A new Edelman Financial Engines survey found women of color are establishing their own financial narratives to better serve them.
According to the study, 67% of women of color said they were actively forging a financial path different than the one they had growing up, 67% expressed confidence in their ability to earn money, and 50% are confident in the direction their lives are heading.
The findings were based on an online survey of 2,000 men and women, ages 25 to 64, who identify as African American, Asian American, Hispanic, multiracial, and Caucasian, along with interviews and mobile ethnographies with over 60 women from across the United States, also of different races.
Edelman notes that while the wage gap affects women of all races, women of color are susceptible to feel larger breaks than white women. According to the study, Black women in the U.S. are paid 36% less than white men and 12% less than white women, Latinas are paid 46% less than white men and 26% less than white women, Asian American women are paid just 85 cents for every dollar paid to white, non-Hispanic men, and Native American women are only paid 60 cents for every dollar a white, non-Hispanic man makes
Additionally, households of color have traditionally not had the same economic opportunities as white households to disproportionate injustices.
“Beyond the broader financial disparities women have traditionally encountered, those of color have faced additional obstacles, including larger wage gaps, a lack of tailored financial literacy resources, and a general lack of trust in the industry,” said Rose Niang, director of financial planning at Edelman Financial Engines. “Despite these hurdles, our study reinforced a number of areas where progress is being made – specifically with developing greater financial confidence and a positive economic outlook.”
In its findings, Edelman found that 48% of women of color felt confidence in their ability to meet long-term financial goals and were most likely to have a relaxed or risk-taking mindset compared to white women, who were more likely to have a disengaged mindset.
Women of color were also more likely to be interested in conversations surrounding generational wealth than white women (33% vs. 16%) and were likelier to offer financial support to a family member or friend (13% vs. 6%).
However, when it came to talking about their finances, women of color were more likely to shy away. Only 28% reported having a confident mindset with financial planning and investments. Instead, women of color were likelier to be eager and more receptive to help with financial planning, at 71%. Eighty-two percent said they prefer to work with a financial advisor from a similar background who shares common values, even as less than a quarter of certified financial planners (CFPs) are women, and only 1.7% of CFPs are Black and 2.7% Hispanic.
Ultimately, Edelman’s research finds women of color are looking to work with a financial advisor who they can depend on as a trusted source, and someone who is committed to growing their financial knowledge and confidence.
Additional findings from the study can be found here.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
