A higher number of diverse Americans are utilizing professional financial advice in 2023, finds a new report by Allianz Life.
According to the Allianz 2023 Annual Retirement Study, which surveyed 1,000 individuals over the age of 25, 36% of Black Americans reported working with a financial advisor in 2023, an increase from 24% in 2022.
Hispanic investors also saw a shift—42% currently have a financial advisor, compared to 35% last year.
This trend of increased engagement among Black and Hispanic workers correlates with a rise in financial confidence, finds the research. When asked, “Right now, how confident do you feel about being able to financially support all the things you want to do going forward in your life,” Black and Hispanic Americans all reported an 80% confidence level (a nine-point year-over-year increase for Black Americans and a five-point increase for Hispanic Americans).
“It’s great to see an increase in diverse populations working with financial professionals and gaining confidence,” said Travis Walker, business solutions and diversity consultant of Allianz Life, in a statement.
Still, Allianz Life data emphasizes a continued need for tailored and personalized advice among diverse investors, noting that advisors cannot provide guidance with a “one size fits all” approach. “…Clearly the industry has more work to do,” continued Walker. “We have to really listen to what our clients and potential clients are telling us about what they want, and don’t want, in a financial professional.”
“We have to really listen to what our clients and potential clients are telling us about what they want, and don’t want, in a financial professional.”
Travis Walker, Allianz Life
Among Black Americans who do not work with a financial professional, 26% said they choose to not seek advice because they do not have enough money, 32% said it costs too much to work with an advisor, and 16% do not trust financial professionals.
Among Hispanic investors, 32% do not work with a financial professional because of a lack of funds, 34% said it is too costly, and 12% expressed a level of distrust with professionals.
Allianz Life also surveyed Asian American investors, finding that 33% do not have the money to afford financial advice, 46% believe advice is too expensive, and 15% do not trust advisors.
The survey adds that these feelings may stem from the fact that Black Americans and people of color face different financial challenges, and goals, than others, stemming from historical racial gaps and disproportionate barriers to wealth.
For example, 38% of Black and Hispanic Americans list “paying off credit card debt” as one of their top three financial goals, compared to 30% of the total population.
Additionally, while 45% of the total population say, “saving enough and making plans to live a comfortable retirement,” is one of their top three financial goals, only 36% of Black Americans say the same.
Thirty-one percent of Black Americans say “leaving a legacy for my family” is one of their top three financial goals, compared to 23% of the total population.
When asked about topics they have not discussed with a financial advisor, but would like to, Allianz Life reported that 78% of Black, 77% of Hispanic and 69% of Asian American investors would like to discuss the possibility of “unexpected, large expenses to pay for, including damages to a home, replacing major appliances, and needing a new car,” as compared to 56% of the total population.
Furthermore, 77% of Black, 73% of Hispanic and 70% of Asian American workers would like to discuss how “the rising cost of living will prevent me from enjoying my retirement,” as opposed to 59% of the total population. And, 77% of Black, 79% of Hispanic and 62% of Asian American respondents would also like to discuss “navigating Medicare and health insurance and making the right choices for my healthcare,” compared to 54% of the total population.
Lastly, when asked what might make them prone to working with a particular financial professional, 23% of Black Americans said they would like to work with an advisor who has “similar characteristics to me such as similar age, gender or race,” further emphasizing the need for diversity within the advisory industry.
“One of the ways we bring more people of color into our client population is to bring more people of color into the career of financial professional,” said Walker. “There are a variety of industry-wide efforts to do so, and our success in these efforts will go a long way toward creating a more inclusive market for financial guidance.”
SEE ALSO: