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An age-old, old-age problem: How financial advisors can help close the racial wealth gap

At its core, the racial wealth gap present in the U.S. is the product of inequality towards People of Color (POC) that has accumulated over centuries. Signifiers of this disparity are wide-ranging, and Allianz Life’s 2020 Retirement Risk Readiness Study* is just the latest example to underscore its presence. 

According to the study – which aims to gauge the preparedness of people in the U.S. for retirement – less than half of POC respondents said they owned investments or accounts that helped with retirement security and a similar proportion said they had made progress towards achieving their personal retirement goals. 

The result, while troubling, is not surprising, says Cecilia Stanton Adams, Chief Diversity and Inclusion Officer at Allianz Life, who describes the experiences of the Black community as an example.  

“African American people historically have been shut out of ways to be able to build their financial future,” says Stanton Adams. “That has really culminated to the point where there’s a huge wealth gap between African Americans and White people. If you have very little money to put aside, you might be using that extra money to take care of primary expenses, like financing college for your children – and not towards retirement.”

Looking at the specific situation of Black people in the U.S., that they make up 13 percent of the U.S. population but only have 2.5 percent of the nation’s wealth, further hammers home the idea that POC are far from receiving an equal share.  

*The online survey was conducted in January 2020 with a nationally representative sample of 1,000 individuals age 25+ in the contiguous USA with an annual household income of $50k+ (single) /$75k+ (married/partnered) OT investable assets of $ 150 k. Among the respondents, 84% were identified as white and 17 % as PoC, People of Color (8 % Black, 6 % Asian , 1 % Native American/Alaskan, 2% other)

The study was published in four waves throughout the year 2020.

Teaching the experts

Despite the rather bleak picture painted by the study, it also provides some insight into how the situation can be improved. With less than one-third (32 percent) of POC respondents currently working with a financial professional, it’s clear that more engagement between experts and POC communities could go a long way in remedying the issue.

“Part of the work is really helping everyone understand the issues,” says Stanton Adams. “So it’s not only a case of helping People of Color understand what's available to them, but also helping financial advisors understand the importance of this market, what they can do to increase this market and how they can better connect with people from different cultural backgrounds.”

Training financial advisors about the different cultural needs and values from these communities is an important step that Allianz Life has already begun to take with their “Cultural Intelligence Assessment” – a four phase training available to all advisors.  

“The first phase focuses on the drive, what motivation we have around diversity,” explains Stanton Adams. “Second is the knowledge to connect the culture and the strategy. Next, is strategy when sitting down with a customer from a different background – and finally, it is about taking action.”

Key to gaining a better understanding of POC and their needs is to, first, view them not as a single homogenous group, but as a collection of different communities and cultures.

“It’ll be interesting for us to understand what the differences are between African American communities versus Latino, Asian, and Native American,” says Stanton Adams, who explains that Allianz Life has also begun to set up focus groups with employees from these respective communities to gain further insights.

“We have already formed Asian and African American employee resource groups. I have been engaging them in this dialogue since the study has come out,” adds Stanton Adams.

Targeting and collaborating with new customers in a way that shows understanding for differing cultural values and finding individual solutions for securing their retirement is key for Allianz Life. Part of the battle, Stanton-Adams admits, is also to actively ensure that the number of POC in Allianz Life’s pool of financial advisors increases.

“When we can start dealing with some of the systemic issues of getting more People of Color understanding financial literacy and also getting them to recognize all of the different financial careers that they can have, we'll start to see a change in the disparities that that are coming up as a result.”

The Allianz Group is one of the world's leading insurers and asset managers with 120 million* private and corporate customers in more than 70 countries. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing around 802 billion euros on behalf of its insurance customers. Furthermore, our asset managers PIMCO and Allianz Global Investors manage 1.9 trillion euros of third-party assets. Thanks to our systematic integration of ecological, social and governance criteria in our business processes and investment decisions, we hold the leading position for insurers in the Dow Jones Sustainability Index, launched on 12.11.2021. In 2020, over 150,000 employees achieved total revenues of 140 billion euros and an operating profit of 10.8 billion euros for the group.

These assessments are, as always, subject to the disclaimer provided below.

*Including non-consolidated entities with Allianz customers.

Press contacts

Holger Klotz
Allianz SE
As with all content published on this site, these statements are subject to our cautionary note regarding forward-looking statements:

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