How Financial Planning Differs for Women of Color
Retirement and estate planning is unique to every individual’s needs, but the distinct challenges and expectations women of color face are essential pieces to factor into a long-term financial plan. As you seek to educate yourself on the strategies and vehicles you should use for saving and investing, be sure to find the right partners and advocates along your journey.
As women of color, we face unique obstacles in the United States. From the pay gap to cultural differences, a lack of generational support and helping our families assimilate, many of us have been burdened with more expectations than our peers for our entire lives. That weight carries into retirement planning, too. Here are some of the reasons financial planning can be unique for women of color:
Expectations around multigenerational care
WOC often face cultural norms which differ from what many non-POC American families face, including caretaking for elderly parents or younger siblings, and sending money to extended family abroad. These expectations can be difficult to plan around, and can hinder financial goals if not properly planned for. If you’re expecting to be responsible for multigenerational care, I’d highly recommend looking into options such as Long Term Care Insurance and Life Insurance.
Pay and economic disparities
It’s no secret that WOC face compounded economic differences in pay and access to opportunities. Over the course of our lifetimes, those setbacks can really change our trajectory. We often start out with fewer financial resources and can face additional barriers to wealth accumulation, such as limited access to affordable education, and being shut out from funding for entrepreneurship. That’s why it’s important to be on the lookout for WOC-specific grants and investment funds - subscribe to my newsletter, The Ambitious Amiga, for a monthly roundup of my recommendations.
Cultural norms can differ, too
Since many of our families have been working to establish their own financial stability and even sometimes assimilate in the US, many WOC don’t have multigenerational financial literacy to learn from. Plus, many of us are expected to support our extended family members with any extra money we earn – rather than save or invest it. This can result in a lack of retirement planning options, knowledge of investment strategies, and the skills needed to make informed decisions about planning for the future.
These differences are the tip of an iceberg of financial disparities we face. Addressing these challenges requires self education, meeting and learning from trusted advisors, and a keen eye for safe investment opportunities. As an entrepreneur and financial advisor myself, here are my tips for finding a financial advisor you can trust, in an industry where WOC are severely underrepresented:
What to look for in a financial advisor or mentor
When seeking a financial advisor, try looking for referrals from trusted friends and family in your network. Before meeting with advisors to interview, run a check on their name using Broker Check, powered by FINRA (the Financial Industry Regulatory Authority) to ensure they don’t have outstanding litigation pending against them, and that they’re fully licensed. These are some of the factors you should consider when meeting with them:
Cultural sensitivity
Look for an advisor who demonstrates cultural competency and a sensitivity to the experiences and challenges faced by WOC. They should be open-minded, collaborative, and empathetic. You can also seek an advisor who specifically matches your cultural background, in hopes that they can understand the expectations driving many of your goals.
Client-centered approach
Seek someone who is a good steward of your time together; they should work to get to know you and your goals, pose questions you may not have considered before, and be well-connected to estate attorneys and even accountants who can help you get a look at your entire financial picture. They should prioritize your unique goals, values, and concerns, and tailor their recommendations accordingly. Avoid advisors who use a one-size-fits-all approach or overlook your specific needs/concerns.
Transparency and honesty
Choose a firm or individual who communicates openly and transparently about their fees, services, and strategies. This ensures that you have a clear understanding of the advice and recommendations being provided - and that they’re not recommending products that don’t suit your goals in hopes of earning an easy commission.
Fiduciary duty
Opt for an advisor who adheres to a fiduciary standard, meaning they're legally required to act in your best interests at all times. Advisors with a fiduciary duty prioritize your financial well-being over their own interests or those of their employer, and generally have to adhere to continuing education and licensing standards in the states they operate in. Safe bets are usually CFPs, CHFCs, and so on, but keep all the aforementioned considerations in mind when evaluating them overall - just because they’re a Certified Financial Planner doesn’t always mean they’re transparent, empathetic, or the right fit for you.
By prioritizing these considerations when selecting a financial advisor, WOC can empower themselves to make informed decisions about their financial futures and work towards achieving long-term goals with confidence. Remember, finding the right advisor is about more than just credentials – it's about finding someone who truly understands and respects your unique financial journey.
If you’d like to meet with me to discuss your financial goals, reach out for a consultation today. For more advice on entrepreneurship, financial planning, and life as a WOC, follow me on Instagram or subscribe to my newsletter, The Ambitious Amiga, for more.
The image used in this blog is by Jennifer Marquez.
