WASHINGTON – In a statement Monday, the Coalition for Financial Security (CFS) urged Florida Chief Financial Officer Alex Sink to look into the results of the latest state report showing that African American and Hispanic test-takers passed the state’s life insurance licensing exam at rates below other demographic groups.
Concerned that the report is reminiscent of last year’s data and mirrors other statistics showing middle-class and minority communities lacking qualified, financial professionals, the financial literacy organization urged the CFO to investigate the matter before another year passes.
“CFO Sink has been a strong champion for financial literacy, and addressing these disparities is another way she can continue that work and help more families get ahead,” said CFS Advisory Board Member Raul Yzaguirre. “Aspiring financial professionals like those taking this test can be important advisors in their communities. We ought to find out why some communities are falling behind others when it comes to receiving a license.”
The Florida report, covering calendar year 2008, was released last week. The report shows that 51.7 percent of White test-takers (1046 of 2024) passed the state licensing exam last year. This rate compared to 32.4 percent of African Americans (536 of 1652) and 34.6 percent of Hispanics (657 of 1900).
The 2008 report was the second annual report to show such disparities.
Also notable in the latest report, according to the Coalition, was the table comparing education level and pass rates. Even with the state mandated 40 hours of pre-test study, individuals with a graduate degree passed the exam at a rate of only 54 percent last year. The pass rate for those with some college experience or those with high school diplomas was even lower, bringing Florida’s overall pass rate to 39.9 percent (2490 of 6239).
As reference, the state of Illinois’s 2007’s demographics report showed an overall pass rate of 80 percent (7639 of 9549), with those who had a college degree or more passing at 88 percent. Illinois requires 15 hours of pre-licensing study.
“The CFO’s office has been monitoring these numbers for some time,” said Venable Attorney Randolph Sergent, an attorney adviser to CFS on insurance licensing reform issues. “While the state continues to collect information, the data that is coming in suggests reason to be concerned that members of minority communities in Florida may have a higher hurdle to overcome in order to enter the financial services profession. One way to champion the cause of financial security is by looking at the reasons for disparities, why there has been little difference in the numbers for the last two years, and what can be done to see more success from all communities and education levels.”
CFS was formed in 2005 in the wake of Hurricane Katrina by a number of organizations and individuals concerned about the growing divide between working-class and wealthy Americans’ level of financial security. The coalition’s mission is to educate policy makers, financial providers about this divide and to advocate for effective solutions.
In addition to new policies to increase financial literacy by teaching finance in public schools, CFS supports new solutions that will address a shortage of financial experts in middle-class and minority communities.
Statistics, including a 2005 survey by CFS and LULAC, show that in some communities, there are not enough financial experts who can help their neighbors learn about and secure important financial tools such as 401(k)s, bonds, stocks and life insurance protection. The 2005 CFS/LULAC poll found that two-thirds of white respondents had some life insurance, compared to roughly half of African American and Hispanic respondents.
The survey suggested that one reason for the disparity was that minority and middle-class respondents did not know anyone who sells life insurance, and had never been contacted about it.
“There are a number of reasons that so many Americans are struggling to achieve financial security,” said former New York City Mayor David Dinkins, another member of the CFS advisory board. “The public, private and non-profit sectors must all do their part. We need more financial education, more recruitment and retention of financial professionals by the financial industry, and more attention to this problem by public officials.”