At the American Savings Education Council’s Virtual Spring Partners Meeting, we tackled the topic of Savings and Diverse Communities. We called on experts in academia, the financial industry, and policy circles to highlight research on savings opportunities and trust in financial institutions within minority communities. These experts also discussed possible policy, institutional, and community solutions and strategies that can be used to overcome savings obstacles experienced by minority populations. In the final installment of this series of panel reprises, Jen Auerbach-Rodriguez, Managing Director, Strategic Growth Markets Executive, Merrill Lynch Wealth Management focused on insights surrounding affluent minorities.
Jen starts by examining the “untold story” of affluent minorities.
Auerbach-Rodriguez: Over the last five years, there has been an increase in the size of the affluent segment (household income of $125,000+) in the Black/African American, Hispanic/Latino, and LGBTQ+ communities – an increase which outpaces that of the general population. And most people might be familiar with stories of individuals within these communities who achieved success at the top of their fields. While the visibility of these figures is important, there are so many other untold stories driving the increase in the affluent segment. That’s why, Merrill Lynch Wealth Management launched a body of research furthering our commitment to understanding the diverse experiences and financial paths of these communities.
In our research we spoke with thousands of individuals from different backgrounds and professional experiences – we spent a lot of time listening and through deep conversations, interactive discussions and surveys, we heard a breadth of diversity and range in stories of success and wealth creation.
Jen discussed the financial priorities of these communities, their motivations, and how they differ from that of the general population.
Auerbach-Rodriguez: In our research, we asked affluent individuals within the Black/African-American, Hispanic/Latino, and LGBTQ+ communities questions like: What does it mean to leave a legacy? What does it mean to be financially independent? And what does success mean to you? The responses were quite telling.
With respect to the Hispanic/Latino community it’s important to understand that one cannot talk about money, legacy—anything—without having a discussion about family. Thirty-five percent of affluent Hispanic/Latinos regard providing for their family as one of their top personal motivators. They are three times more likely than the general population to be driven by the desire to make their family proud. And Hispanics are four times more likely to say they are planning to financially assist their aging parents. We also heard quite a bit about the importance of education and working hard, both for personal and community achievement.
And with affluent Black/African Americans we heard resounding themes around entrepreneurship and giving back to the community. Black/African Americans are 40% more likely to feel that it’s important to give back to their communities. They are 25% more likely to be motivated by the desire to help future generations and are four times more likely to plan to start their own business in the future, compared to the general population.
Meanwhile, when we spoke to individuals within the LGBTQ+ community, we heard about the notion of being financially secure before one could “come out”. LGBTQ+ individuals were twice as likely as the general population to cite that helping their community is a top financial goal. And nearly one quarter of affluent LGBTQ+ individuals say a top financial goal is paying for healthcare or long-term care.
Jen also focused on women and their experience with financial services, finding they faced some of the same challenges as minority communities.
Auerbach-Rodriguez: Women control anywhere between $14 to $17 trillion in just the U.S., and $72 trillion globally. In a research piece called Women and Financial Wellness: Beyond the Bottom Line, we asked women investors if they believe they live a fundamentally different financial life journey from that of men. Seventy percent of women responded yes—their experience was fundamentally different.
In part it’s behavioral. For one thing, some women experience a general level of discomfort with the topic of money. It is effectively a taboo topic. In fact, in our study, 61% of women said that they prefer to talk about their own death rather than money. And by the way, something similar was expressed by Black/African-American and Hispanic/Latino communities -many shared that these are not conversations that they traditionally grow up having, say, around the dinner table.
In another study we did called Seeing the Unseen, we focused on the role that gender plays in wealth management—specifically in an advisor relationship. We were able to identify ways in which gender biases are subtly being perpetuated by both men and women financial advisors, such as the fact that advisors will look more at the male within a male/female couple in meetings.
We explored what this means, and how we can get beyond these subtle barriers. One way we can improve is to start by showing, not telling how important decisions need to be funded. For example, I will often illustrate the importance of saving for college by explaining how my husband and I prioritized education from the moment we met. When we got married, we opened up a 529 account years before we ever had a child. What resonates here is not the reference to the IRS tax code, but the personal story about how my husband and I handled our money to align with what is important to us.
Thank you Ray Boshara, Reilly White and Jen Auerbach-Rodriguez for your thoughtful insights into the important topic of minorities’ and women’s financial wellbeing in America.