|Wealth Management Perspectives
Wealth in Black America
Last summer, Northern Trust conducted the groundbreaking “Wealth in Black America” survey. Wealth spoke with Shundrawn Thomas about the results and what they reveal about this growing millionaire market.
In 2007, on average, affluent Blacks
donated $35,400 to religious organizations
or charitable causes, according to Northern
Trust’s “Wealth in Black America” survey.
“Since we knew anecdotally that there’s
a higher attendance at churches and other
religious organizations among the Black community,
we predicted that they gave a lot, as
well,” says Shundrawn Thomas, senior vice
president and head of corporate strategy for
Northern Trust. “But we weren’t expecting it
to be quite so much.”
According to Thomas, that’s just one interesting
finding from the July 2008 survey of wealthy
Black American households. The study’s
objective was to identify and interpret the
financial habits, expectations and attitudes
of this growing market.
The survey, which will be conducted regularly,
came in response to the changing faces
within the millionaire market, Thomas says.
“As an institution, we pride ourselves on the
rich heritage we’ve built over the last 120 years
working with wealthy families and individuals,”
he says. “To us, this study was a natural extension
of that heritage.”
The inaugural survey focused on four main
categories: the use of advisors, financial
planning and investing, charitable giving, and interest in
financial education programs.
The Generation Gap
The results, which were released publicly in September at the
2008 DreamMakers’ Forum, show that each generation within
the Black demographic is significantly different than the next
in several key respects.
“Going into the survey, we knew that there were a few
things entirely unique to this market,” Thomas says. “But we
didn’t expect to find such differences between the older and
younger generations in certain areas.”
Charitable giving was one area where those differences were
apparent. According to their responses, the primary goal affluent
Blacks hope to accomplish through their charitable giving
is to support a cause in which they personally believe. And the
majority of respondents believe it is far more important to contribute
during their lifetime than to leave money in their will. In
fact, 62% prefer to contribute during their lifetime, compared to
only 3% who prefer to give money away through their will.
While they shared a similar view toward the importance of
giving charitably, Generations X and Y (ages 18 to 42) differed
significantly from the Boomer and Silent generations (ages 43
and older) in the amount they gave to charitable organizations
in 2007. In fact, 53% of those within Generations X and Y
donated $50,000 or more, while only 10% of the older
generations did the same.
Cause for Concern
Another key finding was that young affluent Blacks are more
worried about wealth preservation than their older counterparts.
Three in four Generation X and Y respondents said
they’re concerned about preserving their wealth, while less
than half of respondents in the Boomer and Silent generations
shared this concern. Generation X and Y respondents are also
more worried about how their wealth will affect their children
and future generations. Approximately 80% said they’re
concerned with ensuring that the next generation of family
members will lead productive, meaningful lives amidst
affluence, and that they will pass on family values. Less
than half of Boomer and Silent generation respondents
said they’re concerned about how their heirs will use their
affluence, and only 37% worry about upholding values.
Generational differences were also found when respondents
were asked about their financial advisors. Nearly half of those
surveyed said they frequently rely on advisors versus other
sources of investment advice, but members of the younger
generations use different resources for investing information
and for different reasons than older generations.
“We found that Generations X and Y are more likely to
consult with online sources,” Thomas says. “And when they
do turn to their advisors, they’re more likely to let their
advisors make most or all of their investment decisions.”
The results also show that affluent Blacks want to be
understood by their financial advisors, but only 38% feel
that their advisors’ ability to relate to their race or ethnic
background is “extremely” or “very important” when
choosing a principal advisor.
Like most other wealthy households, affluent Blacks seek
advice when it’s needed, Thomas says, but feel strongly
about developing a mutual understanding with their advisors.
“As this market continues to grow within the U.S., these
surveys will help to broaden our understanding of Black
Americans’ financial preferences and attitudes,” Thomas says.
“And the more we understand their wealth management
needs, the better our products and services can serve them,
now and in the future.”
The 2008 “Wealth in Black America” survey was conducted online.
It polled affluent Black individuals who are U.S. residents, at least 18
years old and who had either $250,000 or more in household income
in 2007 or at least $1 million in investable assets.