Black men have less financial security than white men

When it comes to the ingenious use of money, there is a huge disparity between black Americans and white Americans. Consider this: The average value of savings and investments for white men is $422,000, more than double the $168,000 for black men.

These worrying numbers, compounded over time, mean middle-class Black Americans will have less financial security in retirement and less wealth to pass on to the next generation, says Kelly Johnson, fixed-income portfolio manager at Charles Schwab Investment Management.

As a Chartered Financial Analyst, Johnson has over 25 years of experience in the financial services industry with expertise in institutional investor relations, client portfolio management, and financial advice and planning.

As a first-generation black college graduate, Johnson recognizes that men over 40, especially African-American men, can feel pressure to “know it all” and find it difficult to seek help, especially when it comes to something as personal as their finances. Johnson cites data from a cut of data on black men from the Charles Schwab-Ariel Investments Black Investor Survey. He offered some smart financial tips to help Black Americans better manage their finances, including:

  • One in three black men is not invested in the stock market. Johnson advises them not to hide their money under a mattress… except for next week’s groceries. He suggests considering investing the hard-earned money in vehicles like a workplace retirement plan (401(k) or IRA) or a brokerage account where it can grow over time and earn interest. on investments.
  • Fewer than one in five black men have a written financial plan. Johnson’s advice is BYOP…build your own plan. Create a financial plan with an expert, who can help you customize a plan for finances and goals. He adds that you can also create a do-it-yourself financial plan, which you don’t need to have a lot of money for. The first step is simply to put your goals on paper.
  • While only 9% of black men talked about the stock market growing up, now 43% talk about it with their kids. Johnson suggests investing in future generations. Talking to kids about money early on, he says, can help combat negative money-related stigmas and encourage positive financial habits that will help future generations achieve long-term success.

Of course, people often ask when is a good time to invest in the stock market or another asset class like real estate, fixed income, money market funds, or even Bitcoin. While no investment offers a guarantee, Johnson reflected on the unique challenges Black men face in managing their finances and offered some advice on how they can get started.

BLACK CORPORATE connected with Johnson via email to get his thoughts and thoughts on the investigation.

What was the most surprising finding from the survey regarding black men not investing in the market?

It didn’t surprise me at all, but the finding that 76% of black men don’t work with a financial advisor is significant. If you are lost, ask for directions. As a group, we often find it hard to admit that we don’t know everything sometimes. While asking for help can be uncomfortable, it’s essential that current and future generations start talking about money. If you’re not ready to talk to a financial professional, start by having conversations in the communities where you feel most comfortable, whether that’s a place of worship or a another community organization.

What is the fundamental reason why black men have not traditionally invested in the stock market compared to their white counterparts?

There are deep-rooted gaps in participation between black and white Americans. Our survey found that 55% of Black Americans and 71% of White Americans said they invest in the stock market. Eighty percent of black men think racism is a barrier to black wealth creation, 70% think there aren’t enough black role models in the financial services industry, and only 9% of black men talked about the growth of the stock market. Lack of access, opportunity, and price also likely helped explain why black men traditionally don’t invest. There’s no question the industry needs to do a better job of understanding the unique challenges that black men face.

We know that investing smartly and working with a financial advisor are important steps to building wealth, but right now black Americans are less likely to work with financial advisors (21% vs. 45% of whites) . The more people turn to financial advisors, the more likely they are to save and prepare for their future. By working with trusted advisors such as employers, community organizations and faith groups, our industry can reach more people who need and want advice.

Why is it so important for black men to invest in the stock market now?

Participation in the stock market is an essential tool for building wealth, and by not participating in the markets you are missing the opportunity to accumulate wealth in a meaningful way. I would be remiss if I did not note that I was encouraged by the fact that our study found evidence of growing engagement in the stock market among young black men, with 74% under the age of 40 now participating. in the stock market, a little more than their whites. counterparts (70%). Even in my own home, I have a son who is in his mid-twenties and he has never shown any particular interest in investing. And one day he asked me about bitcoin. And I watched it, and I just started laughing because it just illustrates how these new investment vehicles have gotten a lot of young people who hadn’t thought about investing before into the markets.

What are the main factors that prevent black men from investing in the stock market and how do they overcome them?

Many factors explain why black men have not engaged in the stock market, including a lack of financial knowledge, less wealth to invest, little discussion between families about money, and a lack of confidence in financial services institutions. The good news is that black Americans are now much more likely to discuss the stock market with their families than in the past. More than twice as many black investors under 40 (18% vs. 7% of black investors over 60) say they have discussed stock market growth, which has positive implications. I think we can expect more black men to start investing.

The survey found that when Black Americans were asked about diversity, it was significantly more important to them as a driver of engagement with the market than to White Americans. However, they didn’t necessarily want to work with someone who looked like them. What they really wanted to see was diversity in the workplace, going into a bank or an investment company and seeing people from different backgrounds. This tends to make some people more comfortable.

What’s your best advice for black men when it comes to investing and consolidating their finances?

Spend time learning how to manage your money. Do not hesitate to seek help from reliable sources. Ask questions and never stop learning. Studies show that when people are financially savvy, they are more likely to go to college, have higher credit scores, perform better at their jobs, and have greater ability to manage. financial shocks.

Sarah J. Greer