Each one, teach one. The African proverb rooted in the tradition of our enslaved ancestors acquiring knowledge or skills and then sharing that understanding and commitment to teach another, laid the foundation for Black education, skilled trade, and business. And while its origins date back more than 400 years, the custom of dispensing valuable knowledge in an effort to enrich the greater community, is a practice that is still very much alive and well today. Just ask Vista Equity Partners CEO, Robert F. Smith, who last week announced the launch of the Student Investment Program (SIP), a first of its kind multi-year strategic partnership granting $500,000 in funding to students attending Historically Black Colleges and Universities (HBCUs) and other Minority Serving Institutions for the purpose of investing.
The collaboration between Student Freedom Initiative (SFI), of which Smith is the Chairman, Black-owned investment app Stackwell, and Prudential Financial has made way for an investing program that will distribute $1,000 grants to each of the 500 participating student’s investment account on the Stackwell platform. It will also provide access to investment education and other resources geared at increasing students’ investing confidence and financial wellness. The partnership, expected to launch in the first quarter of 2023, is rooted in a desire to address the expanding racial wealth gap in the United States.
“This program uniquely provides the tools, capital, education and community support necessary to equip the next generation to take control of their financial futures,” says Smith. “This partnership with Stackwell and Prudential shows what the power of intentionality and collaboration can do to create long-term solutions to combat the racial wealth gap. Together, we can eliminate barriers to entry and drive greater representation of the Black community in the financial markets.”
According to the latest Charles Schwab Black Investor Survey, there is an influx of new and young Black investors in the market, mostly driven by the increase in popularity for risky investments like cryptocurrency. As well, amid the “great resignation” Black investors have sought new ways, outside of workplace retirement plans, like the 401(k), as gateways to enter the stock market. But despite the positive trend, there is still an urgency for financial institutions to continue to build trust, address the education gap between Black and white investors and support financial literacy for all Americans. And this is where SIP hopes to stand in the gap.
SIP will not only educate students on how to invest, but give them the financial backing to get their portfolios started. Smith predicts that the partnership will “change the entire way that our community thinks about investing,” as he believes that helping students gain insightful investment practices early in life will, in return, help them to build sustainable wealth for themselves, their families and their communities.
It’s a paramount goal for a particularly complex time, as economists predict that Black Americans’ lack of participation in the stock market is likely to widen the post-pandemic wealth gap. Even before 2020, the racial wealth gap in the United States stood as the largest of the economic disparities between Black and white Americans, according to the National Bureau of Economic Research. But because only 34 percent of Black American households own equity investments, compared with 61 percent of white families, the likelihood of seeing the wealth gap widen coming out of the pandemic is a very real prospect. Add to that, the average value of stocks Black Americans owned in 2019 amounted only to $14,400, nearly a quarter of what their white peers held.
In a release shared with EBONY, SIP highlights another triggering figure: Federal Reserve data show white households hold on average eight times more wealth than Black households, with that figure growing to 17-times for the Millennial population and Gen Z. This is why partners in the endeavor believe that by providing financial acumen to the most affected generations in the Black community, SIP will have the greatest impact on those individuals. And by educating them in the ways of the stock market early on, it will empower them to take control of their financial futures as they prepare to enter the workforce and begin their career journeys.
“Increasing Black participation and representation in the financial markets is critical to addressing the historic economic and social inequities that have disproportionately impacted HBCU students for decades,” says Trevor Rozier-Byrd, Founder and CEO of Stackwell.
Through the SIP program, collaborators hope to reduce the financial stress associated with attending college, better position students and their families to protect themselves against key financial risks, redress historical and social inequities, and increase the financial preparedness of students upon graduation. Sarah Keh, Vice President of Inclusive Solutions at Prudential adds that Prudential’s vision is that SIP will also expand access to investing, insurance and retirement security while creating wealth building pathways for HBCU and MSI students.
“This catalytic program will not only address generational and racial barriers to wealth building that Gen Z minority students face today,” says Keh, “but will also build a solid foundation of financial wellness and a clear future for tomorrow's leaders."