The BIPOC market is an opportunity for finance professionals

What do you want to know

  • Members of the three main BIPOC groups seem less likely to talk to finance professionals.
  • Their interest in talking to finance professionals is strong.
  • A possible solution: More proximity to finance professionals.

Managing finances during the pandemic has undoubtedly been a challenge for many Americans.

But as we know, the assistance of a financial professional can be particularly beneficial in times of great uncertainty and volatility such as the one we have experienced recently.

Whether you need help with day-to-day budgeting or longer-term concerns like retirement planning, finance professionals have the expertise to bring clarity to difficult financial planning topics. .

Unfortunately, these tasks have likely been more difficult for Americans who identify as BIPOC — Black, Native, and People of Color, including Hispanic and Asian/Asian Americans — over the past year due to a lack of professional assistance.

We reviewed this recently 2022 Retirement Risk Preparedness Studyan online survey, conducted in February.

The survey team based the findings on a nationally representative sample of 1,000 people ages 25 and older in the contiguous United States, with an annual household income of $50,000 or more. they were single, or $75,000 or more if married or with a partner, or at least $150,000 in investable assets.

The study also included an “oversample” of respondents who identified as Black/African American (388 responses); Hispanic (355 responses); or Asian/Asian American (373 responses).

For each BIPOC community included in the study, the survey team found a drop, compared to 2021, in the likelihood that survey respondents reported working with a finance professional, even though the level of d white Americans’ professional commitment to finance has remained much the same:

  • #24% Black/African American, up from 38% previously
  • #35% Hispanic, up from 44% previously
  • #32% Asian/Asian American, down from 36%
  • #48% white Americans, up from 49% previously

This lack of engagement with finance professionals could lead to feelings of unpreparedness.

BIPOC respondents were less likely than white participants to say they felt willing to financially support the different things they would like to do or the passions they would like to pursue in their lifetime:

While it is certainly disheartening to see that BIPOC communities are not receiving a higher level of financial planning assistance compared to last year, the fact that the decline only exacerbates the wealth gap race is perhaps more disturbing.

One of the reasons engagement may be on the decline could be a matter of prioritization. For many members of BIPOC communities, the process of financial planning with the help of a professional is still relatively new and could still be seen as a luxury rather than a necessity.

So when times are tough, these additional expenses are often abandoned in favor of more pressing priorities.

The good news is that BIPOC communities want help.

The percentage of BIPOC respondents who have never used a finance professional but said they would consider using one increased for each group: to 37% for Black/African American respondents, compared to 32 % previously ; at 34% for Hispanic respondents, compared to 30%; and 39% for Asian/Asian American respondents, compared to 34%.

So what can finance professionals do to take advantage of this trend?

Here are three things to keep in mind when establishing or improving connections with BIPOC clients.

1. Research.

Creating or developing a better relationship with BIOPC customers begins with a better understanding of each group and their specific concerns.

As the retirement risk preparedness study shows, the specific financial planning needs of each BIPOC community have likely evolved during the pandemic, dictating the need for more specialized professional assistance.

For Black/African American respondents, declining 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 finpro on short-term planning issues like balancing a budget (37% for Black/African American respondents, versus 27% for White respondents, 30% for Hispanic respondents, and 29% for Asian/Asian American respondents) and paying off their debts (31% for Black/African American respondents, compared to 20% for White respondents, 29% for Hispanic respondents and 20% for Asian/Asian American respondents).

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