Despite challenges such as debt level and a perceived indifference by the finanacial services community, African-Americans are confident about their financial futures.
Family-oriented priorities and goals most influence African-Americans’ financial priorities and behaviors, according to a new study that also finds that despite competing priorities and fewer investment products that constrain wealth-building opportunities, “the African-American community remains optimistic and continues to demonstrate financial progress.”
The latest “African-American Financial Experience,” a biennial study recently released by Prudential Financial, finds “increasing economic power and an emerging middle class within the community,” said Charles Lowrey, Prudential’s chief operating officer, U.S. Businesses, in a statement. “Approximately 4 in 10 households surveyed have annual incomes of at least $75,000, and nearly a quarter earn $100,000 or more. Half of African Americans surveyed said they feel better off financially than a year ago, while only 19 percent say they feel worse.”
Nearly half (46 percent) of African-Americans feel well prepared to make financial decisions, compared with 35 percent of the general population, the survey found. Compared with the general population, they also feel significantly more confident (42 percent vs. 30 percent) and optimistic (30 percent vs. 21 percent) when making decisions about their money. Similarly, they are less likely than the general population to feel more uncertain, anxious or intimidated about financial decisions.
At the same time, the study found, African-Americans are “significantly more likely” than the general population to have some type of debt (94 percent vs. 82 percent), most prominently . credit card debt, student loan debt and personal loans.
African-Americans are more likely to live in multi-generational households headed by a female, the survey found, with two-thirds of African-American women working compared with 58 percent of women in the general population. These women are less likely than the general population to have a spouse or partner present (60 percent vs. 74 percent) and more likely to carry the financial responsibilities of the household on a single income.
“Family remains a key factor in the African American financial experience,” said Sharon Taylor, senior vice president and head of human resources at Prudential, in a statement. “African Americans also report managing more financial priorities than the general population, despite doing so with lower incomes. African Americans have a greater number of family-oriented financial priorities, like adequately protecting loved ones, leaving an inheritance and funding education,”
While half of African Americans surveyed say they believe working with an advisor would help them make better financial decisions, only 19 percent say they have a financial advisor. A significant majority of respondents said that the financial services community company has not effectively shown support. Across all levels of affluence, African Americans are 13 percent less likely than the general population to have been contacted by a financial advisor.