A new study from LIMRA Secure Retirement Institute (LIMRA SRI) finds Black Americans are slightly less likely than the general U.S. population to be working with a financial advisor (33 percent versus 37 percent). However, LIMRA SRI research finds Black Americans with a financial advisor are less likely to consult their advisor before making financial decisions about their retirement. In general, Black Americans are more likely to consult immediate family members for financial advice. These results suggest that financial advisors looking to increase their ethnic clientele may benefit by including the entire household in the formal planning process for retirement, not just focusing on the client.
The report, Black Americans and Retirement Planning: Bridging the Advice Gap, explores Black American perceptions and preferences around financial advisors. Researchers found Black Americans prefer working with financial advisors who are involved in their communities and those who have experience working with ethnic minorities. Four in ten Black Americans suggested that they feel they don’t have enough money to work with a financial advisor.
While there are challenges to overcome when engaging the Black American market, this market shows a greater willingness to learn more about products and services that can help manage their financial priorities, and enhance financial security.1 Black Americans pre-retirees are less likely than other pre-retirees to have completed key retirement planning activities, such as calculating the amount of assets they’d have available to spend in retirement (29 percent versus 44 percent) or developing a specific plan or strategy for generating income from retirement savings (15 percent versus 28 percent) than the general population. Prior LIMRA SRI research has found that pre-retirees who complete these activities are more confident in their retirement outcomes.
The new LIMRA SRI study shows that overall, Black Americans feel less financially secure compared to all Americans. About half of all Americans feel secure, while only 4 in 10 Black Americans feel that way. Past research from LIMRA SRI has shown lower levels of financial security can lead to a lack of confidence in retirement.
When it comes to life insurance, according to the 2018 Barometer Insurance study, there is only a minimal difference in ownership. Sixty percent of Black Americans own life insurance compared to 59 percent of all Americans. Additionally, the research found that there was no difference (both 68 percent) between Black Americans and all Americans when identifying with the sentence “I personally need life insurance.”
LIMRA data also shows that Black Americans have the same top three reasons for owning life insurance as all Americans:
- Cover burial and other final expenses
- Replace lost wages/income of a wage earner
- Transfer wealth or leave an inheritance
While advisors working in the retirement sector should identify Black Americans as their own segment, when it comes to life insurance the distinction isn’t needed.
1 African American Middle America Financial Security Study, MassMutual (2017)