While more than half (56%) of Black Americans own life insurance, this number still represents a 19-point gap from the 75% of Black Americans who believe they need life insurance, according to the Insurance Barometer Study conducted by LIMRA and Life was carried out. Happen.
In a recent interview, MDRT member Brenton Harrison shared some critical insights agents should keep in mind as they pursue the African-American market.
The Barometer study, conducted last year, noted that black Americans are significantly more concerned about being able to save for an emergency fund, pay their monthly bills and their mortgage, and leave their families in dire straits than result of an untimely death. .
Like most Americans, Black Americans’ misconceptions about life insurance prevent them from getting the coverage they need, the study said. While the top reason Black Americans give for not buying coverage is that it’s too expensive, the study found that Black Americans are more likely than the general population to overestimate the cost of life insurance (75% vs. 50%) . They are also more likely to believe that the coverage they get from their employer is adequate.
“…It is important that the advisor is willing to educate until the client understands, and can identify why this is in their best interest.”
– Brenton Harrison, MDRT member
Although Harrison serves customers of all races, African-American households comprise 80% of his customers. To work in this community, he said, one must understand two truths:
1.) Few organizations have attempted to authentically serve the African American community.
2.) Among organizations that have attempted this, there have been painful examples of improper and predatory business practices. “When you consider that the majority of black households do not have significant financial assets that most companies look for in prospects, it’s no surprise that the majority of African-American prospects I encounter have never worked with an advisor. . And for those who have, the experience has often been a negative one, marked by their lack of trust in the person giving them advice,” he said.
Establishing trust is crucial, Harrison added, because compared to their white counterparts, African-Americans often have less exposure to insurance planning, investment opportunities outside of work, or even the importance of establishing a will and powers of attorney.
“If the first person to bring up these topics is their advisor, it’s important that the advisor is willing to educate until the client understands and can identify why this is in their best interest,” he said.
The process of educating while establishing trust can lead to some transparent conversations, Harrison said. “I’m not surprised when a client asks exactly what I make of a product or service I’ve implemented, and why even if there are more cost-effective options available, my recommendation is the best for them. Some even want to know if my family and I use the same product or service before agreeing to move forward.”
Struggling with student loans
Most importantly, high-income African-American households are more likely to struggle with student loan and consumer debt than their peers, Harrison added. It is common for him to meet African-American prospects in the medical or legal fields who earn a strong income but owe more than $400,000 in student loan debt (per person).
They also often financially support other family members, such as parents or siblings who have less means. “It’s a phenomenon I’ve experienced firsthand, growing up with high-income black parents who often supported two to three households outside of our own,” he said.
These differences present unique planning opportunities to advisors, Harrison added. And if they are not willing to go above and beyond to treat them as unique, they need to reevaluate whether they are committed to truly serving this community’s needs.
African-American households often don’t fit the mold of a prototypical customer, he pointed out. But when an advisor accepts and embraces the different methods that address their needs, they will establish goodwill that leads to repeat business, multiple referrals, and a tangible impact greater than what they find working with clients whose wealth is established before they met their advisor.
Ayo Mseka has over 30 years of experience reporting on the financial services industry. She previously served as Editor-in-Chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].
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