How can financial professionals help people of color address retirement risks

How can financial professionals help people of color address retirement risks?

Many people of color report wanting to take control of their finances, but may not have the right support from a financial professional.

As a financial professional, you know that building a retirement strategy isn’t a one-size-fits-all solution. Every client has different needs and goals for their retirement, and your job is to help them get there successfully.

Findings from our recent 2020 Retirement Risk Readiness Study show how people of color (POC) approach retirement planning, and shed a light on where working with a financial professional could help them achieve better retirement security. While the study suggests POC feel reasonably prepared for retirement, they also report limited retirement-focused investments and lack of progress toward achieving important retirement goals. These findings indicate a potential misinterpretation of their financial situation that may put POC’s retirement readiness at risk.

When you add on the fact that only 32% of POC report currently working with a financial professional, you can see some of the potential risks that could derail their retirement.

So how can financial professionals better serve these communities in building retirement strategies that can mitigate some risk?

Understand their perspective

It’s important to understand that there are a number of different factors that can impact how POC think about retirement, one of the first being the well-documented racial and ethnic wealth and housing gap. A study from the Urban Institute found white family wealth was seven times greater than Black family wealth and five times greater than Hispanic family wealth in 2016.1 Already, POC may feel they are behind in their finances, and may feel the same way about their retirement strategy.

At the same time, cultural differences may impact their financial strategy. For example, oftentimes in communities of color, breadwinners are expected to balance support for multiple generations with their personal retirement goals. This complexity, among others, could be responsible for the disconnect between perception and reality, putting POC at higher risk for retirement insecurity.

Listen to their worries

The study also found that many POC are worried about financial situations that could be addressed with the help of a financial professional. Some of these concerns include “having unexpected, large expenses to pay” (63%), “becoming a financial burden to your loved ones” (52%), “not having enough money to do all the things you want to do in retirement” (53%), and “not being able to stay in your home” (48%).

Taking time to listen to their worries, in conjunction with their unique life and cultural experiences, can help you truly understand their perspective, and better tailor their financial strategy.

With proper planning and support from a trusted financial professional, POC can address some of these risks that threaten their retirement security. Some of the very first steps in this journey include the right education, outreach, and support from the financial professional community. Now is the time to take this opportunity to help POC realize the retirement they have worked so hard to achieve.


*Allianz Life conducted an online survey, the 2020 Retirement Risk Readiness Study, in January 2020 with a nationally representative sample of 1,000 individuals age 25+ in the contiguous U.S. with an annual household income of $50k+ (single) / $75k+ (married/partnered) OR investable assets of $150k.

The study was balanced and weighted on various demographic factors, including age, income, and race. The study is composed of 84% of respondents who identified as white and 17% who identified as people of color (8% Black; 6% Asian; 1% Native American/Alaskan; 2% other).