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Black Investor Panel discusses racial wealth gap in America

On March 2, 2021, CNBC’s senior personal finance correspondent Sharon Epperson moderated the Black Investor Panel, an event held by Ariel Investments and Charles Schwab in which leading financial experts reviewed causes and potential solutions to economic injustices in America, particularly those impacting people of color.

Since 1998, the two companies have conducted the Black Investor Survey in an effort to study the challenges driving the racial wealth opportunity gap that exists in America. The study focuses on those making $50,000 or more a year in household income.

This year’s panel of experts met via Zoom to discuss the resemblances and at times glaring disparities between black and white investors.

This snapshot of the Black Investor Survey reveals a racial wealth gap that has been documented by Ariel Investments and Charles Schwab for over two decades. | Photo courtesy of

“What struck me with this year’s survey is what we have seen in terms of the record-breaking stock market run and what that has meant for black investors,” Epperson said. “Despite the gains that we’ve seen in the stock market, the percentage of black Americans who own stocks last year was at the lowest level in the past 20 years.”

Ariel Investments co-CEO and president Mellody Hobson spoke first to summarize the survey findings. In addition to her work with Ariel, Hobson has been promoted to chair of Starbucks effective March of 2021, making her the only black woman to lead a S&P 500 company board of directors, as per Bloomberg data.

“Our proclivity to whole life insurance suggests that we are preparing more for death than for life,” Hobson said. “And that is something that we need to address as a financial services industry and as a community.”

In addition to this startling statistic, Hobson also determined through survey results that with the exception of 401k and whole life insurance participation, black Americans are behind in virtually every other financial instrument.

Even with climbing 401k participation, the differences in contributions are mounting as the survey found that black Americans are saving 26% less than white Americans per month in their plans.

“One of the big headlines from the survey shows that black Americans are not benefiting from stock market participation at the same degree as their white counterparts,” Hobson said. “More specifically, our participation rate is 55% versus 71% for white Americans.”

According to Hobson, this problem is compounded by the discovery that the average black American saves $300 less each month than the average white American.

The survey also took a close look at COVID-19 and found that the pandemic has affected participants disproportionately.

Results indicated that black Americans are around twice as likely to have borrowed money than white Americans, and three times as likely to have deferred student loans. Black Americans have also financially supported someone else and have dipped into emergency funds, both at higher rates than white Americans.

Despite these statistics, Hobson shared hope for the future in some of the survey’s final figures. When studying investors under the age of 40, the survey revealed that the numbers of young black and white investors were identical.

A replay of the Black Investors Panel featuring Mellody Hobson, Carrie Schwab-Pomerantz, John W. Rogers, Jr., Kelly Johnson, and Sharon Epperson can be found on the Ariel Investments website. | Photo courtesy of

“It is a great sign that we’re seeing black and white investors track at a younger age,” Hobson noted. “And I think that can lead to narrowing this wealth gap over time.”

Hobson said her heart was also warmed by the discovery that current stock market discussions at the dinner tables of black families have increased by 27% from those that took place for participants as they were growing up.

Lastly, the survey found that three times as many black Americans report having invested in the stock market for the first time in 2020 than white Americans.

For Hobson, these are all promising signs for a better future, despite the step back in overall participation and lack of savings for black Americans this year.

After the survey summary portion, the panel then discussed why these gaps have consistently existed for 20 years and what the industry can do to help close them.

John Rogers Jr., chairman, co-CEO and CIO of Ariel Investments, shared his thoughts on the racial wealth gap, citing key contributing factors including but not limited to the country’s history of slavery, Jim Crow laws, restrictive covenants, and implicit and unconscious bias.

“We started out behind from the beginning,” Rogers said. “We are all working hard to create equal economic opportunity and justice in this country.”

Rogers shared that from 1992 to 2016, college educated black people saw their wealth decline by 10% while college educated white people saw their wealth increase by 96%.

In addition to historically playing financial catch up, Rogers identified two major financial crises in the last 15 years that have contributed to these statistics.

The Great Recession of 2008 was the first to devastate the black community’s ability to build wealth, according to Rogers, because of its effects on the housing market that black Americans are over indexed to.

Rogers named COVID-19 as is the second crisis to threaten the wealth of black Americans, as they have disproportionately worked in the service industries throughout the global pandemic.

Next, Charles Schwab senior Vice President Carrie Schwab-Pomerantz weighed in on the crucial role of financial literacy in combating some of these issues. In her opinion, financial literacy is “one of the great equalizers of our society today.”

Schwab-Pomerantz has consistently found the lack of education surrounding basic budgeting, saving, investing, and debt management to be problematic and under regulated in this country throughout her career.

“We’ve got to fire on all cylinders,” Schwab-Pomerantz said. “We need the federal government, the local governments, schools, families, employers, all of us to come together and create this national conversation where we’re all responsible for learning and being engaged in our finances.”

The experts agree that financial literacy is imperative to creating more opportunities for black investors, and Ariel Investments has an education plan for that.

“We want to create a language of money for kids to learn earlier and not later, so they become more comfortable with that language over time,” Hobson shared. “We’ve created an investment curriculum for elementary school students called Financial Futures that we will give to anyone who asks for it.”

Panelist Kelly Johnson shared his experiences in getting clients to invest at a higher level in his work as a client portfolio strategist for Charles Schwab.

Johnson believes a lack of trust and a fear of losing money remain the front running challenges he regularly encounters in addition to financial literacy.

“There are lots of minorities who go into a financial institution and don’t see anyone who looks like them and they’re uncomfortable,” Johnson said. “That can certainly dilute their trust in that situation.”

Johnson also shared that many of his minority clients are the first in their families to go to college and achieve a middle-class status, leading them to be wary of handing over any wealth they’ve earned to investment opportunities.

“It is absolutely key that we empathize with the situations of the folks that are coming in for help,” Johnson said.

He added that better representation and diversity in the financial industry would work to eliminate the existing distrust black Americans report experiencing.

Johnson also highlighted the importance of getting out in the community and educating people, while Hobson shared her thoughts on the ways in which the industry can do better.

“We have to see more diversity in this industry,” Hobson agreed. “And I think it’s time to target advertisements to the minority investor.”

Rogers shared his opinion on when black Americans can expect to see future improvements in the survey results.

“Whether it’s 10 years or 20 years, it’s going to take a while because black Americans started so far behind in this race,” Rogers said. “We need to steady the ship and move in the right direction.”

A full copy of the Black Investor Survey along with a recording of the panel discussion can be found at

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