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Taking charge of finance can help African-Americans retire

McClatchy-Tribune Information Services

March 28, 2016


PHILADELPHIA ó Among the countryís big Wall Street firms, senior-level African-Americans financial advisers are rare, says Ajamu Loving.

And he would know, being an adviser of color with a doctorate in financial planning.

"I heard 7 percent of astronauts who traveled into space were black," says Loving, recalling an event featuring African-American astronaut Leland Melvin in Tampa, Fla., last year. "It struck me that was better than the number of financial planners of color."

Itís a stark reminder for a community thatís challenged by the lack of diversity and a wealth gap, but that has the same need as everyone to save for retirement.

According to the Government Accountability Office, African-Americans account for only 2.7 percent of senior-level staff in the financial industry. Minorities overall, including Hispanics and Asian Americans, make up about 8 percent of financial-services employees.

So how can African-Americans take control of their retirement planning?

Loving and financial planner Jocelyn Wright, both of whom work for the American College of Financial Services in suburban Philadelphia, deal with this question in classrooms and in meetings with clients.

"Individuals who get less professional advice, they end up not performing as well," Loving said. "Iíd like to increase the number of African-Americans in financial services, and increase the level of advice in the community."

Loving serves as director of academic partnerships and assistant professor of financial planning at the American College, and is creating and coordinating relationships between colleges and universities to increase financial-services education in academia.

Before his appointment in the Philadelphia area, Loving was assistant professor of finance at Texas A&M University-Commerce and worked for about six years in the Midwest for the Dutch bank ABN Amro.

He also had the benefit of both parents working in finance. His father was with Waddell & Reed, an investment firm, in the 1980s and "talked about it in glowing terms as a way to help people, as an opportunity to do well by doing good. While my dad was building a clientele, my mother started her career at Northern Trust, and then worked at First National Bank of Chicago for a decade, then Harris Bank in Chicago."

Loving encourages African-Americans to enter finance: "If youíre a talented young black person, there are a lot of opportunities out there. It may not be on your radar."

He holds his 403(b) academic retirement assets in the Vanguard 2045 Target Retirement fund. "I employ a simple, low-cost diversified approach to investing. I am very low frills and boring when it comes to this."

African-Americans may be hurting themselves and their retirement financially because of the role of family caregiver. According to a recent Prudential research survey of 1,043 African-Americans age 27 to 70, more than 20 hours a week was spent on caregiving, versus 14.6 hours among the general population.

Then thereís the wealth gap: The average annual income of African-Americans is about 20 percent less than their white counterparts, based on recent U.S. Bureau of Labor Statistics data. More than 3 in 10 African-Americans (31 percent) cite the wealth gap as a reason not to seek out financial advice.

Overall, only 14 percent of African-Americans and 26 percent of the U.S. general population currently work with financial professionals, the Prudential survey found.

Wright wants to solve that problem among women of color.

The Insight Center for Community Economic Development, a nonprofit in Oakland, Calif., found that single women of color are the biggest group of Americans with either zero or negative net worth.

"We want to help close the gap as much as possible. The way to do that is through education," said Wright, American College chair for women and financial services and assistant professor of womenís studies.

In addition to her teaching role, Wright is a practicing financial planner with the Ascension Group in suburban Philly. Many of her clients are women.

"Women donít work as long, we donít earn as much because of the pay gap. And then, of course, we work in companies that donít offer fringe benefits providing a pension," she says.

She encourages women to maximize Social Security by deferring benefits until age 70, to tackle debt and save for retirement at the same time, and "increase the level of comfort as women with money."

Wright got an MBA, learned about investing through working in banking, and was mentored by a financial planner to take over a practice.

"I tell women not to get scared and emotional about the markets. Keep your goals in mind."

Wright likes to allocate about 40 percent of her assets in actively managed mutual funds and the rest in ETFs or passive index funds, the same advice she gives her clients.