In a groundbreaking survey, Prudential Financial Inc. found that only one in four African-Americans polled use the services of a financial planner.
The study, “The African American Financial Experience, released Tuesday by the Newark, NJ-based insurance and financial services giant, looked into the financial needs and beliefs of this segment of the population. “The use of financial professionals is low” because of the expense, the lack of knowledge about how to choose a competent advisor and a lack of trust, said Ron Andrews, an executive with Prudential, who presented the findings at a luncheon Tuesday.
African Americans also displayed “significantly lower ownership of financial products,” Andrews said.
A large part of the problem is due to trust. According to the survey, when asked: “Has any financial services company effectively engaged and show support for the Black community?” 78% of respondents answered “No.”
“This probably hit home the most to me,” said Mark Hug, Prudential’s vice president and chief marketing officer for individual life insurance agency distribution.
“I thought we were making progress, but this survey shows we are not,” Hug said, adding that the financial services industry needs a better job of connecting with local community and providing support.
Among the survey’s other major findings:
- When buying a financial product from a financial services firm, 94% said that earning trust is either critical or very important;
- Those surveyed indicated that they are less knowledgeable about a number of asset accumulation and asset protection financial products and consequently have low levels of ownership of IRAs, stocks, bonds, mutual funds and annuities;
- For African Americans, reducing debt and improving credit worthiness is a more pressing issue that for most other Americans;
- African Americans are less likely that others to fund their company-sponsored retirement plans on a monthly basis and more often tap into these plans to meet immediate cash-flow needs.
- Six in ten African Americans polled have les than $50,000 saved in company retirement plans; only 23% have more than $100,000 in these plans compared with 34% of the general population;
- African Americans are more cautiously optimistic about the economic recovery;
- They are more likely than the general population to cite charitable donations as an important financial goal (68% versus 55%);
- They recognize that they are behind in planning and saving for retirement and they are less likely than the general population to feel that they are on track to meet with financial goals (21% to 34%).
They survey polled 1,500 African Americans with incomes of $25,000 or more, (with 18% earning more than $100,000) between the ages of 25 and 70. The survey was conducted November 4 through 23, 2010.