The disparities are far too large to ignore: Black and Hispanic families’ median wealth is about 1/7th of their White counterparts. While there are lots of reasons for this, one of them is that the system itself is built to entrap minorities in debt cycles that prevent them from making financial progress. And the “Financial Wellness” industry is just another cog in the wheel.
An excellent article in PlanSponsor explores some of the racial inequities in financial wellness. Not only do minorities face generational challenges in wealth-building and predatory lending practices, they have very different views, responsibilities, and priorities when it comes to money. For example, the article points out that 71% of black workers have financially supported family members in the past year, compared to just 33% of whites. Financial wellness scores are dramatically different: Black employees are three times as likely to score in the bottom tier and Latino workers are twice as likely as their White peers. Savings rates, retirement readiness, and monthly cash flow are similarly slanted.
The bottom line: you need a financial wellness program that is personal, based on the needs, culture, and priorities of each individual. The industry’s current model is a sales-driven model which will discriminate against those who are less prepared and less willing to engage in the traditional investment process. When your financial wellness program is “free,” that’s because it is really just a prospecting/profit tool for your 401(k) provider, an investment company, or even your benefits consultant. That means the participants who can play by the inequitable rules of our financial system will get more service, while those with different views will get less attention.
It is time to provide a solution that is tailored to each person, rather to perpetuating a broken, unfair system’s profits.