When Oprah Winfrey said, “I still have my feet on the ground, I just wear better shoes,” her words reflected what many insurers and financial advisors already know: There is a large and growing affluent African-American community waiting to be served.
Census figures suggest an expanding market that is better educated and more affluent (see chart) and insurance experts put a voice to those numbers.
“The insurance industry is catching on to the fact that America is browning and it is important to have diversity as part of its program,” says Roosevelt Haywood III, chairman of the National African-American Insurance Association, Washington.
African-Americans who are part of that change are affluent professionals, says Kevin Taylor, a certified financial planner with H&R Block Financial Advisors, Kansas City, Mo. “They are first generation. They are the first college graduates and the first to go out and make a good living.
“So much of financial planning is new to them. There is a whole education process; they have needs that they didnt know they had,” Taylor says.
That is where financial advisors and insurers need to step in, he continues, because often clients are underinsured, not believing they really need additional protection. Among responses he hears are: Weve had it tough this long and weve gotten through it or The kids will find a way.
Consequently, a financial advisor needs to show the benefit in relation to cost, Taylor says, and it will be easier to show that to your client if you maintain contact with that individual. African-Americans want more contact, he adds. “Advisors need to know it may be harder to get a relationship but these folks are more loyal,” he says.
Taylor adds that “for too many years, too many of us have been ignored by Wall Street.” Wall Street sales forces are trained to go out and reach the ultra-high-net-worth individuals, leaving a lot of African-Americans who are now in the middle class out of the equation. “There are a lot more middle-class Americans out there.”
Taylor says that although he found this to be true of the securities industry, he does not have enough evidence to say whether the same holds for the life insurance industry.
If companies do work with African-Americans, they will find loyal clients, says Damon Dyas, a certified financial planner affiliated with American Express Financial Advisors, Southfield, Mich.
Dyas says a lot of African-Americans have kept older, small face amount policies in force. The policies may not be efficient for their current needs and a planner may need to work with those clients. But the point, Dyas adds, is “once they purchase it, they keep it. There is no buyers remorse.”
Women are more open to insurance, more “security conscious,” he says. “The wife is more realistic.” She is concerned about independence if the spouse dies, Dyas adds.
Many of his clients “do their homework” before they come to him to discuss an insurance need, he says. “They come in with a very set idea of the insurance they want.”
What they want, he continues, is someone to tie insurance into a financial plan that goes beyond just selling insurance.
African-Americans who understand the needs of those in their own community can help achieve this goal, say those already in the business. They need to be trained and encouraged to enter the life insurance business, they add.
“There needs to be visible, professional practitioners supported by a strong company with sensitivity to the needs of the community,” said Haywood, who also is a principal with Haywood & Fleming Associates, Gary, Ind.
Companies need to be “visibly active” in the fabric of events in the African-American community, he says.