There’s a glaring—and widening—divide in our country. A 2017 report from the Institute for Policy Studies projected that in 2020, the median white household will have 86 times more wealth than its black counterpart and 68 times more than its Latino one.
This is personal for me. I was raised in the United States by my Dominican parents and lived on the thin line between poverty and prosperity. I am choosing not to stand on that line and turn the other way. I believe that we as individuals can, and must, influence businesses to make decisions that will dramatically change the trajectory of the financial services industry and entire communities.
My personal journey
I know my story is not unique, but I also know that it is not often told, shared, or fully understood by society and companies alike. My parents’ journey began like that of so many immigrants, leaving behind established careers in education and finance in the Dominican Republic to move to the U.S. They eventually became American citizens and raised a family.
Saving money looked different in my house, as did many things. For instance, at 10 years old I stood in a doctor’s office translating my type 1 diabetes diagnosis to my parents while apologizing to them for getting sick because I knew that we couldn’t afford my illness. I will never forget the kindness of my endocrinologist, who, in that moment, came back with a job offer for my father to be a custodian with union insurance at that very hospital.
As time passed, we relied on a close network of friends, and a community with shared experiences, to navigate finances and family decisions. But what we deserved was financial inclusion—information, support, and access to products—that would have allowed my parents to make that one diagnosis, or another unexpected life event, seem just a bit more manageable.
Getting to the root of the problem
The racial wealth gap has long threatened the economic well-being of the nation and the financial services sector due to historic, systemic marginalization and inequities. Less wealth translates into fewer opportunities for upward mobility and an inability to invest in retirement savings or an endowment for future generations. This is further compounded by income volatility, making any unforeseen challenges that arise result in insurmountable financial setbacks.
Part of the issue is a lack of understanding within the financial services sector about the unique experiences, barriers, values, and capacity within these communities. Some may be more nuanced, others more clear-cut. Someone like me, with a corporate job, has access to a wide range of financial tools, but there are many young men and women who are starting out as my parents did, with no access to financial planning at all.
True equity requires solutions that match the scale of the problem
I want to challenge businesses to be truly inclusive of communities of color. The way we do business must create pathways for them to build wealth and plan for retirement, as well as consider their well-being through life insurance.
It’s not enough for financial institutions to put black and brown faces on their websites or rely on philanthropic investments to check a regulatory box. Those institutions need to prioritize their commitment to and relationship with communities of color. There are three specific areas to focus on.
Companies need to learn about and treat this customer segment with the same sense of urgency and purpose as other groups. They need to invest in thoughtful research to understand what is truly important to them, including their values and financial goals. This demographic is far more dynamic than our industry realizes, offering a valuable pathway toward increased market share and business growth. This should be a key consideration for the insurance and financial services industry.
Financial institutions need to elevate the economic engine of these communities, prioritizing their potential by offering equity incentives to financial advisers to proactively reach out to this segment. Advisers should be trained and encouraged to learn about and visit inner cities, engaging with the nearly 11 million minority-owned businesses across the country. There are opportunities within each firm’s business model where this audience can be prioritized. Whether direct-to-consumer or B2B, they should encourage employees to consider where and how they can work toward greater financial inclusion.
Are businesses truly ready to commit to this? Are there initiatives in place to build out a racially diverse sales force? Are they equipped to handle a new influx of customers? These are important questions, and while a quick “yes” is what we need to hear, we also know it will take time to make this work meaningful and sustainable. Each organization’s capacity and readiness, both from an operations and a culture standpoint, is different. However, a move toward financial inclusion can be the catalyst to help businesses act responsibly and with greater intentionality.
By sharing my personal journey of coming from a low-income, immigrant family to where I am today, as a voice in corporate responsibility, I feel uniquely inspired to challenge financial services companies to see the value of my experiences as motivation to fundamentally change how we serve the customers who have been left behind.
Rita Germán is the director of community investments at John Hancock, overseeing their $4.3 million program focused on building a healthier, more equitable Boston.