Some 75% of affluent Black Americans are now shifting their financial planning priorities after the COVID-19 pandemic, much higher than 46% of the same population generally, new research from Bank of America reveals.
The discovery for well-off Blacks comes as 80% are placing greater emphasis on working with a financial professional they have a personal connection with. Historically the Black community has faced obstacles in accessing the wealth management industry, which makes the move meaningful. That makes it more and more difficult to find a professional who likely understands the group’s unique financial goals and needs.
To boot, volatility in the stock and housing markets, inflation, and economic unpredictability are among the forces post-COVID that have impacted or changed many individuals’ stand on money-making decisions.
The analysis comes as the nation’s racial wealth gap continues to widen based on existing conditions. Researchers at the Federal Reserve Bank of St. Louis noted the median White family had $184,000 in wealth in 2019, eight times higher than $23,000 for the median Black families.
Observers contend the disparity is far-reaching as wealthier families have greater leverage to make game-changing moves securing capital to launch a business, financing a college education, live in neighborhoods with higher home values, and paying for costly medical care if needed.
The study findings are tied to a new Bank of America study that shows how Black Americas, Gen Z, and millennials are prioritizing financial independence. Craig Young, mid-Atlantic division executive at Merrill Wealth Management, provided some email commentary.
Merrill Wealth Management is a unit of Bank of America, the nation’s second-largest bank.
The study showed affluent Black Americans could use help from advisers pertaining to making investments (51%), savings for retirement (45%), and saving for a big purchase like a home (34%).
As the affluent Black population keeps growing, Young says there is more of a need for this community to receive financial advice and guidance. And he says a greater challenge for Black Americans, with 27% of those prosperous individuals saying they don’t know how to find the right adviser for them, versus 22% of the affluent general population.
The difference could be due to many factors. Young says, “They include historical lack of access to the financial industry, being the first in one’s family to need a financial adviser, and a myriad of other societal and personal obstacles.”
The study showed that 64% of people working with an adviser are the first generation in their family to do so, including 80% of affluent Black Americans. Of those without an adviser, 62% would be the first generation to have an adviser relationship, including 76% for affluent Blacks.
So, how could Black Americans changing their patterns help reduce the nation’s wealth gap?
Young explained today’s economic environment makes it more important than ever to work with a financial adviser. He says they are in a unique position to help navigate market uncertainty and make decisions in the wake of unexpected events.
He says a financial adviser’s goal is to help clients grow and preserve their wealth over the long term, along with keeping them on track for priorities or milestones. He says that can mean reassessing how and what clients spend, save, and invest. A financial adviser can help their clients develop better habits and patterns for a healthier financial future.
“Advisers are here to help navigate financial questions and considerations,” Young says. “The right guidance can truly unlock new possibilities. This is true for everyone, including members of the affluent Black community, as they balance current needs with long-term priorities.”
Young said overall the numbers also suggest that “the work we’re doing to lessen the barriers and obstacles to accessing financial guidance for the Black community is working, and that more people today are accessing advice than older generations.”
Before using a financial adviser, experts suggest you ask yourself questions. First, what are looking for? For instance, do you plan to hire one to assist with investing, reaching financial goals in a given time frame, budgeting, or something else? Be sure to ask much you will be charged and for what?