Ariel Investments and Charles Schwab’s 2022 Black Investor Survey is shining a light on trends in the investor market, and there are positive takeaways from this year’s research. Chief among them is the accelerated growth of young Black investors participating in a financial market that has been instrumental in building wealth.
“Over the past 24 years, we've really spent time with our long term partner Schwab trying to understand essentially what the barriers to entry might be for Black investors, how the financial services industry can be held accountable to pivot and possibly enhance strategies, so as not to leave money on the table and to foster greater financial literacy for the greater good,” Arielle Patrick, Chief Communications Officer at Ariel Investments tells EBONY. “We found from this year’s survey that there are some emerging asset classes, crypto being one of them, where people are actually intrigued and jumping on these opportunities.”
Though these new classes are opening doors to the market, Kelly Johnson, Portfolio Manager at Charles Schwab notes that the education piece is still missing. Both Black and White Americans, roughly 50 percent, are investing in areas that they have not researched or are not particularly well versed in. “When we've done the survey in the past, Black Americans have tended to be more conservative investors. In a lot of cases, maybe even more conservative than they should be. But I think the larger cultural influence of crypto and NFT's and then having celebrities endorse a lot of these things publicly has pulled a lot of Black Americans into these asset classes and into some of these risky investments without really understanding them.”
Despite the risks involved, Black respondents were drawn to investments not involving the stock market because of a lack of trust. What the survey found is that Black Americans did not consider the stock market a fair playing field, instead, believing that it is designed to benefit white Americans. “What jumps out is this idea that Blacks trust technology more than they trust people,” says Johnson. “Essentially a third of black Americans in the survey would rather deal with technology as opposed to a person.”
Amid the “great resignation,” workplace retirement plans, like the 401(k), are no longer the sole gateway for investors to enter the stock market. That’s a positive takeaway. But there still remains 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.
“I think it's the responsibility of financial institutions to foster these relationships,” says Patrick. “I'm not saying that by doing this survey, we at Ariel and Schwab have done enough. This is just one small part of how we engage with the community to really harness the opportunity to close the gap and ensure the financial well-being of people of all colors.”