Diverse Investors Warm to Financial Advice

After recent declines, the percentage of Black and Hispanic Americans working with a financial advisor is on the rise, according to a recent Allianz Life study. But challenges still exist. How can the industry respond?

Key findings:

• After falling in 2022, the number of Black Americans who have a personal financial advisor rose from 24% in 2022 to 36% in 2023.
• Similarly, the number of Hispanic Americans who have a personal financial advisor rose from 35% in 2022 to 42% in 2023.
• Black Americans, more than any other group, say that having an advisor with “similar characteristics to me, such as similar age, gender, race” would make them more likely to work with a financial advisor.

The Allianz Life Insurance Company of North America (Allianz Life) 2023 annual consumer survey of Americans’ views on retirement planning found that diverse Americans are re-engaging with professional financial advisors in 2023, rebounding from a drop reported in 2022. Allianz Life found that 36% of Black Americans reported having a professional financial advisor in 2023, up from 24% in 2022. This is a reversal of the previous year, which saw Black usage of professional financial advisors decline from 38% in 2021, to 24% in 2022. Hispanic investors report similar shifts in working with a professional financial advisor, rising from 35% in 2022 to 42% in 2023, after falling from 44% in 2021.

The increased engagement of Black and Hispanic Americans’ with professional financial advisors tracks with a corresponding increase in confidence. 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, Hispanic and White Americans all reported an 80% confidence level (a 9 point year-over-year increase for Black Americans and a 5-point increase for Hispanic Americans).

Working with a professional financial advisor on a written plan that maps out how to achieve a successful retirement can be one of the most important steps anyone can take in seeking to secure their financial future. And while the uptick in investors of color working with professionals is encouraging, all groups are still behind white Americans, 47% of whom currently work with one.

“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, Allianz Life. “But clearly the industry has more work to do. 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.”

Why not work with an advisor?

Americans who don’t currently work with a professional financial advisor gave varying reasons:

And, when those who have a professional financial advisor were asked why they don’t discuss certain important issues with their advisor, diverse investor groups often reported they were using other resources to find solutions to these issues (38% of Black Americans, 32% of Hispanic Americans and 30% of Asian Americans).

These feelings may be due, in part, to some Americans of color having different financial concerns than others. 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.
• 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.
• 31% of Black Americans say “leaving a legacy for my family” is one of their top 3 financial goals, compared to 23% of the total population.

“The data are telling us that one size does not fit all when it comes to what people are looking for in financial advice,” said Walker. “Now more than ever, it’s critical for financial professionals to approach their clients with an open mind and really listen to their concerns. That’s how we help make financial guidance work for everyone.”

When asked about topics they have not discussed with a financial advisor, but would like to, there are also significant differences among people of color compared to the overall population:

• 78% of Black, 77% of Hispanic and 69% of Asian Americans would like to discuss the possibility of “unexpected, large expenses to pay for (e.g. damage to home, replace major appliance, need a new car),” as compared to 56% of the total population.
• 77% of Black, 73% of Hispanic and 70% of Asian Americans would like to discuss “the rising cost of living will prevent me from enjoying my retirement,” as opposed to 59% of the total population.
• 77% of Black, 79% of Hispanic and 62% of Asian Americans would like to discuss “navigating Medicare and health insurance and making the right choices for my healthcare,” compared to 54% of the total population.

“These results show the need for a more holistic approach to providing financial planning strategies,” said Walker. “By definition, that means getting to know your clients better, and using a planning process that takes into account life needs that might fall outside the realm of traditional retirement strategies.”

Diverse populations of Americans, just like all Americans, can benefit from professional financial advice. When asked what might make them more likely to work 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.”

“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,” says 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.”

*Allianz Life conducted the Allianz 2023 Annual Retirement Study online in February and March 2023 with a nationally representative sample of 1,000 individuals age 25+ in the contiguous U.S. with an annual household income of $50k+ (single) / $75k+ (married/partnered) OR investable assets of $150k.

Neither Allianz Life Insurance Company of North America nor Allianz Life Financial Services, LLC provide advice or financial planning services.

Products are issued by Allianz Life Insurance Company of North America and distributed by its affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. 800.542.5427 www.allianzlife.com

This content does not apply to the state of New York.

About Allianz Life Insurance Company of North America

Allianz Life Insurance Company of North America, one of the Ethisphere World’s Most Ethical Companies®, has been keeping its promises since 1896 by helping Americans achieve their retirement income and protection goals with a variety of annuity and life insurance products. In 2022, Allianz Life provided additional value to its policyholders via distributions of more than $7.7 billion. As a leading provider of fixed index annuities, registered index-linked annuities and fixed index universal life insurance, Allianz Life is part of Allianz SE, a global leader in the financial services industry with approximately 150,000 employees in more than 70 countries. Allianz Life is a proud sponsor of Allianz Field® in St. Paul, Minnesota, home of Major League Soccer’s Minnesota United.

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