Advisors Make Progress With Diverse Investors

However, several challenges still exist in understanding and providing advice to these clients.


Getty Images

After falling in 2022, the number of Black and Hispanic Americans working with financial advisors has risen this year, according to a new report by Allianz Life.

Allianz found that the number of Black Americans who have a personal financial advisor rose from 24 percent in 2022 to 36 percent in 2023. Similarly, the number of Hispanic Americans who have a personal financial advisor rose from 35 percent in 2022 to 42 percent in 2023. This is a reversal of the previous year’s trend when Black Americans’ usage of financial advisors declined from 38 percent to 24 percent, and Hispanic American’s usage fell from 44 percent in 2021 to 35 percent in 2022.

Although, the report is a positive step for an industry that has historically struggled to serve women, minorities, and people of color, both as clients and as advisors, more needs to be done.

“It’s great to see an increase in diverse populations working with financial professionals and gaining confidence,” Travis Walker, business solutions and diversity consultant at Allianz Life, said in a statement. “But clearly the industry has more work to do. We have to really listen to what our clients and potential clients are telling us about what they want, and don’t want, in a financial professional.”

Black and Hispanic individuals make up less than 5 percent of all the Certified Financial Planner Board of Standards’ certified professionals, wealth management’s most popular designation. The percentage of women CFP professionals has grown in recent years, but still only makes up 23.6 percent.

Allianz said that while the uptick in investors of color working with professionals was encouraging, they were still behind white Americans, 47 percent of whom currently work with a financial professional.

If wealth managers want to increase diverse clientele, they need to hire diverse advisors.

“One of the ways we bring more people of color into our client population is to bring more people of color into the career of a financial professional,” Walker said. “Our success in these efforts will go a long way toward creating a more inclusive market for financial guidance.”

According to the report, Black Americans, more than any other group, said that having an advisor with “similar characteristics to me, such as similar age, gender, race” would make them more likely to work with a financial advisor.

Advisors who work with a more diverse clientele also need to understand that each population has different planning needs. According to the report, the majority of Black and Hispanic Americans list paying off credit card debt as one of their top three financial goals. Comparatively, just 30 percent of the total population had this in their top three.

Building generational wealth is also more important to Black Americans compared to the general public. Thirty-one percent of Black Americans said that leaving a legacy for their family was one of their top three financial goals, compared to 23 percent of the total population.

Advisors have proven benefits for investors.

Recent research by Schroders, a London-based asset manager, found that retirees with a financial advisor or a financial plan had on average nearly double the monthly income of those without a financial plan or without a financial advisor. Having a financial advisor can also help investors become less stressed and more optimistic about their financial situation.

“The data are telling us that one size does not fit all when it comes to what people are looking for in financial advice,” said Walker. “Now more than ever, it’s critical for financial professionals to approach their clients with an open mind and really listen to their concerns. That’s how we help make financial guidance work for everyone.”

Related Articles