The events of the last few weeks are a sad reminder of how deeply ingrained racism is in our country. It’s uncomfortable for me to think about just how bad structural racism and white privilege really are in this country. It’s even more unthinkable that this has endured for centuries. 

But I know everyday violence and oppression are very real for the Black community.  My discomfort is a sign of where I need to focus. It has left me thinking about how I can help call out racism in my own line of work. 

While today’s protests are primarily focused on criminal justice and how the Black community is treated by police, we’re seeing the many other ways in which racism and white privilege rear their ugly heads.  From bias in the workplace to disparate incomes to higher unemployment rates or homeownership, our societal systems are designed to favor skin color and privilege. As a financial planner, I’m acutely aware of one dramatic way this is all expressed: the racial wealth gap. 

What is the racial wealth gap?

The racial wealth gap is the vast difference in wealth between white people and black people. Simply put, no matter what data you look at, black household wealth is a tiny fraction of white wealth. To me, the wealth gap is an expression of generations of systemic bias, racism, and white privilege. 

A significant driver of the wealth gap is the large and persistent racial income gap. The racial income gap is the inability to earn an equal amount of money because of the inherent biases in workplaces, discrimination, and economic disadvantages in education, which all lead to a lifetime of lower-income and wealth. The Federal Reserve Bank of Cleveland shows that if you eliminate the income gap, you largely eliminate the racial wealth gap. 

I constantly see this gap demonstrated in my own line of work. The statistics show that less than 4% of financial planners in the U.S. are black, and yet the Black population is around 15% of the total US population. This is widely disproportionate. So if, as a helping profession, the Black community can’t even be proportionally represented, what does that say about all the people in need of help? Odds are, it will be very difficult for a person of color to find a financial planner who is in the community. And that means families of color can’t access the same financial education, support, and resources they need to get ahead.

Some facts about the racial wealth gap:

• The median (or average) net worth of a white family is nearly 10x that of a Black family in America. Net worth is a simple calculation: it’s your assets minus your liabilities. You build net worth by earning income, saving, staying out of debt, and inheriting money. On average, each of those actions has been inhibited in a systematic way in our society. 
• Black families invest in the stock market at half the rate of white families. See more about that Pew Research study here. 
• For a Black family, it’s generally harder to purchase a home. The homeownership rates for black families is 45% compared to 74% for white families. Think about the impact given the fact that a home is typically the primary savings vehicle for American families. Historically, one reason for this is discriminatory lending practices called redlining. 
• Over time, the levels of black unemployment have generally been twice that of white Americans. This persists today. And the most recent economic crisis brought on by the Covid pandemic has once again disproportionately impacted the Black community.

These are but a few examples. I share these statistics because they are shocking, and they show us the grave consequences of the racial wealth gap. I encourage you to share these facts, and have conversations about the racial wealth gap with your friends, family, and colleagues. I’m hopeful that as our awareness grows, we can call out these inequalities in our own corner of the world, and start rectifying them for the betterment of the Black community.