Financial Wellness: A Diversity & Inclusion Perspective

Surya Kolluri is Managing Director for Thought Leadership, Kai Walker is Director, Head of Inclusion Transformation, and Anna Potts is Wealth Management Analyst for Retirement and Personal Wealth Solutions at Bank of America. Opinions are the authors’ own.

Recent events have highlighted long-standing gender and ethnic disparities in Americans’ income and wealth. And as a new cohort of workers (Gen Z) enters the workforce, generational along with other demographic differences such as gender and ethnicity are increasingly coming to the attention of policymakers and practitioners. Additionally, employers today are increasingly feeling responsible for their employees’ financial wellbeing. As a result, employers today play a growing role in addressing gender and ethnic disparities, as well as building financial wellness programs with generational differences and preferences in mind.

To help identify needs and knowledge gaps, our Retirement and Personal Wealth Solutions team (RWPS) recently designed and fielded a new survey on Financial Wellness, including a diversity and inclusion lens. We leveraged the framework offered by the Consumer Financial Protection Bureau (CFPB) and queried 1,000 online consumer banking client panelists who are members of our Consumer Banking Client Panel Online Portal. This research was conducted toward the end of 2020 through the beginning of 2021.

Definition of Financial Wellness

The CFPB takes into account four elements across both time (present and future), and also by financial security and freedom of choice. Specifically, we examined respondents’ views over the following elements:

  • Present Security: Control over day-to-day, month-to-month finances
  • Future Security: Capacity to absorb financial shock
  • Present Freedom of Choice: Financial freedom to make choices to enjoy life
  • Future Freedom of Choice: On track to meet financial goals

In our survey, if a respondent responded positively to all four of these outcomes, we concluded that the respondent could be deemed financially well.

Overall results

Characteristics of the respondents surveyed were as follows:

After being shown the CFPB questions regarding financial wellness, our survey respondents had the opportunity to rate their overall financial wellness on a scale of 1-5 (where a score of 1-2 indicates poor financial wellness, 3 indicates neutral, and 4-5 indicates excellent). Overall, 59% of the respondents said that they felt their financial wellness level to be excellent, 30% were neutral, and 11% said they felt their it was poor.

In terms of gender, males expressed higher levels (64% versus 55% of females) of excellent financial wellness. Conversely, women were more likely than men to report a neutral sense of financial wellness (33% versus 27%).

Turning to ethnic differences, Whites articulated the highest financial wellness rating, with approximately 66% who said that their sense of financial wellness was excellent. By contrast, only 36% of Black African Americans reported an excellent financial wellness score; as did 46% of Asians; and 42% of non-White Hispanic/Latinx participants. Even more worrisome, many Black African American and non-White Hispanic/Latinx respondents indicated their financial wellness level was poor, twice as high as the overall average, and nearly three times as high as the White and Asian respondents.

We also examined the results from an intergenerational perspective. In the Silent Generation, 79% reported excellent financial wellness, with Baby Boomers coming in at 65%, Gen X at 44%, Older Millennials at 50%, and Gen Z and Younger Millennials together at 51%. Concerningly, Gen X respondents reported the lowest levels of financial wellness wellness. This may be due to the fact that Gen X is now the “sandwich generation,’ often caring for both their own children as well as their aging parents.

Help Needed  

In addition to asking respondents how they were doing financially, we also inquired whether they were seeking help from a variety of different sources. The list included financial advisors, financial websites, family and friends, technology-based solutions, professionals like accountants and attorneys, employers, and other professionals like banking representatives and estate planners.

What we learned is that the most sought-after resource is a financial advisor (50%+ overall). Some 40% wanted help from a financial website, and women in particular (35%) said they would seek help from family and friends. Men, on the other hand (32%), said they would prefer technology-based solutions.

Through an ethnographic lens, the resources that Black and other ethnic groups said they found most important were financial advisors and websites. Asian respondents favored technology as a source of information more than their peers (36% versus 26%, 23%, and 24%, respectively for White, Black, and other including Hispanic/Latinx). Employer-based resources were strongly preferred by Black African Americans and Asian Americans.

Our survey also demonstrated that preferences differ importantly by generation. The Silent Generation favors working with financial advisors, estate planning professionals, and accountants. Interestingly, younger adults (Gen Z and Millennials) prefer tech-based solutions and financial websites, as well as employer-based resources, compared to their older counterparts. The Gen Xers and would like more employer-based solutions, while younger adults lean more on extended family and friends for advice.

Implications of Research

Our research findings can help financial advisors, institutions, and employers to better deploy and connect advice, guidance, and helpful information to the workforce. For example, some employers may wish to ascertain when and to whom to provide services of a financial advisor, a financial website, or when to offer tech-based solutions.

Rather than a “one size fits all” approach, employers are likely to find that a preferred solution would offer an array of solutions. Focusing on the resources will help current employees, as well as those new to the workforce, to start and stay on track when preparing for retirement.

Bank of America is a marketing name for the Retirement Services business of Bank of America Corporation (“BofA Corp.”). Banking activities may be performed by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A., member FDIC. Brokerage and investment advisory services are provided by wholly owned nonbank affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”), a dually registered broker-dealer and investment adviser and Member SIPC.

Investment products:

Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value

© 2021 Bank of America Corporation. All rights reserved. | MAP#3726092 | 09/2021


Views of our Guest Bloggers are theirs alone, and not of the Pension Research Council, the Wharton School, or the University of Pennsylvania.