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Danielle Byrd Thompson. (Photo: TPS Financial)

Life Health > Life Insurance > Life Planning Strategies

Black Women Business Owners Need Advisors' Attention: Danielle Byrd Thompson

By Allison Bell

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What You Need to Know

  • Employer businesses owned by Black women generated about $40 billion in revenue in 2020.
  • Danielle Byrd Thompson sees those women as clients with complicated planning needs.
  • The pandemic added to the complexity.

Danielle Byrd Thompson would like to see agents and advisors observe Black History Month by working to educate prospects in underserved communities, including Black prospects, about the financial services resources that are out there.

Speaking in a phone interview with ThinkAdvisor, Thompson noted that one of the underserved groups of prospects closest to her heart is Black women who own businesses.

Oprah Winfrey may be the chairman and CEO of the Oprah Winfrey Network, and Arlan Hamilton may have founded her venture capital firm, Backstage Capital, but Thompson sees many Black female business owners are unaware of the gaps in their protection and planning.

“They are not sought-after clients,” Thompson said. “They are extremely underserved.”

What It Means

For a financial professional, thinking about diversity, equity and inclusion can mean identifying people who have an urgent need for what you have to offer.

The Data

In 2020, the United States was home to 52,374 businesses with employees that were owned by Black women, according to data collected by the U.S. Census Bureau’s Annual Business Survey program.

Those businesses employed 420,318 people, accounted for $13 billion in annual payroll and generated about $40 billion in annual revenue. These businesses generated a level of economic activity in 2020 that was roughly comparable to the gross domestic product of Paraguay, Latvia or Bahrain.

Danielle Byrd Thompson

Thompson is a partner at TPS Financial in Falls Church, Virginia, and a financial professional with Equitable Advisors. She has a bachelor’s degree and a master’s degree in business from Howard University, a historically Black university.

She started out as an advisor at VALIC — a retirement services provider that’s now part of Corebridge Financial — then moved to TPS Financial in 2017.

Equitable has been taking active steps to attract more Black financial executives since at least 1968, and it backed efforts to make the services of the Securities Training Corp., an organization that prepares students for the Financial Industry Regulatory Authority’s Series 7 exam, available at Howard in 2016.

Thompson’s Experience

Thompson has a practice that serves a wide range of clients.

She noted that Black women who own businesses are as varied as any other group of prospects.

But she said that, in her experience, Black women who own businesses tend to be different from other clients who own businesses, and from Black women who do not own businesses.

A Black woman who owns a business faces complicated questions about financing, health benefit plan sponsorship, disability benefit plan sponsorship, retirement plan sponsorship, succession planning, and business continuity planning and insurance that rarely come up for salaried clients, she said.

Meanwhile, because Black women are less likely than other business owners to have access to family money or experienced business owner relatives, they have a harder time getting information, and often have a more difficult time working with lenders and other financial services providers, she added.

She said the nature of the typical business owned by a Black woman is another factor: Many Black women own businesses in the service sector, such as health services providers, child care providers, beauty salons and restaurants.

The Pandemic

The COVID-19 pandemic has been catastrophic for Black Americans.

In the second quarter of 2020, for example, the pandemic increased the death rate of white people with household incomes over 400% of the federal poverty level by 9.2% over the year-earlier level.

The pandemic increased the mortality rate of Black people in that income category by 47%.

The pandemic has affected Thompson’s own life, she said, noting, “I’ve had numerous clients who passed away because of COVID.”

She did not hear of many Black business owner clients tapping cash-value life insurance for business financing during the pandemic. Instead, she said, she took calls from clients who wanted more insurance.

She has found this to be an especially good time to talk to Black business owners about the need to insure their businesses against the risk that they could become disabled.

The disability planning conversation is particularly important for clients who want to keep service sector businesses open during pandemic surges, she said.

Danielle Byrd Thompson. (Photo: Equitable)

Allison Bell

Think_Allison

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