Juneteenth and The Racial Wealth Gap
About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C., area that works with clients virtually across the country. Dream Financial Planning is a Fiduciary Financial Planning firm specifically designed to help individuals in their 30s and 40s take control of their finances and fulfill their dreams. Feel free to schedule a Free Consultation to learn how we use the DREAM Financial Planning Process ™ to help our clients achieve their goals.
Racial Wealth Gap
In the article, Combating the racial wealth gap: 9 money moves for Individuals of Color, I offered a few tips to help individuals close the racial wealth gap. I included an excerpt below.
For individuals of color, even personal finance can be a heartbreaking reminder of racial inequality.
Almost any way you slice it, White households have amassed more riches than their counterparts of color, leading to a racial wealth gap. White Americans hold eight times the wealth of the typical Black family and five times the wealth of the typical Hispanic household, the Federal Reserve estimated in its 2019 Survey of Consumer Finances. White families also had the highest median level of wealth at $188,200, the survey found, compared with $24,100 for Black families and $36,100 for Hispanic families.
By the time White individuals reach their 60s, they're expected to have accumulated $1.1 million more than Black Americans, according to an analysis from the Urban Institute.
Who Should You Work With?
There are numerous historical barriers to building wealth for black people and other minorities. Getting more black people to work with a Financial Planner could be one solution to closing the racial wealth gap. The problem is that Black CFPs represent only 1.8% of all CFPs, even though nearly two-thirds of Black Americans would like a financial advisor of the same race, according to the Ariel-Schwab Black investor survey.
There are also barriers to becoming a black CFP Professional. To sit for the exam, you need to have at least a bachelor's degree, three years of full-time personal financial planning experience, and complete an education requirement that costs at least $5,000. On the other hand, becoming a financial or insurance salesperson is much less difficult, and there are no experience or education requirements prior to scheduling an exam to become licensed.
Most Financial Advisors are looking to work with Millionaires. So who do you turn to if you're suffering from a wealth deficit and don't have a large enough portfolio to work with a Financial Advisor? Most choose not to work with an advisor at all because of the cost and a perceived lack of value. Some work with an insurance salesman or commission-based advisor who may be incentivized to sell you an expensive product such as a whole-life or permanent life insurance policy. You can read more about why those policies may not be a good wealth-building tool. Having adequate insurance is crucial to a well-constructed Financial Plan. However, be careful when you're presented with a product that combines insurance and investments.
I may be a little biased, but I think working with a Fee-Only Financial Planner who is a Fiduciary and a CFP Professional is your best bet. Especially if you can do it in a budget-friendly way.
Financial Coaching
I recently launched the Dream Builder Program, with a monthly fee starting at $99/month to help as many individuals as possible. My goal is to help 100 people by the end of the year by providing high-quality financial advice for the cost of your monthly cell phone bill. Even the best athletes have coaches. Why would you try to build wealth without a little help? If you or someone you know is looking for financial guidance, feel free to send me an e-mail.
Juneteenth
In 2021, Juneteenth became a federal holiday. The path from local observance in Texas to a nationwide day of celebration has been long, and—like the freedom it commemorates—speaks of America's journey from a nation that aspired to equality to a nation that works each day to achieve it.
The Juneteenth story began in Galveston, Texas, in the years after the Civil War. On June 19, 1865, Major General Gordon Granger issued General Order No. 3, which emancipated those who were enslaved, marking the end of the institution that dated back to the first colonies of what would become the United States.
June 19 became "Juneteenth" and a day of celebration; the first recorded observance occurred the very next year, in 1866. Many of these early celebrations centered around church communities, as segregation laws prevented African Americans from using many public spaces. Despite this, Juneteenth celebrations expanded across the South. Traditions began to form, with many communities gathering for meals, fairs, baseball games, and more.
As the Civil Rights Movement marched to prominence, the old exclusionary practices were denounced and removed from the law. Consequently, Juneteenth celebrations were more broadly adopted in the 1970s.
As the African American community expanded across the country, Juneteenth found its way into the North and further west. By 1979, Juneteenth celebrations occurred in every U.S. state and the District of Columbia. Moreover, Juneteenth is not exclusive to the U.S.; parts of Mexico also observe the day.
Since becoming a federal holiday, Juneteenth appears set to become an even bigger American institution. The day is celebrated Jubilee-style (a biblical reference to the celebration held after the freeing of the enslaved) with cookouts, fairs, cultural gatherings, public readings, and more.
This celebration of freedom continues to spread to the rest of the country and beyond. It offers the opportunity to affirm the universal right to life, liberty, and the pursuit of happiness for every human being and to reflect upon how far we have come, how far we have yet to go, and how we can continue advancing the cause of freedom and justice across our communities—even worldwide.
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