Black women often face barriers in finding financial advisors and accessing wealth-building tools. Three financial advisors share tips for overcoming these challenges.
1. The Communication Gap Between Financial Advisor and Client
A study conducted by the American College Center for Economic Empowerment and Equality, titled “Black Women, Trust, and the Financial Services Industry,” indicates that the financial services industry needs to make more efforts to connect Black women with the entire wealth-building journey and raise awareness of what is possible.
One way to achieve this is by allowing Black women to connect with financial advisors they feel comfortable working with, which can be daunting for anyone, according to Andrea Corinne Williams, a wealth management advisor at Northwestern Mutual.
“Financial planning is really ambiguous for anyone, and when you’re dealing with a professional who speaks a lot of jargon, it can be overwhelming,” says Williams. “This is a hurdle many people face. When dealing with individuals who are not from your community, it can seem challenging to get what you need.”
However, the key is not to let these challenges impede your efforts to find someone you can work with, according to Dominique Broadway, an award-winning financial advisor and innovator of the Finances Demystified Camp.
“Often, Black women are not targeted by financial advisors,” says Broadway, who focuses her practice on helping people achieve their financial dreams. “However, don’t let this be an excuse not to search for financial advisors.”
2. How to Find the Right Professional for You
If you want to start looking for a trusted financial advisor, Williams suggests several steps, including visiting the CFP Board’s website, where you can search for a qualified and comprehensive professional.
“A certified CFP advisor is the advisor who is committed to fulfilling a fiduciary duty and should provide unbiased and comprehensive advice,” says Williams.
She also recommends interviewing several professionals to find the one that fits your needs and requirements. Some questions Williams suggests asking when vetting potential advisors include: What is your philosophy on planning, risk management, and investing? How often will we review my financial plan and goals? How am I charged for the services rendered? What happens if my circumstances change or if I have complex needs?
It’s also a good idea to ask for referrals from family members, college friends, church friends, or other mutual interest groups.
“While there isn’t one way to determine if someone is trustworthy, I recommend seeking feedback from those who have worked with this financial advisor and have gone through the financial service provision process,” says Williams.
3. Understanding How the Stock Market Works
Having a financial advisor is just one piece of the wealth-building puzzle. Learning about the stock market is another critical step and not one to be taken lightly. Lakisha Simmons, who earned a Ph.D. and is the author of The Unlikely AchieveHer and founder of BRAVE Consulting, a women’s empowerment consulting firm, is a living testament to this.
Simmons, who retired at age 41 after amassing $900,000 in investments, says, “When I shifted my mindset from spending to saving and investing, everything changed for me. I went from fear to confidence in investing because I took the time to educate myself.”
As part of this effort, Simmons suggests learning everything you can about retirement accounts, how they work, what the specific contribution limits set by the IRS are, and how to reduce taxes. Then, invest and remember that no amount is too small when starting out.
She says
Simmons: “Many workplaces offer tax-deferred accounts, but the vast majority of women do not fully take advantage of these benefits to build wealth.”
One of the additional benefits of taking the time to educate yourself on these topics is that you will be smarter and more informed when meeting with financial services professionals.
Simmons says, “The best way to maximize your relationship with a financial advisor is to know your goals and have some knowledge about the stock market and retirement accounts.”
4. Understand the Many Ways to Build Wealth
Having a financial advisor is an important step. Learning about the stock market and retirement plans is also important. But your work isn’t done with these two things.
Broadway says, “One of the best ways for Black women to actively build wealth is to start understanding all the ways you can build wealth,” a sentiment echoed by all three women.
Williams delves a bit deeper into this topic, explaining that there are multiple pillars of wealth, including entrepreneurship, real estate, investments, and insurance.
Williams clarifies: “Building wealth isn’t about choosing one thing that will significantly enhance your position, but about diversification.”
It’s important to integrate each of the pillars into your overall financial strategy (or as many as possible) to manage risk and ensure you’re not allocating too large a percentage of your money into one of these areas.
Williams states that real estate is an important tool for wealth accumulation. “Whether you’re buying a home for personal use or as an investment, the appreciation and gains are almost inevitable if held for a long period,” she says.
As for investments and insurance, they work dynamically together to achieve a balanced financial picture, according to Williams. Investments work aggressively to help you achieve goals like retirement, while insurance can help you plan for situations arising from life’s unexpected circumstances.
Williams advises: “Black women should fund both insurance and investment with appropriate amounts as recommended by a financial advisor. Most financial advisors are licensed in both insurance and investment and will not only be able to provide recommendations but also help in executing the strategies.”
5. Make Your Financial Freedom a Priority
All the recommended steps here are an important part of the overall process. But alongside these tangible actions, there’s one more element to add to your to-do list: make planning your financial freedom a priority for yourself.
Simmons says, “No one is coming to save us. The best advice for those wanting to build wealth is to make it your main goal. Educate yourself, spend money on the things you value and cut back in areas that you don’t value. Pay down debt. Invest in your workplace retirement accounts. And put energy into creating a financial plan of your own.”
Source: https://www.realsimple.com/work-life/money/financial-advisors-tips-for-black-women-building-wealth
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