Lazetta Rainey Braxton is a rare bird in the financial planning profession. She is African-American, a group that accounts for no more than 2 percent of all planners.
Braxton, 42, is working to change that. She runs her own registered investment advisory firm in Baltimore called Financial Fountains. She also is president of the Association of African American Financial Advisors, known as the Quad-A, a southeastern regional professional group that seeks to expand representation of African-Americans in planning.
The group’s first national conference will be held Sept. 24-25, as a pre-conference of the Financial Planning Association annual conference in Boston.
“I just wasn’t seeing a critical mass of African-American planners who understood the unique challenges clients are facing,” she said. “I started wondering, where is everyone?”
The retirement security problems facing so many Americans are much more acute among minority groups. Income disparity is an important cause, but recent research also shows that some of the gap could be due to differences in investing patterns.
A growing number of advocates feel that having more African-Americans involved in financial planning could help.
Sixty-two percent of black working-age households have no assets in a retirement account, compared with just 37 percent of white households, according to a 2013 report by the National Institute on Retirement Security. Just 25 percent of black households have more than $10,000 in retirement savings.
And a report released earlier this year by the Federal Reserve Bank of St. Louis found that half of white, Hispanic and Asian households are in the upper half of national wealth distribution, compared with just 25 percent of African American households.
The disparities stem mainly from racial gaps in income, but the study also found that investing differences are key. The research shows that minority households tend to invest in lower-return assets such as housing, and also tend to borrow at high interest rates.
In other words, some of these households could use a good financial planner. And, while that planner need not be African-American, increased diversity in the profession certainly would promote their use.
“There’s a word of mouth aspect to it,” said Ajamu Loving, director of academic partnerships at the American College, which recently launched a new initiative aimed at collaborating with historically black colleges and universities to train more financial planners. “All the ads you see for financial help on TV show advisers as being part of your family – it becomes very personal. If your social network has fewer of these people, then you aren’t as likely to find people who can build these outcomes.”