October 28, 2010

Finding and Serving African-American Clients

I have heard advisors say it so many times that I take it as true: Advisors in general want the dream client, one with seven figures of investable assets and a healthy income

Historically, that wouldn’t describe average members of the African-American community. But Gary Rozier, senior vice president of institutional marketing and client services at Chicago-based Ariel Investments (with whom I had spoken to for my first post on the African-American advisor community), says that things have been changing. Yes, there are artistes, rappers, sports pros with big bucks, but there are also more and more professionals like Rozier himself, and within the community at large, incomes have been rising for a greater number of African-Americans.

“There’s always been a misconception in our community that you need a lot of money to invest,” Rozier says,” but you have now a proliferation of different products that are affordable; at Ariel, you can buy a mutual fund for as cheap as $50 or $25 a month.”

But more than anything else, it is the change in investment management, namely the irreversible dynamic that’s getting rid of defined benefit plans and replacing them with defined contribution plans instead, that Rozier believes is changing the investment outlook of many African-Americans.

“Historically, a lot of our community worked in public sector jobs with pensions, and in their minds, their employer would take care of their retirement,” he says. “Now, the onus has shifted to the individual, so more African-Americans are having to learn about investing.”

Many more would be encouraged to learn even more if they could learn from someone who looks like them, Rozier says. But anyone can be equally successful in reaching out to them, he says, if they understand certain specifics such as:

  • Most African-Americans have grown up thinking that real estate is the be all and end all in investments.
  • They are not comfortable with idea of the stock market.
  • Many of them take care of their parents so there is a limit on how much they can invest personally.
  • For this community in general, financial education is critical and should be the jumping off point for advisors.

Rozier does believe that a greater number of African-American advisors will kickstart things for the population at large. But his advice to all other advisors is “network, network, network” – with any and every African-American professional associations and even with the local chapters of the National Urban League where many successful African-Americans devote their time to community activities.

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