The study from Prudential found that African Americans are optimistic about achieving their financial goals; however, they tend to hold fewer financial products, invest more conservatively, lack relationships with financial professionals, and are more likely to borrow from company retirement plans – all of which are barriers to achieving financial goals.
Prudential reported that two in 10 African-Americans believe that they are on track to meet their savings goals for retirement, and nearly twice as many say they are way behind or haven’t even started. Sixty percent of African-Americans surveyed have less than $50,000 in company retirement plans and only 23% have more than $100,000.
African-Americans are three times more likely than the general population to tap into their 401(k) or similar plans to meet immediate financial needs.
Although 82% of African-Americans believe maintaining their current lifestyle in retirement is critical, only one-third feel confident they will be able to accomplish this. In addition, 83% place critical importance on not becoming a financial burden on loved ones, but just one in 10 is confident of being able to achieve that goal.
African-Americans are nearly twice as likely to have a dream of starting a small business as those in the general population (35% versus 19%), and view starting their own small business as a path to financial freedom. However, more than half of those with an interest in starting a small business say a lack of capital has been the primary hurdle to getting started.
Even though trust is low, desire for financial advice is high, the study found. Fifty-eight percent of respondents agreed with the statement, “I would like advice on saving and planning for retirement, but I don’t know or can’t find a professional I can trust.” Those that do have an adviser are twice as likely to say their retirement savings are on track (36% versus 16%). Likewise, 37% of respondents with an adviser know what savings they’ll need in retirement versus 15% without an adviser.
When asked, “Has any financial services company effectively engaged and shown support for the Black community?” a significant 78% of respondents said “No.” Yet, when it comes to doing business with a financial services firm, 94% said trust is critical or very important.
The study polled 1,500 African-Americans with incomes of $25,000 or more, between the ages of 25 and 70, as well as 500 people with the same qualification for a general population. All respondents either lead or have a significant role in making financial decisions for their households.
A complete compilation of the survey results is here.
A panel discussion was held to consider what the industry can do to engage with the African American community (see African-American Community Needs Industry Attention).
– Nicole Bliman