg.
Walker said he was encouraged by the results showing how many BIPOC respondents are open to receiving financial advice.
“To me, that indicates that they understand the importance of this and that they cannot go it alone.”
Susan Rupe is an editor for InsuranceNewsNet. She previously served as communications director for an association of insurance agents and was an award-winning journalist and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.
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