Think about this when you hear the term “wealth gap”: A 2015 St. Louis Fed study found that between 1989 and 2013, even college-educated African Americans saw their wealth decline 55%. This was one part of John Rogers’ answer to my question about why he started an internship program at the University of Chicago that places under-resourced students into asset management and foundation positions.
“I’ve been running Ariel for 35 years, and the wealth gap in the country between the majority community and the minority community has grown — it’s dramatic,” he explained, so he decided to “in a small way, to make a little dent in the problem.”
Rogers is chairman and CEO of Ariel Investments, the asset management firm he founded in 1983 that has $13.2 billion in assets, offices in Chicago, New York and Sydney, Australia, and 99 employees.
A “small way” and a “little dent” to the soft-spoken Rogers means donating $4.5 million of his own money to establish and fund the John W. Rogers, Jr. Internship Program in Finance at the University of Chicago. In the university’s last academic year, the program funded 16 internships at 11 local employers.
Rogers believes the financial services industry could do better to help reduce that wealth gap. He doesn’t say that flippantly. Understand that Rogers is quite familiar with advisors, as more than 80% of Ariel’s assets come through third-party distributors like Schwab, Fidelity and TD Ameritrade.
Furthermore, he speaks from experience. He has long supported educational and financial literacy programs in Chicago. For instance, his 2016 funding to start the internship program was only part of a wider $10.5 million gift to the University of Chicago.
He also recognizes that he is not alone in trying to do something to close that wealth gap. To help find solutions, the Center for Financial Planning of the CFP Board will host its first-ever Diversity Summit next month in New York, and Rogers will be a featured speaker. The Center’s mission is to create “a more diverse and sustainable financial planning profession so that all Americans have access to competent and ethical financial planning advice,” says Executive Director Marilyn Mohrman-Gillis. (See Part of the Solution sidebar on page 56).
Increase the Supply As noted, John Rogers has been thinking about — and acting upon — this issue and its possible solutions for a long time, and he has a different, more direct way to reduce the wealth gap. Simply put, his solution is to first build more wealth among people of color. Doing so, he believes, will usher in related changes for good — including building a more diverse advisor population, a more financially literate population and stronger minority communities where one person’s success breeds other success stories.
How can wealth be built within the minority community? Rogers points out that the most lucrative careers in American society today are in the financial services and the technology sectors. However, they also “happen to be the two sectors that have the least diverse employment and leadership,” he says.
He concedes that there are now “more African-Americans on Wall Street,” where many companies have programs to promote employee diversity and inclusion. But among nonprofits, universities and foundations, which he says typically have otherwise very progressive policies on diversity and inclusion, “the endowment offices of these organizations are almost all white.”
That paucity of African Americans in the money management business is particularly noticeable in the private equity, hedge fund and venture capital sectors. Money managers in those sectors command very high incomes, Rogers says, and the recipients of those high incomes tend to wield not just more personal heft but broader economic and political power within their communities.
His idea for the internship program is to prepare students “to work in the investment offices of major endowments in the United States.” By working in those offices, the interns can be exposed to a career with organizations that do great work, he says, and also be exposed, especially in the larger endowments, to the universe of private equity, hedge funds and venture capital.
His eventual goal, he says, is that “maybe 15 years from now we’ll have an African-American Georges Soros or Henry Kravis or David Rubenstein.”
Rogers uses a socio-athletic metaphor to drive home his point.