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It’s often said that smart advisors know that one-size-fits-all isn’t a successful strategy in this business and that’s particularly true when clients are segmented across various demographic lines.
For some advisors, that acknowledgment requires shedding some discomfort because not only do today’s clients want more customization, some of that tailoring is going to be performed along ethnic and gender lines.
Put simply, female clients frequently have different goals and needs than their male counterparts and that scenario evolves when exploring the longer-ranging financial objectives of Black and Latina women. Like their counterparts from other racial groups, Black and Latina women are focusing on their legacies and building generational wealth. In fact, that’s a top area of emphasis for roughly seven in 10 women from both groups.
Advisors need to be aware that female clients from those two demographic groups are prioritizing generational wealth building. They also need to be ready with bespoke plans and strategies that are actionable for a group of market participants that, broadly speaking, are new to investing.
Respect Their ‘Rookie’ Status
It’s a topic worthy of deeper examination by academics, but the fact is outside of employer-sponsored retirement plans, Black and Latina women are relatively new to investing.
“Roughly half of Black, Hispanic and Latina women respondents reported being new to investing outside of employer-sponsored retirement accounts within the past five years, at 51% percent of Hispanic and Latina women respondents and 46% of Black women respondents. This is compared to 24% of all respondents,” notes Mary Mannion of J.P. Morgan Wealth Management.
Importantly, being new to investing should not be conflated with lack of acumen or desire. A slew of recent studies confirm that regardless of race, women are increasingly participating in equity markets and doing so via vehicles beyond 401(k)s and other retirement accounts.
Point is more women across all ethnic and racial lines are awakening to the value of investing, many or doing so on their own and plenty of those in the do-it-yourself cohort are looking for more education and professional guidance. All of that is particularly applicable to younger Black and Latina women.
“More than half of Black, Hispanic and Latino millennial respondents (52% and 53%, respectively) reported taking an active role in choosing which stocks, bonds or index funds to add to their investment portfolios,” adds Mannion. “This reveals a greater preference in active stock selection compared to Black Generation X and baby boomers (both at 45%) and Hispanic and Latino Gen X and baby boomer respondents (46% and 37%, respectively).”
Expect Engaged Clients
Regardless of gender, Black and Latino clients are engaged clients. As noted by J.P. Morgan, more than half of millennials from both groups, regardless of gender, take active roles in selecting stocks, bonds and index funds. They’re also diligent retirement savers.
“In the Black respondent group, 84% reported contributing the same amount or more toward their retirement accounts as they did in 2023, and 79% reported contributing the same amount or more toward their taxable brokerage accounts compared to 2023,” observes Mannion. “In the Hispanic and Latino respondent group, 78% reported contributing the same amount or more toward their retirement accounts compared to 2023, and 73% reported contributing the same amount or more toward their taxable brokerage accounts compared to 2023.”
Bottom line: investing is more democratized than ever and that’s only going to increase over time. That’s a positive because it could user in a new wave of prospects becoming clients, but advisors have to be ready with tailoring demanded by women and other demographics.