Research Finds That Affluent African Americans Are More
Likely To Start A Business
BY TIA CAROL JONES
Merrill Lynch Wealth Management conducted a study with 455 affluent Black and African Americans as part of its Diverse Viewpoints: Understanding Affluence in the United States. The study was conducted to understand the beliefs, motivations, priorities that influence wealth and investment decisions
among the Black and African American community. Insights were found using qualitative and quantitative techniques.
‘Affluent” in their terms refers to those Black and African Americans with $100,000 in investable assets, which includes cash, funds in bank accounts, money in retirement accounts, mutual funds, stocks, bonds, certificates of deposit and insurance contracts with cash value. Out of the 455 respondents, 50% were married, 40% were age 55 or older, 37% had investable assets between $100,000- $250,000 or more and 52% were women.
Craig Young, National Business Development Executive at Merrill Lynch, said the goal of the study was Merrill Lynch’s effort to better understand the communities it serves. Findings
include the importance the community places on giving back and recognizing the people who got them to their affluent
status. Financial stressors included taking care of family members who aren’t in the $100,000 or more range.
The study found there is a deep sense of responsibility to uplift future generations. Forty percent of Black and African Americans are more likely to feel it is important to give back to their communities. The study also found that 25% had a desire to set future generations up for success.
“We talk about lifting as we climb in our community and what I just thought was awesome about both of those statistics when you combine them together, it’s a recognition of who got us here standing on the shoulders of giants and also a recognition of the importance of lifting as we climb and not turning our backs on the future generations,” he said.
Four times the number of affluent Black and African Americans plan to start their own business in the future, compared to the affluent general population. Young believes this points toward a notion that hard work is the way to make money. Conversely, the study also found a skepticism of financial markets and an inability to make money passively, without hard work. More than half of the community, 58% of affluent Black and African American respondents work with a financial advisor. Ninety one percent report they have a financial plan.
Young said that mindset and skepticism about passive income, such as the financial market, is putting members of the community at a disadvantage in saving for retirement. He said there is an opportunity to talk and empower the community more. To also help them understand how investing in the market and in companies is very similar to running and owning a company.
When asked how an institution can build trust, 47% percent shared those financial institutions could be more welcoming and inclusive. They also felt institutions could demonstrate that they understand the unique issues within the Black and African American community more.
“That’s why this type of research becomes important for us, as an organization, to better understand the communities that we want to serve going forward,” he said. “This type of reporting, research and insight that we get helps our advisors become more in tune with how to support and work with the Black/African American community.” Said Young.
Hiring was something else respondents said were important to them with a focus on hiring from within the community, as well as giving to causes that the community cares about.
The research from the study will help Merrill Lynch get to know the community better. The focus is on empowerment
and the way to support the community, with a desire to understand the unique needs of the community.
“The better you’re able to understand an individual and/or a community, because the community is not monolithic,
so there’s a lot of different data points and things to understand about the Black/African American community. And the better we are at doing that, the better we are at serving the community
at large,” he said.
Merrill Lynch also conducted research on Hispanic and Latinos in “Diverse Viewpoints: Exploring Wealth in the Hispanic/Latino Community” and the LGBTQ+ Community in “Diverse Viewpoints: Exploring Wealth in the LGBTQ+ Community.” Said Young.
To view the research, visit https:// www.ml.com/diversity.html.
