Minorities Seek More Financial Education for Underrepresented Groups

New research findings show that a majority of Black and white Americans believe that financial literacy is a problem in the U.S., but the two populations differ on what they think should be done to solve that problem.

Retirement benefits firm Voya Financia's late March 2022 survey of 1,000 adults throughout the U.S. found that significantly more Black respondents (84 percent) sauid that employers should be more focused on providing equal access to financial education for underrepresented groups, compared with 69 percent of white respondents.

Ways of providing financial education "will be different at each company to meet the needs of talent," said Carole Mendoza, Voya Financial's vice president for benefits. "Employers must find the most effective ways to reach all employees with specific resources, such as technology, language and benefits."

She added, "The best way to understand how to communicate is to ask employees which resources meet their needs."

A better understanding of financial principles can also help employees from racial minorities advance within their organizations, Mendoza said. Consequently, "financial education can promote inclusion in the workplace."

The Voya research also found:

• 89 percent of Black respondents said that employee-benefits providers should offer additional resources to provide financial education to underrepresented groups (e.g., people of color, people with disabilities, etc.), versus 70 percent of white respondents.
  

• 82 percent of all respondents agreed that technology can improve financial education for underrepresented groups.

Most respondents overall said they'd like to see increased diversity and inclusion in the financial services industry, which could include more minority financial educators and service providers.

Inclusive Financial Education

A 2021 survey from the Society for Human Resource Management (SHRM) and employee benefits provider Morgan Stanley at Work also looked at race-based financial wellness disparities.

The survey of 1,000 working Americans found that non-white employees were more likely to indicate that the personalization of financial coaching is important to them. That view was shared by a majority of respondents who are Black (63 percent), Hispanic or Latin (61 percent), or other non-white races and ethnicities (65 percent), compared with less than half of white employees (48 percent).

"Financial well-being is not only good for an employee's peace of mind, but it also can help drive bottom-line results," said Krystal Barker, head of financial wellness for Morgan Stanley at Work. "Employees who have greater control over their personal finances are more productive and engaged. The challenge then is how to scale and tailor these benefits to reach all employee segments."

Employers can broaden the involvement of historically disadvantaged groups in financial education programs by working with employee resource groups and creating economic empowerment seminars tailored to their individual needs, she advised.

A Savings Gap

The Employee Benefit Research Institute (EBRI) has also looked at race-based differences in workers' financial well-being.

EBRI's 2021 Retirement Confidence Survey, which surveyed 3,017 U.S. adults early last year, found that:

• 58 percent of lower-income Black workers reported savings of less than $1,000, versus 38 percent of lower-income white workers.
  

• 32 percent of middle-income Black workers had savings of less than $1,000, versus 13 percent of middle-income white workers.
  

Disparities persisted higher up on the income ladder:

• 26 percent of white workers with middle incomes had $250,000 or more in assets, compared with 8 percent of Hispanic workers and 4 percent of Black workers.
  

• 56 percent of white workers with upper incomes had $250,000 or more in assets, while 39 percent of both Black and Hispanic workers with these incomes had this level of assets.

A similar pattern occurred with debt, as Black and Hispanic workers across each income group were more likely to consider debt to be a problem for their households than white workers.

Additionally, Black and Hispanic workers and retirees across all income groups were more likely to say debt is impacting their ability to save for retirement or live comfortably in retirement.

"There are both systemic and behavioral barriers faced by workers and retirees [who] are Black, Hispanic, or single women when it comes to saving for retirement," EBRI reported. "These include lack of educational or advisory resources that resonate with such individuals, meet their unique needs, or are found to be trustworthy."

By harnessing data on financial disparities, EBRI said, "we can better understand the forces that result in savings gaps by various cohorts, and thereby better address them."

Related SHRM Articles:

Minority Wealth Gap Isn't Just About Income, SHRM Online, October 2021

Black Workers Still Earn Less than Their White Counterparts, SHRM Online, June 2020