Advisers are ignoring the fastest growing wealth demographic

Income growth rates of African Americans have outpaced those of non-Hispanic whites, and many could use a planner to help dispel unhealthy money beliefs

Sep 15, 2016 @ 1:10 pm

By Liz Skinner

+ Zoom

African-American incomes are rising faster than any other group in the world, but financial advisers seeking to target them as clients need to understand some of their deep-rooted money perceptions.

The statistics tell a story of growing prosperity among African Americans, said Stacey Tisdale, senior editor of Black Enterprise, speaking to advisers Thursday at the Financial Planning Association's annual conference in Baltimore.

For instance, income growth rates of African Americans outpaced those of non-Hispanic whites at every annual household income level above $60,000 in 2014, according to Nielsen Research. And the largest bump for these households occurred in those earning more than $200,000.

But understanding the African-American client requires more than a numbers approach, Ms. Tisdale said.

(More: What it's like being an African-American financial adviser)

The African American community is scarred and suffers from a cultural message that they aren't good with money, Ms. Tisdale said.

As a result, African Americans carry some money beliefs that they need financial advisers to help them with, she said. For instance, they're especially nervous investors and are more likely to panic and sell in a falling stock market.

Lanta Evans-Motte, a Raymond James Financial Services adviser, described recent events that hit African Americans hard and makes the investing piece a tough sell.

“A lot of African Americans were just starting to invest in the stock market right before the tech crash, and after that they lost faith in the market,” she said. “So then they started to invest more in real estate, then that got devastated.”

Ms. Tisdale said African Americans also disproportionately carry the financial burdens of family members and other loved ones.

“Advisers can help them understand that giving someone money at your own expense will cause a burden on your children in the future,” Ms. Tisdale said.

(More: Adviser's Consultant: Building diversity at firms makes business sense)

African Americans also put a “sometimes unhealthy” prioritization on education spending, she said.

Finally, it's useful to understand the “different flavors” of black Americans, she said. For instance, black immigrants actually earn 30% more than blacks who were born in the U.S.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

How to build a better business plan

Financial advisers are good at a lot of things, but business planning isn't always one of them. Why is that and how can they improve? Teri Shepherd of Carson Group offers some solutions.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

How does your advisory firm stack up?

Comparing a firm's pay to the competition can point out vast flaws.

10 signs your client is cheating on you

Sure signs that clients may be on the way out the door.

Morgan Stanley sees slower fee-based asset flows on fiduciary rule delay

Flows to advisory accounts, while still higher than the start of 2016, dropped off more than 20% from Q2 and were the lowest in a year.

How adviser salaries stack up to other jobs

Median compensation hovers just under $100,000 on the low end and reaches nearly $300,000 for bosses.

Finra ranking brokers in effort to crack down on industry's bad apples

All 634.403 reps have been ranked based on factors such as prior regulatory disclosures, disciplinary actions and employment history.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print