Cycle of Low Financial Wellness for many African American and Hispanic/Latino American Employees
El Segundo – Calif., May 18th, 2017 – The latest study from Financial Finesse, Optimizing Financial Wellness for a Diverse Workforce, sheds new light on the financial behaviors of different ethnic groups in the workforce.
The study found that higher percentages of African American and Hispanic/Latino American employees experienced unmanageable levels of financial stress and were more likely to have financial wellness levels in the “Struggling” or “Suffering” categories.
The workplace financial wellness firm – which offers unbiased financial coaching and guidance to employees as a benefit paid for by their employers – found that, even when controlling for age and income, there were key differences in the aggregate wealth management and wealth transfer behaviors of four different ethnicity groups studied: Caucasian, African American, Asian American and Hispanic/Latino employees.
The Demographics of Stress
Compared to Caucasian and Asian American employees, higher percentages of African American and Hispanic/Latino employees were found to be:
- Suffering more from unmanageable levels of financial stress
Thirty-one percent of African Americans and 25 percent of Hispanic/Latinos said they have high or overwhelming levels of financial stress compared to just 19 percent of Caucasian employees and 12 percent of Asian American employees.
- More likely to be stuck in a “cycle of low financial wellness
Only 26 percent of African American employees and 37 percent of Hispanic/Latino employees report having an emergency fund, compared to 55 percent of Caucasian employees and 72 percent of Asian employees. Not having a financial reserve to pay expenses if they lose a job or face an unexpected expense puts those employee groups at risk of financial crisis.
- More likely to live at or above their means
Fifty-two percent of African American employees and 64 percent of Hispanic/Latino employees report having a handle on their monthly cash flow, spending less than they earn each month, compared to 77 percent of Caucasian employees and 82 percent of Asian American employees. This makes it difficult to save for retirement, contribute to education expenses and build a legacy to leave to their families one day.
A general lack of access..
Liz Davidson, CEO and founder of Financial Finesse, says that while these disparities are, to some degree, related to lower average income levels for these minority groups in the workforce, the biggest driver is a general lack of access to sound financial guidance and education in school systems and communities.
While there is much work to be done in these areas, Davidson says she is encouraged to see that employers are increasingly looking to address the financial disparity within their workforces. According to AON Hewitt’s 2017 Hot Topics in Retirement and Financial Wellbeing, a high percentage of employers – 92 percent of those surveyed – are putting programs in place to help improve employee financial wellness.
“With study after study showing that diverse workforces perform better, employers are recognizing that they need to design their employee benefits strategies in a way that addresses the specific needs of different employee populations,” Davidson says.
Tania Brown, CFP®, lead author of the report, adds that financial wellness is at the epicenter of this trend with personalized financial counseling growing faster than online solutions because counselors can readily adapt to different types of employees in highly diverse workforces. Brown notes that highly targeted, personal financial wellness programs are especially effective at helping financially-stressed employees cut expenses, save for emergencies, reduce debt and plan for the future.
For more insights, download the report here.
For a sneak peek of the report, you can reserve a spot on our webcast with Tania Brown, June 7th at 10 am PT/1 pm ET, here.
About Financial Finesse
Financial Finesse is the leading provider of unbiased workplace financial wellness programs in the country, providing over 600 organizations with holistic financial coaching and guidance that helps employees improve their financial wellness. The firm’s programs cover every area of financial planning – from basic money management to advanced estate planning – and cost employees nothing out of pocket, since they are fully paid for by their employers. Financial Finesse’s programs have proven to transform lives through its proprietary education model offering live workshops, webcasts, one-on-one financial coaching sessions and a financial helpline – all from CERTIFIED FINANCIAL PLANNER™ professionals who do not sell any financial products or services. www.financialfinesse.com.