Alabama lacks financial planning resources, UGA researchers find
The state of Alabama significantly lacks financial advice resources, according to a new study, a reality that exacerbates barriers to retirement planning for rural and minority populations.
University of Georgia researchers found that Alabama qualifies as a financial advice desert by their standards. To identify these deserts, authors of the study Swarn Chatterjee and Lu Fan compared overall state population to the number of certified financial planners and personal financial advisers. Alabama was one of 10 states that had a “startling” low number of both.
The study found that people living in these deserts are less likely to understand their financial options, less likely to save for the future and less likely to be able to afford to retire. This applies to about 10{3df20c542cc6b6b63f1c547f8fb389a9f235bb0504150b9df2ff264aa9a6c16c} of Americans, the research shows.
“If people do not save enough, it is going to affect everyone,” Chatterjee said in a statement. “This is important to understand right now because one of the largest cohorts of the population, the baby boomers, continue to retire in large numbers.”
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In addition to his research, Chatterjee works as a professor of financial planning in UGA’s College of Family and Consumer Sciences.
He said that many people underestimate how expensive it is to retire, but the more people plan in advance for that end, the more likely they will be able to afford it. Access to financial planners and advisers can be key to understanding this.
One problem noted in the study is that the communities who lack access to these financial resources tend to be under-resourced in other ways as well. This was found to be especially true in sparsely populated communities with large minority populations — like the rural Alabama Black Belt.
“In communities where people have even less access to financial advice, these problems will be amplified, so the people who need the help the most are less likely to get it. What we are finding is that for minorities, the effect is even more intense,” Chatterjee said. “Minority households are less likely to participate in retirement in general, but they’re even less likely to participate in these desert areas.”
The other states researchers identified as financial advice deserts are Alaska, Arkansas, Louisiana, Mississippi, Montana, Nevada, New Mexico, Oklahoma and West Virginia.
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Like anything, though, there are still people who succeed financially in these states and in their more rural areas. Chatterjee said people who are more educated and employed full-time were more likely to have a financial plan for their futures.
“Not everyone who is working has access to a 401(k) through their employer, and if they are in an hourly job, they may or may not have any access to that,” Chatterjee said. “But anyone can save if they have income.”
Not only does financial literacy benefit the individual, Chatterjee said, but it can also fortify the resilience of a community.
He suggests programs promoting financial literacy at schools or in workplaces could provide a foundation for retirement planning and overall future planning.
Hadley Hitson covers the rural South for the Montgomery Advertiser and Report for America. She can be reached at[email protected]. To support her work, subscribe to the Advertiser or donate to Report for America.
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