COVID’s economic fallout continues to impact people of color disproportionately. Pew Research finds that job and wage losses due to the pandemic have hit Hispanic adults the hardest, and most Black and Hispanic Americans lack financial reserves to cover expenses in case of an emergency.
It’s wreaking havoc with their finances, yet a silver lining of sorts is an increasing trend that connects diversity and inclusion initiatives with financial wellness programs for more targeted, culturally appropriate, and therefore effective results.
“COVID has revealed inequities that have always existed but weren’t really understood,” says Liz Davidson, CEO and Founder of financial wellness provider Financial Finesse. “Large companies have been very aware of the importance of diversity and inclusion, but there’s always been a lack of understanding of the nuances of the problem, especially when it comes to finances.”
That’s beginning to change. With the help of science and technology, Davidson and her team are collecting information and engaging with employee resource groups (ERG) within organizations to determine where employees of color are currently, and how to improve their financial wellness scores through niche marketing and other diversity initiatives.
“Financial wellness usage is proportionate to the populations and demographics overall, which is good,” Davidson explains. “If it’s marketed through the right channels and in the right way, employees are even more likely to use it. That’s the silver lining in all of this.”
While many of the initiatives are new, they’re nonetheless already seeing a positive impact. She says the challenge is ensuring they’re personalized and tailored to specific needs and why ERGs are essential in identifying barriers to employees seeking help.
Simple steps
Calling it a focus (or refocus) on restoring the American Dream, something she believes “has been in reverse for a while,” small steps can mean big changes.
“For instance, there is a lot of nuisance in how credit agencies rate people. You can make a big dent in your credit score quickly by taking a few key steps like correcting inaccuracies, which are huge. A low credit utilization ratio is another, meaning credit used compared with the amount available. We also know the role homeownership plays in improving financial wellness by building equity rather than paying rent.”
It’s among the top three priorities for senior benefits professionals with whom Financial Finesse works. The firm is looking to formally develop a diversity and inclusion practice that focuses on those engagements.
“People are more comfortable talking about race, so we’re having conversations with clients that are more open than they have ever been,” Davidson concludes. “Companies have coalitions that are very diverse themselves. They’re coming together and hearing each other’s experiences and perspectives. That’s helping to build strategies for effectively marketing to different groups, and they also have a hand in how it’s done.”