Tom: Today we are talking about some very interesting survey findings – from the Ariel investments Black Investor Survey 2015.
Mellody: That’s right! And all of the Tom Joyner Show listeners are going to hear about our findings before anyone else. You have the exclusive, Tom.
Tom: You are hearing it here first! Mellody, tell us about the survey – why do you do it?
Mellody: This latest survey is the thirteenth in a series that Ariel has been conducting since 1998, and we do it to compare and contrast the saving and investing attitudes and behaviors of middle class Black americans and white americans. We look into the factors that impact how African-Americans and whites think about financial matters, particularly underlying beliefs or past experiences; we study the expectations and issues that each group faces in their financial future; and we study trends over time.
Tom: Let’s start with the biggest contrast between the two groups. What stood out to you?
Mellody: When you compare the white and African-American investing behavior, the thing that continues to stands out is the stubborn gap between the two communities when it comes to stock market participation. At the moment, Black investing is at 67%, while white investing is at 86%. That is a 19% difference. This is important because the stock market is one of the greatest tools for wealth generation that Americans have access to, Tom. However, the biggest finding in our survey may point the direction to significantly close this gap.
Tom: Really? What finding was that?
Mellody: The outsized role that workplace retirement plans play in introducing Black americans to the world of investing. Seven in ten African-American investors cite workplace retirement plans as a contributing reason for becoming an investor, double the rate of the next most common reason, having extra cash on hand that they wanted to grow. Over half of African-American investors say workplace plans are the most important reason – more than four times more common than having extra cash to invest. All things being equal, African-American investors are about 40% more likely to cite workplace retirement plans as their entry into investing. When we see the important role that employer-sponsored plans play, it is clear that they way forward for the Black community to close the gap in stock market participation and secure our retirement futures is tied to these plans.
Tom: So access to employer plans are really important. Were there other factors that contribute to the gap?
Mellody: There are definitely other factors at play here, Tom, with the big ones being income, education and age. The survey found that African-Americans with higher incomes and higher levels of education have a greater propensity to invest. Of the African-Americans making between $50,000 and $100,000 per year in household income, 57% were investors.
Money Mondays: The State Of The Black Investor 2016 was originally published on blackamericaweb.com