by Carolyn EllisMs. Ellis is Features Editor for Advisor Magazine and L&HA e-newsLink. Connect with her through e-mail: firstname.lastname@example.org
Since the late 1990’s Prudential has had an active diversity program in place. Through its Signature Series, a multicultural initiative to understand the changing face of the American people, Prudential endeavors to learn about the needs and views of diverse Americans. Beginning with women in 2000, Prudential’s research has extended to LGBT, African American and Hispanic American markets, surveying their financial situation, sense of financial preparedness, and confidence level. We spoke with Mark Hug, Prudential Individual Life Insurance’s executive vice president for product and marketing about recently released African American Financial Experience findings and how financial professionals can serve this increasingly affluent and financially confident community.
L&HA: Prudential recently released the 2013 African-American Financial Experience study. What are some key findings?
MH: In 2013 we interviewed about 1,100 African-Americans ages 25-70 whose household income was $25,000 or greater. We found a blossoming middle class where almost 40% of those we interviewed had a household income of $75,000 or greater and 25% of them earn six figures. Another important finding is that this community has made great progress, even in the difficult economic times we’ve had. Half the people we surveyed feel better off financially than they did a year ago despite the challenges they face. Only 19% feel worse. This was in spite having high unemployment and in some cases, money that falls short of their retirement goals or having to retire earlier than they might have expected. This demonstrates a confident group of people that the financial services industry should be able to support and serve as we get to know this community better. Also the preparedness of this community is surprising. 46% of them feel better prepared to make financial decisions versus 35% of the general population.
L&HA: What is the long-term goal?
MH: A number of years ago Prudential made a commitment to follow and learn and eventually market to the growing multicultural market that we see in the United States. You often hear the phrase that by 2040, half the country will be multicultural. Well, that’s a long way away. How about this: in five short years, by 2020, 40% of the country will be multicultural. Prudential has embarked on a total market strategy where we will incorporate all these cultures into our normal marketing process and in essence, absorb what we learn into our DNA so that it’s no longer a specific type of marketing, but rather, it’s just marketing.
L&HA: Does Prudential’s research program cover other cultural communities?
MH: Our Signature Series targets under-served communities where we believe the financial services industry could do a better job of understanding and speaking in language they understand about retirement savings, guaranteed income, or protection. The longest-running study is our Women’s Financial Experience, conducted biannually since 2000. We also have done financial experience studies for the Hispanic American and LGBT, Lesbian-Gay-Bisexual-Transgender communities.
L&HA: The African American Financial Experience showed a high incidence of women as breadwinner and decision-maker in the household.
MH: According to study respondents, African-Americans are more likely to have a female head of household who carries the financial responsibilities. Women are more likely to work compared to the general population and less likely to have a spouse present. This is a complex, multi-generational community, with families taking care of kids after 18 and taking care of grandparents. The multi-generations play into the confidence that we see; we want to help them turn this confidence into retirement savings or protection for their families.
L&HA: How does Prudential actually use the research findings?
MH: These studies are part of our Diversity and Inclusion Initiative, a broad program made up of three pillars to help understand our customers or potential customers. The first, the people pillar, starts with our employee base. We need a diverse and inclusive set of people who understand the market we live in.
The second pillar is the market pillar. We want to understand what these cultures are looking for. We need to nuance our messaging so these cultures understand what we’re saying and we understand what they are saying back to us. This isn’t a philanthropic endeavor; ultimately we want more product sales. It’s a win-win. If we can serve these cultural markets better, they will have more money for retirement and better protection.
L&HA: Are you out in the community as well?
MH: With the third pillar, Prudential’s people go into the community to serve. The community pillar is critical and needs to relate back to into the people and market pillars. The Signature Series research informs our Diversity and Inclusion Initiative and has led us into other programs including our pilot with the dfree movement for financial freedom.
L&HA: How did Prudential become a partner with the dfree program?
MH: It began with the African-American Financial Experience. I met Dr. DeForest Soaries, Senior Pastor of the 6,000-member First Baptist Church of Lincoln Garden in Somerset, New Jersey in 2011. He had created an educational program to help his congregants get free of personal debt. Dfree stands for living without debt, deficits, and delinquencies. This is consistent with our African-American Financial Experience survey that said African-Americans are twice as likely to learn about financial information from their church as the general population. We came to see that what Dr. Soaries was trying to accomplish with dfree was aligned with our Diversity and Inclusion Initiative.
L&HA: What are your current and long-terms plans for this sponsorship?
MH: We decided to create a full partnership and began a three-city launch in Indianapolis in September. Other pilot cities are New Jersey-Metro and Baltimore-Washington D.C. Dr. Soaries has created an excellent book and workbook. We create financial educational materials to complement them. Our financial advisors attend local events so they can get better known by the community and provide some help. This addresses a survey finding that African-Americans are 13% less likely than the general population to have been contacted by a financial adviser. We created a digital presence on the dfree website. We’re also a sponsor of Dr. Soaries’ Billion-Dollar Challenge, which is to help all Americans free themselves of a billion dollars of debt. If you’re free of debt, you have money to invest in your future.
L&HA: What are key takeaways for agents and advisors?
MH: At Prudential, the majority our sales comes from independent financial advisers. A big message is this market’s an opportunity for you. Our research shows that regardless of the culture, the vast majority of people have no problem buying product or getting advice from people who don’t look like them. They want somebody who is familiar with their community and understands what they go through. It’s easier to have that knowledge if you come from a community, that’s understood. But you can find these communities that yearn for financial advisers’ support. Start with financial education and debt reduction. Communities like African-Americans have pockets of millionaires, affluent people, and a healthy middle class. Prudential offers tools that range from digital to paper to seminars to help advisors connect with these markets.