Companies have the opportunity to expand their diversity demographics

The U.S.’s demographic makeup and financial situation are changing in ways that have important implications for its economy, including the financial planning profession.

Research projections from the U.S. Census Bureau (www.census.gov/content/dam/Census/library/publications/2015/demo/p25-1143.pdfAs Black, Latino, and Asian-American communities expand, the United States will see a majority of its population as a minority by 2045. These historically underrepresented groups are not only increasing in size but also creating greater wealth.

Since 2019, the purchasing power of people of color has grown exponentially. Nielsen estimates that Black consumers have an annual purchasing power of $1.3 trillion, which is a 48 percent increase on 2010. According to the University of Georgia in 2019, Latino purchasing power increased by almost 70 percent during the same time period and reached $1.7 trillion in 2019. The University of Georgia reports that the average wealth of the richest fifth of Black households, which includes more than three million households, is $395,000; while the average wealth of the wealthiest fifth are Latino households with more than $400,000, this figure stands at $1.7 trillion in 2019.

Data from the U.S. Census Bureau shows that there are large numbers of people who could benefit financially planning advice to help their families grow wealth. According to research published by Journal of Financial Planning, Black and Latino households are less likely to work with a financial professional than white families. Furthermore, fewer households opt to receive financial planning advice.

Financial advisors have the opportunity to reach underserved clients and diversify their client bases while offering a valuable, empowering service. The CFP Board Center for Financial Planning suggests that this can be done by ensuring that the workforce of financial planners reflects wealth-building communities. This is currently not the case: Only 4 percent CERTIFIED FinANCIAL PLANNERTM professionals identify themselves as Black/Latino, while nearly 32 percent U.S. citizens are Black/Latino.

The Center is leading an industry-wide collaborative effort to implement sustainable diversity and equity initiatives that foster financial planner diversity.

Visit CFP.net/The-Center-for-Financial-PlanningLearn more about the Center’s diversity-focused programs and get involved.

Financial firms that want to diversify client base must diversify their staff of financial planners. This is why diversifying is a wise strategy.

“Financial Planner Use Among Black and Hispanic Households,”Kenneth J. White Jr, Ph.D., and Stuart J. Heckman, Ph.D., CFP®, Journal of Financial Planning, September 2016, pp 40-49 http://bit.ly/2NU627O