5 ways wealth managers can better serve first-time Black investors

Wealth managers have a responsibility to deliver the best possible investment results to their clients. History has proven that participating in a solid investment strategy is one of the surest ways to develop and preserve generational wealth, especially in times of economic uncertainty and record inflation.

But beyond the dollars and cents on a spreadsheet, investments are personal. Money is an emotional topic and people expect their investment managers to be open, honest and understand their life goals, financial situations and trepidations. A recent study conducted by the World Economic Forum, in collaboration with Accenture and BNY Mellon, found the primary reason non-investors have chosen to avoid financial markets is fear of losing their money. Education and trust are paramount to getting people off the sidelines and into the markets, and much of that responsibility falls on the shoulders of financial advisors.

But where trust and understanding can develop into a mutually beneficial relationship between advisor and client, some groups reap the benefits of investing more than others.

Black Americans are among those who have faced a higher barrier to entry for myriad reasons including historical segregation policies, income gaps, lack of generational wealth and less access to investment networks. In a recent industry survey, just 58% of Black Americans reported owning stocks of any kind.In terms of generational wealth, 17% of white households expect to receive an inheritance, compared to only 6% of Black households, according to the Brookings Institute.

SNAPSHOT OF BLACK INVESTOR PRIORITIES

One of the ways the wealth management industry can stay responsive and accountable to clients is through ad hoc group discussions with investor demographics to gather actionable insights on the needs of clients. Our team recently spoke with a group of more than 30 Black investors from diverse walks of life and asked them how wealth management firms can better suit their needs.

In terms of priorities, respondents shared four key offerings they’d like to see more of from their wealth advisors:

• Early education and access to financial advisors and financial literacy programs in schools and community organizations.
• Client-centric interactions and product offerings like trainings, webinars and regular updates from their advisors.
• Clearer insights into products and strategies — personalized information not found in standard brokerage accounts that takes into consideration the lived experiences of Black individuals and their families.
• Digestible marketing materials for first-time investors, i.e., how can a wealth manager help me?

From those conversations, some voiced that their experience with the industry has missed the mark in terms of relationship building. “The wealth management industry has conscious and unconscious biases — meeting with an advisor felt like a sales pitch on life insurance. The interaction was ‘how can I sell you a service?’ versus ‘how can I help you make your money work for you?” said one quality engineer specialist in Atlanta who participated in our conversation series.

HOW FIRMS CAN MEET BLACK INVESTORS’ NEEDS

While many firmwide initiatives require large capital investments and multiyear plans, meeting the needs of emerging Black investors can be done through incremental changes to client council and outreach. These are the top five steps we’ve identified for firms to better serve their customers.

• Identify programs and organizations with potential client opportunities and develop branded content for seminars. Examples include employers, employee resource groups, community organizers, and Black student groups and organizations at universities.
• Create marketing content representative of the Black community in targeted digital media and for key events (lifestyle, sports, entertainment, etc.).
• Use tools like generative AI to produce client intake questionnaires that are tailored to understand cultural background, current financial state and goals.
• Develop tailored offerings based on client personas, relevant data and community exposure rather than using a standard pitch.
• Produce illustrative case studies aligned to defined personas that feature images of Black advisors and clients. 

“There is currently a lack of knowledge around wealth creation and money management within the Black community. We need to start having these conversations on a broader scale. Wealth managers need to market investing, the industry, and their firms to the Black community. How do we address the myths and concerns regarding investing and images of financial success? How can firms show they understand the Black community?” said one participant, a consultant based in Washington, D.C.

As with all aspects of client services, producing great financial results is only half the battle. The other half requires advisors to take the time to understand their clients' needs and act with nuance and intention. Upskilling, creating customized content and meeting prospects at their current financial literacy levels are small steps advisors can take today to expand their books of business and win over emerging clients who don’t have established contacts in the industry. Wealth managers’ roles go beyond investments, they advise clients on major life decisions and must take into account cultural norms and historical experiences that have, in the past, made Black Americans apprehensive to invest.

Saira Shariff is part of Accenture’s North America Wealth Management leadership team and serves as inclusion and diversity lead for its North America Capital Markets industry group.