GrowingVariety Demographics Provides Chance for Firms

The demographic makeup of the U.S. population and therefore the financial status of its communities are shifting in ways in which have significant implications for the country’s economy, including the financial planning profession.

According to U.S. Bureau of the Census research projections, we will have a minority-majority population by 2045 as Black, Latino, and Asian-American communities grow. These traditionally underrepresented populations aren't only growing in size, but they're also building greater wealth.

The purchasing power with people of color has grown exponentially since 2019. The annual buying power of Black customers was determined by Nielsen to be $1.3 trillion in 2019 — a roughly 48 percent increase over 2010. Latino purchasing power grew by nearly 70 percent over an equivalent period, consistent with the University of Georgia, reaching approximately $1.7 trillion in 2019. Additionally, the wealthiest fifth of Blacks — quite three million households — have a mean wealth of $395,000, while the wealthiest fifth of Latinos households have quite $400,000 in average wealth.

The U.S. Bureau of the Census data indicates an outsized population that would enjoy financial planning advice as families generate more wealth. Research published by the Journal of monetary Planning found that Black and Latino's households are less likely than white families to figure with a financial planner, and a good smaller percentage of these households prefer to receive comprehensive financial planning advice.

Financial advisors and their firms have a chance to succeed in these underserved groups and diversify their client base while providing a valuable and empowering service. a method to try to do so, consistent with the CFP Board Center for Financial Planning, is to make sure that the financial planning workforce reflects the range of wealth-building communities. It recently does not Only about 4% of Certified Financial Planner specialists self-report as Black or Latino, whereas nearly 32 percent of the U.S. people identifies as Black or Latino.

The Center is leading a collaborative, profession-wide effort to implement sustainable diversity, equity, and inclusion initiatives that will address this systemic challenge and foster greater diversity among financial planners.

Visit CFP.net/The-Center-for-Financial-Planning to find out more about the Center’s diversity-focused initiatives and obtain involved.

Diversifying the financial planner workforce may be a prudent strategy for financial firms seeking to diversify their client base.

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