How to Help Black/African American Investors Reach Their Financial Goals

The clients of tomorrow are more diverse than your current clients. To help boost your practice’s growth trajectory, you need to engage with this next wave of investors—diverse groups with unique goals and expectations for the client-advisor relationship.

Connecting with Black/African American investors is an opportunity to help these new clients achieve their financial goals while boosting your practice’s bottom line.

Findings from a 2020 T. Rowe Price study¹ found that Black/African American investors want to learn more about financial topics and are seeking money-management help. They cited building an emergency fund and planning for long-term care as their top financial goals.

• Two out of three (67%) Black/African Americans want to know as much as possible about financial topics.
• 62% would like a financial “coach” to help manage their financial health.

Rising economic power increases the need for financial advice. Research shows that Black/African Americans wield growing financial power and have an estimated buying power of $1.6 trillion. According to researchers at the University of Georgia, in 2020 Black/African Americans accounted for 9% of total buying power in the U.S.—growing at a faster pace than all U.S. consumers.²

This untapped market is ripe for growth. Despite their growing buying power, Black/African Americans are falling behind in ownership of financial assets. Six out of 10 (59%) Black/African American women and 42% of Black/African American men say they do not own any financial assets, including risk assets such as stocks, bonds, mutual funds, exchange-traded funds, real estate, and cryptocurrency.³

There is a huge need for a retirement savings “nudge.” The retirement savings crisis is particularly acute for Black/African Americans. Only one-third of Black/African American men and women currently have a retirement account.³

1. Ask Black/African American investors about the financial goals they are trying to achieve. Offer guidance on how to save for short-term needs like car repairs or medical bills and long-term goals like saving for retirement and their children’s college tuition.

2. Pitch yourself as a financial “coach”—someone willing to help them improve their financial health and be more confident about investing.

3. Offer to help them with their most pressing financial concerns. More than one-third (36%) of Black/African Americans responding to the T. Rowe Price study, for example, said building an emergency fund was their top priority—but they’re also interested in issues like long-term care and estate planning.

4. Create an investment blueprint specific to them rather than a generic, cookie-cutter financial plan. The T. Rowe Price study found that two out of three (64%) Black/African Americans want a financial professional to “design a customized strategy just for them.”

5. Evaluate their views on risk, help them determine their level of risk tolerance, and aid them in pursuing investment opportunities that will lead to long-term growth of their assets. The majority of Black/African American investors (55%) say they value opportunity (e.g., faster investment growth) more than they do security (e.g., more conservative investments), according to the T. Rowe Price study.

6. Assist Black/African Americans experiencing a major life event or change that impacts their financial life—such as a new job, a raise or promotion, a new home, or welcoming a new baby. When their financial picture improves, celebrate their wins and identify helpful ways to use the extra cash flow.

It makes financial sense for you to actively broaden the diversity of your client base to include Black/African American investors, who have growing buying power, a range of financial goals, and a desire for financial advice and coaching. Connecting with diverse individuals invites a new pool of clients to your practice and enables you to play a role in the democratization of investing by helping your clients reach their financial goals.