The recent 2021 Retirement Risk Readiness Study conducted by Allianz Life found that a majority of Americans who identify as BIPOC (Black, Indigenious and people of color) were concerned they wouldn’t have enough saved for a successful retirement (52% Black/African American, 56% Hispanic and 62% Asian/Asian American). The survey also showed that BIPOC respondents were less likely than white Americans to work with a financial advisor. Thirty-seven percent of Black/African American respondents reported this was because they “don’t have enough money,” while 45% of Asian/Asian Americans said they were unlikely to work with a financial advisor because it “costs too much.”
The financial advisory industry is clearly not reaching these communities, causing anxieties about saving for retirement as well as other financial concerns. Advisors have the opportunity to change such sentiments and provide needed financial assistance. There are reasons why the gap exists, and steps that can be taken to bridge it.
Close the Distance
One contributing factor is that wealth management and financial advisory firms aren’t typically found in communities with a strong BIPOC presence. As many people juggle work and raising families while handling other responsibilities and commitments, they often don’t have the time to drive a long distance to meet with an advisor. The lack of advisory offices in their local community can further solidify that these services are inaccessible to them.
Additionally, many clients of financial advisors have connected with them through mutual contacts in the community. Or perhaps they first saw the office while driving through their town. If advisors don’t have a presence in communities with a significant BIPOC population, it’s less likely they’ll make an impression on those community members. Thus, advisors must actively expand their reach in an effort to connect with different people.
Amid the disruptive and tragic pandemic, one positive to emerge has been the development and adoption of advances in technology that enable people to connect no matter how much physical distance separates them. Advisors can now easily utilize video conferencing software and other platforms to interact with people in communities outside their physical office location. But in order to maximize this technology, they must be conscious of how to best reach these potential clients.
Adjust Your Marketing
For example, advisors who conduct most of their marketing via local ads need to adjust that approach if they want to connect virtually with different communities. Utilizing targeted online marketing techniques will help expand their reach.
But reach won’t matter much if the content doesn’t resonate with the target audience. Ensure that marketing materials use messaging and visual elements that will speak to the audience for a specific campaign. A catch-all approach is unlikely to be effective, so marketing efforts should be thoughtful and deliberate, taking into account the wants and needs of the target community.
Hire Advisors Who Reflect the Communities You Want to Serve
Perhaps the best way to connect with diverse ethnic groups is by showing a commitment to these communities through employing a diverse staff. Many people want to work with advisors who look like them or share similar experiences. As the financial services industry has not traditionally been young or diverse, targeted recruitment efforts can help bring needed change.
Unconsciously, disparate impact might play a role in recruiting and hiring. This can happen when someone relies only on their established circles when looking to meet new people. For hiring purposes, it may manifest as advisors using the same networks to recruit new talent. Unfortunately, this creates the problem of hiring from similar places over and over, which will likely result in a continuous flow of homogenous talent.
It’s important to remember that worthy candidates can come from a variety of backgrounds and possess the personality traits needed to be excellent advisors. As such, it is a best practice to look for top talent in different places.
Become Familiar with Cultural Differences and Sensitivities
The worst mistake an advisor can make when expanding their reach into BIPOC communities is assuming that all underserved ethnic groups have the same tendencies and mindsets. Each group has its own unique culture and proclivities, so if you want to reach a wide variety of diverse communities, it’s essential to become aware of these differences and understand distinctive sensitivities.
For example, the Retirement Risk Readiness Study found that, while top concerns about risks are consistent, Black/African American respondents tend to be less worried across the board, with Asian/Asian Americans the most worried and Hispanic respondents falling somewhere in the middle. When asked what risks have them the most concerned, nearly three-quarters (74%) of Asian/Asian American respondents said “the rising cost of living will prevent me from enjoying my retirement,” versus 67% of Hispanic respondents and only 54% of Black/African Americans.
Advisors don’t need to have shared experiences with every single client to effectively advise them. But they do need to listen and educate themselves in order to understand how a client’s background and culture may shape their thinking.
The BIPOC community is underserved in the financial advisory industry and the only way that will change is if advisors modify their practices, marketing and recruitment efforts to meet the needs of these communities. Advisors must be knowledgeable and deliberate when reaching out to these audiences, understanding the cultural differences that could affect financial decisions, while also looking internally at how they can make their practices more diverse and inclusive environments.
Heather Kelly is senior vice president of Advisory and Strategic Accounts at Allianz Life