2011 Prudential Research Study

Transcription

1 The African American Financial Experience Prudential, the Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities. The Prudential Insurance Company of America, Newark, NJ and its affiliates are Equal Opportunity/Affirmative Action Employers and are committed to diversity in its workforce. Prudential is an Employer that participates in E Verify Prudential Research Study The African American Financial Experience is the first survey Prudential has conducted on this market, but not the first of its kind. Prudential previously conducted similar research on the following markets: Asian American Hispanic Generation X And, for 10 years we have been publishing studies on women. 2 1

2 2011 Prudential Research Study Today we will review: Methodology Overview Questions 3 Methodology Early last fall conducted in depth interviews with Prudential business leaders and external subject matter experts to help identify themes and issues for exploration. November, 2011 launched a national online survey with CR Market Surveys, a minority owned research firm, based in Chicago. Survey target: 1,500 African American financial decision makers between the ages of 25 and with annual household incomes of $25,000 $49, with annual household incomes of $50,000 $99, with annual household incomes of $100, General Population Financial decision makers between the ages of 25 and

3 The African American segment is an attractive market with a rapidly emerging middle class. Nearly six in ten of the population surveyed earned more than $50, % of African Americans surveyed felt that no financial services company has effectively engaged or shown support for the black community. 5 Faith, family and community lie at the heart of many critical financial goals. Strong orientation toward improving the well being of the family. Promote financial literacy at a young age (77% vs 68%) Charitable donations (68% vs. 55%) Faith based learning is preferred (47% vs. 28%) African Americans are self reliant and entrepreneurial in directing their financial future. More self directed in information sources African American are also highly entrepreneurial. Of those surveyed, African Americans were significantly more likely to have a dream of starting a small business (35%) than the general population (19%). Black Americans are also significantly more likely than the general public to view starting a small business as a path to financial freedom (27% vs. 16%). 6 3

4 Despite feeling confident and optimistic in their ability to make financial decisions, many are behind in their planning. Greater degree of confidence (35% vs 28%) More confident in the country s recovery (62% confident the economy will recover within two years vs. just half of the general population) More likely to be behind in planning and saving for retirement 77% of those surveyed have less than $100K in retirement savings and investments (including 401Ks, rollover IRA s and pensions). African American women have strong financial influence, but household composition is a challenge. African American women surveyed were more likely to be unmarried 72% of African American women primary financial decision maker in their households 7 Many African Americans are expecting to rely on their company sponsored retirement plans. Workplace plans as viewed as primary retirement source Yet, among those surveyed, African Americans are drawing down their 401ks at 3x the rate of the general population (24% have taken one or more loans from their company retirement plans, compared with just 8% of the general population). Most indicated they had done so to cover short term cash flow needs, emergency/unexpected expenses, or to pay off bills and debts. Household debt is a pressing issue. Debt is a concern, even among the most affluent African Americans. Reducing debt and improving credit worthiness are concerns for all income groups, with African Americans in the $100K+ group equally likely to feel this way. Among women the concern looms even larger (87%). 8 4

5 Partnership with financial professionals and lower levels of product ownership. Use of financial professionals is low Barriers include: Expense Lack or knowledge on how to choose a qualified advisor The need to build trust 52% want more advice on saving and planning for retirement African Americans more likely to agree (37% vs 26%) financial professionals have made no effort to reach their community Ownership of basic financial products is solid (e.g., life insurance and savings accounts), but African Americans have significantly lower ownership of more complex financial products like IRAs, individual stocks and bonds, mutual funds, estate plans, wills and trusts. Those using financial professionals are notably more confident 9 Comments There is an emerging middle class in the African American community Buying power will reach more than a trillion dollars in the next four years* Market not concentrated in a handful of states* African American market is largely untapped Critical financial goals including leaving legacy, providing for their families, and providing charitable donations *The University of Georgia Terry College of Business Selig Center for Economic Growth Annual Minority Buying Power Report, Release Date November 4,

6 Questions Q&A 11 6