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Despite Access to Plans, African-Americans Less Likely to Participate, Work with Advisors

A new study from Prudential finds that while African-Americans have comparable access to retirement plans at work as the rest of the country, they tend to participate in the plans less often — and they are less likely to work with financial advisors.

Just 14% of African-American respondents reported engaging with a financial professional, compared to 26% of all Americans. However, among workers earning $75,000 or more annually, the gap shrinks, with 28% of African-Americans reporting having engaged with an advisor, compared to 36% of all Americans.

African-Americans are more likely to want to engage with a financial professional who is active on social media (48%, compared to 39% of all Americans), or one who is supported by a trusted community leader or faith-based organization (61% vs. 43%).

On that note, the study found that While 83% of African-Americans earning over $75,000 per year participate in a plan when offered (compared to 86% of all Americans), just 68% of African-Americans earning under $75,000 participate in a plan (compared to 85% of all Americans).

While African-Americans largely feel optimistic about their future financial situations, and confident in their ability to save for retirement, just 31% of respondents thought highly of their ability to invest wisely, 36% felt confident in their knowledge of how best to save or invest for their child’s education, and 33% said they were comfortable with planning for wealth transfers to their descendants. According to the study, these numbers correlate strongly to the value of the assets the respondents hold, including the money in their employer-based retirement accounts.

Prudential’s African American Financial Experience survey was developed based on the responses of 1,043 Americans between the ages of 25 and 70 who identify as black or African-American, including 216 with household incomes over $150,000. Among those respondents, 52% said they feel “very well-prepared” to make wise financial decisions, and 71% gave themselves high marks for being able to manage household expenses and budgets.

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