Helping Underserved Clients Turn Income Into Wealth

Harriet Tubman escaped slavery and courageously helped liberate other slaves in the mid-1800s, leading them to freedom as a “conductor” of the secret Underground Railroad. Deeply inspired by the historic activist, certified financial planner Lazetta Rainey Braxton, an African-American, is leading a proud fight for a “financially liberated America,” she tells ThinkAdvisor in an interview.

Braxton, 45, is a strong voice for diversity in financial services, and her commitment to it is clearly evidenced by her RIA, Financial Fountains. The Baltimore-based firm, serving clients in several states, targets underserved consumers that are “overlooked by Wall Street,” as its website proclaims. Clients are widely diverse generationally, economically, racially and otherwise.

A 20-year-plus industry veteran, Braxton is chair and past president of the Association of African-American Financial Advisors and board president of the AAAA Foundation.

In the interview, she talks about overcoming the challenges of being a black woman working in the white-male dominated financial services industry and the objectionable circumstances that chiefly precipitated her choice of going solo a decade ago.

Braxton’s career began at Marriott, where she worked as an auditor. She then moved into investment management at firms such as Diversified Trust Co. and Brown Capital Management.

She is a prominent advocate for diversity and inclusion at wealth management firms. In an email exchange following the interview, she praised Edward Jones’ initiative to pay an incentive to retiring advisors or those trimming their books if they pass their clients to women or minorities at the firm. She said:

“I commend Edward Jones for recognizing the competitive advantage of supporting and promoting diverse talent by rewarding advisors for aligning their actions with the firm’s objectives. It is a wise investment in the company’s future; consumers will continue to demand financial advisors with cultural competence.”

Braxton’s practice — all about turning income into wealth — is fee-only, requires no minimum and is mostly virtual in operation. She founded the RIA in 2008 during the financial crisis (“For those who understood the value of advice, it was the ideal time.”)

Several of her 30-some clients are HENRYS — High Earners, Not Rich Yet — and two years ago she began also offering services to high-net-worth individuals with assets of $1 million to $5 million.

Braxton was motivated to learn about managing money while growing up in rural Virginia the daughter of blue-collar workers who eked out only a modest living. She went on to earn a Bachelor of Science degree and a Master of Business Administration, both in finance.

ThinkAdvisor recently interviewed the CFP, on the phone from her Baltimore office. The conversation took in her view on why African-American FAs decide to break away from wirehouses, the unfortunate result of which, Braxton says, is the firms’ loss of “great talent that hasn’t been nurtured.”

Here are excerpts of our interview:

THINKADVISOR: How did your early background influence your career ambitions?

LAZETTA RAINEY BRAXTON: I was raised in rural Virginia and didn’t see any black professionals who dealt with money. Coming from parents who hadn’t obtained undergraduate degrees, what I realized was that education and exposure are key — necessary — for people of color to build wealth. But a lot of underserved and overlooked populations don’t get the opportunity to be exposed [to wealth], as they don’t have a long history of generational wealth.

Why did you decide to become a financial advisor?

I wanted to understand the challenges surrounding personal finance, but I didn’t have a career name for that [growing up]. I saw my parents struggle with their finances and wondered how to be educated about managing money well.

What key strength has helped you in your career?

Perseverance, and I have a high tolerance for tension — in other words, courage. I’m open to learning new stuff about things that are awkward to talk about and face. I can handle uncertainty. I’m resilient and resourceful.

You’ve said that you’re “fighting for a financially liberated America.” So, is Harriet Tubman, who escaped slavery and helped other slaves to freedom, a hero of yours?

Very much so. She was relentless in her pursuit to set people free, and she put her life on the line. No one’s threatening my life, but I’ve had challenges and pushback. Facing a lot of challenges is the reason people [especially African-Americans] go out on their own. If we wait for the mainstream to catch up, we may be waiting a long time — which we have.

Has being a black female hindered your career?

I’m very much aware of the challenges. I just don’t allow them to be excuses. Does the fight tire me out? Yes. But, hey, Harriet Tubman did it! So why not me?

What are some of the challenges facing a woman professional in financial services?

The pay gap is [wide compared to men], and the opportunities still aren’t what they’re supposed to be. It’s worse for people of color. Being an African-American female is a double-whammy. Then you add being from a lower economic background, and the chances of success are somewhat dismal.

What career path did you take?

I had an affinity for accounting but didn’t want to be an accountant. I majored in finance at the University of Virginia. A lot of people pursued investment banking then, the mid-’90s. But that wasn’t my interest. So I really didn’t have a home for my passion.

There are comparatively few black advisors with the wirehouses. Is that because African-American FAs don’t want to work at those firms or that the firms don’t want to employ many African-American advisors?

I didn’t go the wirehouse route; I went the wealth management route. But I’ve often heard that at the wirehouses, the opportunities to inherit books of business aren’t the same for African-Americans as for other advisors. So, many African-Americans end up going out on their own.

What’s the downside of that?

The wirehouses lose great talent that hasn’t been nurtured. There are programs now intended to do better at attracting and retaining [black FAs] and creating the conditions that are conducive culturally for those who want to stay. The hope is that [this effort] will be more proactive, not reactive.

Twelve years ago, you resigned from your last job — vice president at an investment management firm — because a prospect, Caucasian and in his 80s, used a derogatory term about African-Americans to the firm. Yet they took him on as a client. You were the only African-American with the company. How did you feel about the way it responded?

There was no recognition of my humanity and how it affected me. I didn’t see support or concern on the part of the firm. They didn’t take a stand on what I felt to be right. They just did this dance about risk management.

Did the prospect use the term about you personally?

No, about the whole population of African-Americans. I had prepared the proposal [for him], and the principal of the firm met with him in his home. He came back and [what the prospect said], which was appalling, circulated around the office. But they still brought him on board as a client.

Did you try to take legal action?

I didn’t have any grounds to sue because he said it in his home. But I didn’t want to sue. What I wanted was for the firm to say, “We don’t accept these types of clients.” But they just wanted to act like it didn’t happen.

So you left.

Yes, I resigned. I had already decided that I wanted to be a CFP and work with the mass affluent instead of the super-high net worth I’d been working with there.

Tell me about your “No fear, No shame zone” that you mention on your website.

There’s a lot of fear and a lot of shame around money — fear of what it can do or may not do for you. Most of my clients have never worked with a financial planner before. Therefore, it’s very important for me to create a safe, no-judgement place so they can just lay on the table how they feel about money and not be hindered by fear or shame.

How do you prospect for clients?

People find me online through my digital presence as well as through the network of people that I know. I get referrals. One of my [Caucasian] clients, who received a windfall, found me because she intentionally wanted to work with an African-American female. That’s very unusual. But she wanted to direct her purchasing power to an African-American woman as part of her personal social justice. She did her due diligence and thought I was a good fit.

In 2011, you and your husband, Dr. Brad R. Braxton, founded the Open Church, where he’s a senior pastor. You indicate that your practice is “faith-based.” What does that encompass?

I’m very anchored personally in the Christian faith. I’m married to a pastor and have clients who are pastors. I’ve done presentations in churches. I understand clergy taxes and finances, which is an extension of the services that I offer. But in terms of my practice, everything that I do is not going to be biblical in your face — if you will.

What’s one way you’d like the advisory industry to advance within the next decade?

I’d like to see more black-owned RIAs that are SEC-registered. That ties into AUM because you need $100 million under management. I’m not there yet, but I’m on my way.

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