Ready for Advice

The African-American marketplace increasingly offers great potential for advisors.

By Lucretia DiSanto Jones

Increasing incomes and buying power indicate that the African-American market is economically moving up and ready for more investment and financial planning advice. Shedding light on this market’s potential for insurance and financial advisors is LIMRA International’s recently released study, Marketing to African Americans.

The study’s data shows that there are many opportunities for financial professionals who would like to enter this market segment. Only a fourth of African Americans have a professional financial advisor, the study indicates. The situation is not much better for those who are more affluent. What’s more, the study shows that African Americans would like to use financial planners as advisors.

Market potential
Along with the potential for advisors to be successful entering this market is the potential for sales.

While ownership of individual life insurance is higher among African Americans than among the general U.S. population, insured households may not have adequate coverage and all income-earning members within a household may not be covered. These gaps in insurance coverage can be especially crucial in married households where both spouses contribute to the high household incomes.

There is considerable potential for the sale of accumulation products in the African-American market as well. African Americans do own investment products; however, their ownership levels tend to be lower than those of whites in large part because of their lack of knowledge about investment products, the study says.

Clearly, education is critical in this market. Like other markets, African Americans prefer learning through face-to-face meetings with producers. They are far more likely to be receptive to someone who represents a well-known company, someone who is recommended by friends or relatives or someone who is involved in local community development, for example. What does this preference mean to advisors? An investment of time and effort are essential for their success in this market.

Educating the African-American market, though, doesn’t mean talking about just insurance products or about just investment products. Advisors must include in their discussion both protection and accumulation products, showing prospects how both, taken together, can help African Americans address their financial concerns and achieve their financial goals.

Craft the message
Advisors should also develop and use messages that touch on themes important to African Americans. These themes include caring for elderly parents and relatives and the importance of extended family, church and giving back to the community. In fact, any steps that advisors themselves take to give back to the community will be noticed by African-American prospects.

Topics that are likely to catch the ear of many African Americans are economic independence, economic empowerment and personal fiscal responsibility.

Stick to it
The past two decades have seen an increase in African-American household income. In fact, this is the first generation of African Americans to reach middle-class status in great numbers. Advisors will do well to implement a strategic plan for entering and selling in the African-American market.

Source: Marketing to African Americans, LIMRA International, 2005. For more information, visit www.limra.com.