Category Archives: Racial Inequality

Women of Color Lag Behind Economy

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“Race and racism create specific, unique challenges for women of color that are too easily ignored with broad platitudes that seek to advance women’s representation without questioning which women are most likely to benefit.“ ~ Adia Harvey Wingfield, author of the book Flatlining: Race, Work, and Health Care in the New Economy

Race and gender continue to create divergent and uneven outcomes for women of all races and men of color in America.

An oft-cited statistic reveals that women make 79 cents for every dollar men earn. But Black women earn only 64 cents on the dollar, and for Latinas,.racism and ,.racism and” it is a dismal 54 cents.

As it was in the early 20th century, women of color continue to experience occupational and economic disadvantages that reflect the ways both race and gender affect their work experiences.

Research indicates that both factors, racism and sexism, impact women of color in professional settings. The factors adversely affect Black women in a variety of occupations through stifled leadership opportunities, the ongoing persistence of specific forms of sexual harassment, and subtle but pervasive doubts about competence, intelligence, and skill that are unrelated to actual performance, according to a Brookings Institution report.

In a study by Adia Harvey Wingfield, Black women doctors observed that

The medical community is sorely lacking in diversity with respect to Black women doctors.

Black women doctors, in a study by Adia Harvey Wingfield, observed that race and gender were key factors shaping the challenges they faced in the field.

Despite being 7% of the U.S. population, Black women are a paltry 3% of medical doctors today, a disparity that has devastating consequences for health equity in a rapidly diversifying society.

Working in a profession dominated by white men, Black women doctors are very attuned to the ways that sexism impacts their lives. For instance, nearly every Black woman doctor with whom Wingfield spoke shared accounts of being mistaken for a nurse rather than a doctor, so much so that they argued that when it came to their everyday interactions, gender was a much more significant factor than race.

Source: https://www.brookings.edu/articles/women-are-advancing-in-the-workplace-but-women-of-color-still-lag-behind/

The 2% Solution: Driving Action for Real Change l

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“The problems of racial injustice and economic injustice cannot be solved without a radical redistribution of political and economic power.” ~ Dr. Martin Luther King, Jr.

The 2% Solution grew from the idea that lasting, generational change is possible only through a major investment by U.S. companies in economic justice and development for Black communities.

Inequitable access to capital has impeded the ability of Black entrepreneurs to maintain positive cash flow and cover operating costs in their businesses, explains Robert F. Smith, Founder, Chairman and CEO of Vista Equity Partners.

A key factor in this disparity is the lack of major financial institutions in Black communities.

“Only 53% of Black households are properly banked, compared to 80% of white households.”

As a result, Black business owners often rely on Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) for support. However, these institutions are also often underfunded and lack modernized and digital systems.

Supporting CDFIs and MDIs is one of the key pillars of the 2 Percent Solution. By investing capital in these institutions, we’re also investing in Black entrepreneurs and businesses.

The 2 Percent Solution asks U.S. companies to invest 2% of their annual profits over the next 10 years into communities where systematic inequities have hindered progress, says Smith. These investments aren’t acts of charity. They are reparative, enabling lasting generational change and bringing economic justice for Black communities.

“I think that [The 2% Solution] will show Americans there is hope, there is an opportunity for the American dream to now be revitalized. And frankly, to give us all confidence that we can actually make this a better country and a better place to live.” ~ Robert F. Smith, Forbes 400 Summit on Philanthropy

The 2% Solution has the ability to make lasting change in Black communities with a focus on four main pillars of action where an investment’s impact would be long-lasting and broadly felt within the Black community. These main pillars are:

  • Supporting CDFIs & MDIs
  • Healthcare
  • Education
  • Technology and the Digital Divide

The 2% Solution will benefit all Americans. A 2019 McKinsey Global Institute analysis found that eliminating the racial wealth gap would generate $1.5 trillion in GDP, and we can use The 2% Solution to help close the gap between Black and white households.  

References:

  1. https://robertsmith.com/2-percent-solution/
  2. https://robertsmith.com/about-robert-f-smith/

Jackie Robinson #42

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Jackie Robinson, the six-time Major League Baseball (MLB) All-Star and Hall of Famer, wasn’t just a pioneering athlete. His effort—and sacrifice—launched a cascade of human and civil rights advances.

Seventy-five years ago when Jackie Roosevelt Robinson started at first base for the Brooklyn Dodgers on April 15, 1947, he broke major league baseball’s six-decade-long color barrier, which not only made him an icon to those fighting for racial equality, but he was also a target for those who sought to fight against it. Jackie’s poise and strength—both on and off the field—are why he is honored today. He signaled to America that African Americans would no longer remain quiet and accept second-class citizenship status. 

“His courage and bravery played a major role in the history of integration, both on the field and throughout American society,” wrote Harvard historian Henry Louis Gates, “and no history of the civil rights movement would be complete without noting Robinson’s major role.” 

“Jackie Robinson gave all of us—not only black athletes, but every black person in this country—a sense of our own strength,” wrote MLB Hall of Famer Hank Aaron in his introduction to Robinson’s autobiography ‘I Never Had It Made’. 

Robinson’s strength was not only as a gifted athlete and fierce competitor who earned Rookie of the Year, MVP and six-time All-Star status. His strength manifested itself as dogged perseverance in the face of a tidal wave of racism—from daily taunts and threats to broad institutional inequities.

Robinson’s athletic brilliance and contributions to history earned him the Presidential Medal of Freedom and resulted in Major League Baseball retiring his number “42” in 1997—a first for any athlete, in any sport. 


Shortly before Robinson’s induction into MLB Hall of Fame ceremony, Dr. Martin Luther King, Jr. paid tribute to Robinson’s pioneering achievements this way: “Back in the days when integration wasn’t fashionable, he underwent the trauma and the humiliation and the loneliness that comes with being a pilgrim walking the lonesome byways toward the high road of Freedom. He was a sit-inner before sit-ins, a freedom rider before freedom rides.” 

U.S. Army

After receiving his military draft notice in March 1943, Army recruit Robinson reported to Fort Riley, Kansas for basic training. After racism initially barred him and other Black recruits from Officer Candidate School—despite their clear eligibility—they were eventually accepted.

But his time in the segregated U.S. Army would prove deeply frustrating. It ended not long after an incident near Fort Hood, Texas. In 1944, he was riding in a U.S. Army bus with the wife of a fellow Black officer. The driver, believing the light-skinned woman to be white, ordered Robinson to the back of the bus. Robinson, noting the fact that U.S. Army buses were not segregated, refused. The driver backed down, but called Military Police after the ride. Robinson was taken into custody and eventually court-martialed for disrespecting and disobeying a superior officer, disturbing the peace and drunkenness (although he neither drank nor smoked). He fought back and, despite false witness statements stacking the deck against him, he was eventually acquitted of all charges and received an honorable discharge in 1944, having reached the rank of second lieutenant.

Jackie Robinson Day

Beginning in 2007, players across the MLB started wearing Robinson’s No. 42 every April 15 in observance of Jackie Robinson Day, a tradition that continues.

References:

  1. https://www.history.com/news/jackie-robinson-life-baseball-pictures
  2. https://www.history.com/news/jackie-robinson-color-barrier-baseball

Wells Fargo rejected nearly half of their Black homeowners refinancing applications

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Only 47% of Black homeowners who submitted home mortgage loan refinance applications in 2020 were approved by Wells Fargo as opposed to 72% of white homeowners, according to a Bloomberg News analysis

While home mortgage rates in the U.S. hit an all-time low during the pandemic, African American homeowners did not have the same level of access to refinance and ultimately lower their long term interest costs as other homeowners.

“Only 47% of the Black homeowners who submitted refinance applications in 2020 were approved by Wells Fargo as opposed to 72% of white homeowners”, according to a Bloomberg News.

Wells Fargo rejected more Black homeowners refinance applications than it accepted.

While Black applicants had lower approval rates than White applicants at all major lenders, the data show, Wells Fargo lagged behind other major lenders in their approval rates for minority applicants and had the biggest disparity and was alone in rejecting more Black homeowners than it accepted. Overall, 71% of Black refinancing applicants in the country were approved in 2020, according to Bloomberg’s analysis.

Wells Fargo, the third largest bank in the United States by assets, was the sole lender that rejected more Black applicants than it accepted. Black homeowners faced more refinancing denials than other minority applicants such as Hispanic homeowners and Asian homeowners,

This remarkable wealth event has seen U.S. homeowners refinance almost $5 trillion in mortgages over the past two years. This refinancing has allowed White homeowners to save an estimated $3.8 billion annually by refinancing their mortgages in 2020, according to researchers at the U.S Federal Reserve. But it’s a door that barely opened for Black Americans, who make up 9% of all homeowners and locked in just $198 million a year, less than 4% of the savings.

Bias in Wells Fargo’s approvals for refinancing home mortgage loans

Wells Fargo approved a greater share of applications from low-income White homeowners than all but the highest-income Black applicants, who had an approval rate about the same as White borrowers in the lowest-income bracket.

The U.S. Justice Department has censored banks for lending practices that tend to elevate costs for minority borrowers. After the 2008 housing crisis revealed discriminatory treatment, authorities unleashed a wave of penalties against U.S. lending giants. Wells Fargo agreed in 2012 to pay more than $184 million to settle federal claims that it unfairly steered Black and Hispanic homeowners into subprime mortgages and charged them higher fees and interest rates.

References:

  1. https://www.bloomberg.com/graphics/2022-wells-fargo-black-home-loan-refinancing/
  2. https://www.msn.com/en-us/money/news/wells-fargo-rejected-nearly-half-of-their-black-homeowners-refinancing-applications/ar-AAVa7tL

Racial Economic Disparity vs. Economic Inclusion

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“The economic downturn has not fallen equally on all Americans, and those least able to shoulder the burden have been hardest hit.” Jerome Powell, Chairman Federal Reserve

Wealth inequality, also known as the wealth gap, is a measure of the distribution of wealth—essentially the difference between the richest of the rich and the poorest of the poor, according to World Population Review. American household wealth—the value of assets subtracted by the liabilities and debts owed—may have increased largely in the form of equity, mutual funds, and similar investments, but not equally among all Americans.

Wealth inequality is closely related to income inequality, which tracks the money people earn. However, wealth inequality includes not just income, but also the value of bank accounts, stocks and investments, homes, and personal possessions such as cars, jewelry, artwork, and other valuables. Wealth inequality is a major cause of unequal living standards in many communities.

The Federal Reserve’s statistics have confirmed the racial inequity gap related to income and wealth disparities. In its 2019 Survey of Consumer Finances, white families were reported to have had a median wealth level of $188,200, substantially larger than the median Black family’s wealth level of $24,100.

“These disparities still stand from a racism that’s systemic. It can be traced from employment to small businesses and wealth and still exist today in ways that still damage our country’s health,” Cleveland-based artist Chris Webb said.

The central bank is studying racial inequities in the U.S. economy. The Federal Reserve says it can only do so much to address earnings and wealth disparities, but feels an obligation to at least research the economic implications of uneven economic outcomes in the U.S.

While the assets of white households are equally split between real estate, equity and mutual fund shares, pensions, and other assets, the assets of other racial groups are less diversified. Almost two-thirds of Black wealth is composed of real estate and pensions, with 38% coming from pension assets alone. Similarly, 61% of Hispanic wealth and 56% of wealth from other races is composed of just these two asset types.

Additionally, according to data from the Census Bureau, 35% of white Americans are 55 and older, whereas only 24% of Black Americans are and only 16% of Hispanic Americans are. Hence, a part of the reason why wealth ownership is much lower among Black and Hispanic Americans may be due to the fact that they are relatively younger on average than white Americans. Black and Hispanic populations may be younger for a variety of reasons, including differences in life expectancy—Black Americans’ life expectancy is 3.5 years less than that of white Americans—as well as immigration trends.

The white population is more likely to be older, has earned more income over their lifetime and hold more wealth than Black and Hispanic populations.

In summary, the causes of wealth inequality in America remains deeply rooted and are systemic. And, the results of wealth inequality in America persists even today.

References:

  1. https://worldpopulationreview.com/country-rankings/wealth-inequality-by-countryhttps://worldpopulationreview.com/country-rankings/wealth-inequality-by-country
  2. https://finance.yahoo.com/news/economic-and-racial-inequalities-are-long-haul-issues-for-the-federal-reserve-220405947.html
  3. https://usafacts.org/articles/white-people-own-86-wealth-despite-making-60-population/

Building Black Wealth Insights Study – U.S. Bank

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The racial wealth gap constrains the U.S. economy as a whole, resulting in $1-1.5 trillion in lost economic output and a 4-6% drag on America’s GDP.

The racial wealth gap in America is not just a ‘Black problem.’ It’s a problem that effects all Americans and is an ‘all of us’ challenge to remedy, according to U.S. Bank. “Extreme disparities and their persistent harm reach into every American’s future. We can all be energized by the opportunity to provide the tools of financial prosperity for Black families and other historically disadvantaged members of the American fabric because those benefits will be felt throughout our entire country. By working to close the racial wealth gap, we’re creating economic prosperity – more jobs, economic vitality – it’s better for business, for families and for communities. The racial wealth gap must be closed if we are to achieve our full potential as a nation,” says Greg Cunningham, SEVP, Chief Diversity Officer U.S. Bank

Building wealth and achieving financial security is a primary aspiration for most, but many communities, especially the African American community, face distinct systematic challenges in reaching these goals. And, the financial industry has an important role to play in eliminating the barriers and closing the racial wealth gap.

While everyone has a unique definition of financial security, it’s often defined as having peace of mind that their income is enough to cover both expected and unforeseen expenses.

U.S. Bank’s Building Black Wealth Insights Study attempts to understanding the needs, goals and challenges of the Black community. This research highlights many steps the financial industry must pursue to better serve the Black community, according to Gunjan Kedia, Vice Chairman, U.S. Bank Wealth Management and Investment Services.

In the United States, Black households hold significantly less wealth than white households, and over the last several decades, that gap continued to grow.2 While there has been some improvement, the net wealth of the average Black family today is less than 15 percent of that of a white family.1

The overall conclusion is that more work needs to be done to narrow the wealth gap; in fact, a 2018 analysis published by the Federal Reserve Bank of Minneapolis posited, “no progress has been made in reducing income and wealth inequalities between Black and white households over the past 70 years.”3

Also, according to the Q2 2021 Bureau of Labor Statistics report, the median weekly earnings for Black men were $877, or 78.7 percent of the median for white men ($1,115).4

It may come as no surprise, then, that our survey found Black affluent respondents feel they are at a disadvantage compared to rest of the population. Nearly twice as many Black affluent individuals as Hispanic individuals in the survey stated they had been treated differently by the financial services industry due to their race – and nearly four times as many compared to Asian and white individuals.

Despite these barriers, we found that Black affluent individuals are more likely than non-Black (white, Hispanic and Asian) affluent respondents to:

  • Have clearly defined financial goals.
  • Have a strong financial plan that helps guide their decisions.
  • Believe they are better at managing their finances than their parents.
  • Be more comfortable discussing money matters freely with friends and family.

U.S. financial institutions must acknowledge that they played a historical role in creating and sustaining present and persistent gaps in wealth by race and ethnicity. According to the Federal Reserve’s 2019 report, there is an 8:1 gap in wealth between white and Black families, and a 5:1 gap in wealth between white and Hispanic families.1 Financial institutions must not only acknowledges this history, but be willing to leverage the unique skills and expertise of its they possess to build wealth in African American communities and help close those gaps.

U.S. financial institutions must make a commitment to address this persistent racial wealth gap.

To help build wealth, banks and financial institutions must reduce actual and perceived barriers to their services, and redefine how they intend to serve the special needs of racially diverse communities. They must make a commitment to support businesses owned by people of color, help individuals and communities of color advance economically, and enhance career opportunities for employees and prospective employees

It must start by banks and financial institutions listening to and learning from their diverse customers and communities. “We are starting with the Black community, because that is where the wealth gap is greatest. We’ll continue to listen and learn in order to take steps to support lasting change,” explains Mark Jordahl, President U.S. Bank Wealth Management.

Despite the historical and current barriers faced by Black individuals, there are abundant opportunities by banks and financial institutions to cl,ose the wealth gap. And,
there is still much that industry leaders can do to support Black affluent individuals – and Black individuals at all economic levels. A few thought starters, according to U.S. Bank, are:

  • Advisor training – Ensure employees at all levels are trained to recognize their own individual biases and to treat all individuals with fairness – whether they’re greeting someone at a bank counter or considering approval for a loan product.
  • Advisor awareness – Acknowledge that working with a financial advisor may be uncomfortable for someone doing it for the first time or someone who has had a prior negative encounter. Consider how words and actions can impact an experience and commit to training client-facing advisors to enhance the client experience, especially for those from different backgrounds.
  • Diverse advisors – Know that representation matters. Expand hiring and retention efforts to ensure diversity doesn’t just occur at entry-level positions, but through all levels of client-facing roles and leadership.
  • Tailored advice – As with any customer, avoid making assumptions about financial goals and ensure financial planning advice takes into consideration the priorities of the individual or family. Examples may include ensuring current lifestyle needs are met, helping the next generation and leaving a legacy. Make real estatepart of the conversation and ensure fair mortgage lending.

https://www.usbank.com/dam/documents/pdf/wealth-management/perspectives/building-black-wealth.pdf

References:

  1. https://www.usbank.com/dam/documents/pdf/wealth-management/perspectives/building-black-wealth.pdf

Bridging the Divide: Racial and Ethnic Disparities in of Investing

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Historically, people of color have been under-represented as investor of stocks and bonds in taxable brokerage accounts.

Due to decades of federal, state and local policies that advantaged white communities and systemically marginalized Black, brown and Indigenous communities, wealthy households in the United States are disproportionately white.

All levels of government have created conditions for the racial wealth gap through discriminatory and often blatant racial policies that favor white families over families of color.

A large disparity in stock ownership between racial/ethnic groups exist in the United States. Nearly two-thirds of American households have some form of investment, typically through taxable brokerage accounts, IRAs or employer-sponsored retirement account like a 401(k). About one-third (35%) said they owned stocks, bonds or mutual funds outside of retirement accounts in a Pew Research Center survey.

Although a sizeable number of households report owning investment accounts, people of color, particularly those who identify as African American or Hispanic/Latino, are underrepresented as investment account holders.

While African American and Hispanic/Latino adults make up 12 and 16 percent of the U.S. adult population, respectively, they comprise only 10 and 11 percent of households with taxable investment accounts, according to the FINRA study. Taxable investments include investments in stocks, bonds, mutual funds or other securities outside of retirement accounts.

Moreover, white families make up 65 percent of families but own nearly 90 percent of corporate stocks, nearly 90 percent of private business assets, and more than 76 percent of real estate holdings. Black and Hispanic families, in contrast, own 1.7 and 0.5 percent of corporate equities respectively, less than 2 percent of private business assets, and under 6 percent of real estate holdings.

FINRA Foundation’s National Financial Capability Study findings confirmed the presence of a persistent investment racial and ethnic divide: African American and Hispanic/Latino respondents were largely underrepresented as taxable investors and overrepresented in households without any investment accounts. Few had investments outside of a retirement account and many had no investment accounts whatsoever.

One encouraging trend was that the proportion of those owning a taxable investment account increased by 18 percent for African Americans over the six-year study period. However, gender differences, particularly among respondents of color, were more troubling, even when controlling for demographic differences. While the gap between white women and white men was relatively minor, with white women 6 percent less likely to own a taxable account than white men, across the six-year period, African American women and Hispanic/Latina women were 14 percent less likely than their male counterparts to own a taxable investment account. Similar gender gaps were identified among Asian American respondents.

The racial/ethnic composition of investing households indicates sizeable gaps between some communities of color and white respondents throughout the six-year period studied. Focusing on those with taxable investment accounts, African American and Hispanic/Latino adults are underrepresented relative to white respondents, although for African American respondents, the gap seems to be closing.

Still, understanding the role that race and ethnicity play in the likelihood of owning a taxable investment requires consideration of other key factors. Many people of color face obstacles that can hinder their capacity to invest. For example, income, wealth and educational disparities, stemming largely from structural racism, create barriers unique to this population.

The study examined households with taxable investment accounts; households whose only financial investments are in retirement accounts; and households without any investment accounts over the course of six years, from 2012 to 2018.

There was a large disparity between the investment account ownership of some communities of color and that of white adults. African Americans and Hispanic/Latino respondents were underrepresented among households with a taxable brokerage investment account and overrepresented among households without any type of investment account. Among African American and Hispanic/Latino respondents, nearly half reported not having a taxable investment account, while only about a quarter reported having taxable investment accounts.

The legacies of systemic racism and racial barriers are deep and complex. The data highlights that inequities across many areas, whether it be education, healthcare, criminal justice, or financial inclusion, are more pronounced for people of color and those from minority backgrounds.

Increasing the representation in taxable brokerage accounts of African Americans and Hispanic Americans may serve as a major factor to narrow a significant racial and ethnic wealth gap. It could enable people of color to benefit from market returns and close the wealth gap.

References:

  1. https://www.pewresearch.org/fact-tank/2020/09/25/few-in-u-s-owned-stocks-outside-of-401ks-in-2019-fewer-said-market-had-a-big-impact-on-their-view-of-economy/
  2. https://itep.org/investment-income-and-racial-inequality/
  3. https://www.finrafoundation.org/sites/finrafoundation/files/bridging-the-divide_0.pdf
  4. https://itep.org/investment-income-and-racial-inequality/

FINRA Foundation’s National Financial Capability Study examined investment account ownership over a six- year period across households of differing racial and ethnic backgrounds.

Systemic Racism and Unconscious Bias in America

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“I look to a day when people will not be judged by the color of their skin, but by the content of their character.” Reverend Dr. Martin Luther King, Jr., “I have a dream speech”

Over the past centuries, Americans have permitted systemic racism and unconscious bias to affect how an entire race and class of people are mistreated – by the justice system, by the penal system, by the social welfare system, by the education system, by the financial system, and the list goes on – because of the color of their skin, stated Chamath Palihapitiya, founder and CEO of Social Capital. In no reasonable, moral worldview is this acceptable.

The salient point is that equality, for all Americans, is an essential pillar of the US democracy and its capitalist economy…not a discretionary feature that can be arbitrarily turned off and turned on based on the whim of public and private leaders.

Conversely, we, as a nation, can’t fix what we don’t acknowledge and we need to acknowledge that systemic racism and unconscious bias have happened and continues to happen, and begin the hard work of finding solutions.

One solution

“We can’t solve problems by using the same kind of thinking we used when we created them.” Albert Einstein

In the past eighteen months since George Floyd murder at the knee of law enforcement, many private sector companies are embracing their role in creating more equitable workplaces, addressing societal racial inequality and even donating to causes working to end racism. Robert F. Smith, Founder, CEO and Chairman of Vista Capital, argues that if we want to see lasting, meaningful change, the private sector’s efforts to address structural racism, we need the private sector to step up and deploy “permanent capital” — meaning investments and commitments that are scalable and focused on the long-term. 

Specifically, companies should designate 2% of their yearly earnings to closing racial opportunity gaps, diversifying their boards and pension managers, making higher education more affordable, and addressing disparities that they’re uniquely qualified to help solve.

For example, telecommunications companies have a “special responsibility to end connectivity deserts” where one in three Black households have no broadband internet or computer access, according to Smith.

Health care companies can work to address racial health inequities, and software companies can make affordable tools to help Black sole proprietors and small business owners better handle payroll and customer acquisition. 

“It is all too easy to let the urgency of a moment fade away with little to show for it,” Smith said. “Let’s meet this moment. We have the tools, the technologies and the access to capital to do it. All we need is the willpower to see this through.” 

References:

  1. https://www.socialcapital.com/annual-letters/2020
  2. https://www.washingtonpost.com/opinions/2020/07/15/how-companies-can-make-practical-commitments-achieve-economic-justice/

Robert F. Smith, Blazing a Remarkable Path

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American investor, inventor, engineer, philanthropist, entrepreneur. Robert F. Smith is the Founder, Chairman and CEO of Vista Equity Partners, focused on investing and partnering with leading enterprise software companies.

The software titan Robert F. Smith is a philanthropist and the wealthiest African American in the U.S., with a self-made net worth of more than $5 billion. He was raised in a working-class Denver neighborhood in the 1970s. And, it was a high-school science class in his junior year that sparked his interest in transistors, the building blocks of computers, cellphones and other electronic devices.

Mr. Smith was educated as an engineer at Cornell University, earning his B.S. degree in Chemical Engineering in 1985. After graduation, he worked at Goodyear Tire and Rubber, followed by Kraft General Foods, where he obtained two United States and two European patents for coffee filtration systems.

Upon receiving his MBA in 1994, he joined Goldman Sachs in tech investment banking, first in New York City and then in Silicon Valley. At Goldman, he advised tech companies such as Apple, Yahoo and Microsoft on over $50 billion of mergers and acquisitions activities. Mr. Smith knew his talents and his niche, and Goldman gave him the platform to showcase them. He became the first person at Goldman to focus purely on mergers and acquisitions of technology and software companies.

In 2000, Mr. Smith founded Vista Equity Partners to invest in businesses that develop and use technology, software and data to promote economic equity, ecological responsibility and diversity and inclusion for the prosperity of all. Vista invests and develops businesses focused on using tech to create value, new businesses, or helping to solve some of the world’s issues.

He is Founder, Chairman and CEO of Vista Equity Partners, which includes 64 companies. Companies like TIBCO, a technology company. He climbed from humble roots in Denver to the pinnacle of the 1990s dot-com boom as a Goldman Sachs banker in San Francisco; he went on to found Vista in 2000 in Austin, Texas.

Vista currently manages equity assets under management of over $81 billion and oversees a portfolio of more than 70 enterprise software, data and technology-enabled companies that employ over 75,000 people worldwide.

Vista had grown into an impossible-to-overlook force, delivering a 31 percent average annual return since its founding. “Vista Equity Partners Emerges from ­Private-Equity Shadows” read a Wall Street Journal headline.

Mr. Smith is also the founding director and President of the Fund II Foundation. Started in 2014, the foundation has made significant contributions to support scholarships for minority students interested in science, engineering and math, research on breast cancer in Black women and the preservation of Martin Luther King Jr.’s birth and family homes. It also backed Mr. Smith’s recently announced Student Freedom Initiative to ease the debt burden of students at historically Black colleges and universities.

Throughout all of his successes, Mr. Smith has demonstrated the importance of giving back. In 2017, Mr. Smith signed the Giving Pledge and was the first African American to do so. In his pledge, Mr. Smith committed to investing half of his net worth during his lifetime “to causes that support equality of opportunity for African Americans, as well as causes that cultivate ecological protection to ensure a livable planet for future generations.”

But it took a grand gesture at Morehouse College to cement Smith’s status as one of the world’s most interesting philanthropists. To the shock of Morehouse officials, Smith went off-script during his commencement speech and told the 396 graduating students that he would pay off their student loans at a cost to him of about $40 million.

“I was looking at 400 students 400 years after 1619,” he says, referring to the beginning of American slavery. “And they were burdened. And their families were burdened. They had taken on a tremendous amount of debt to get that education. And liberating them was the right thing for me to do. Honestly, I didn’t think it was going to be that big of a deal,” he continued. “I mean, globally. I didn’t realize how many people understood the pain and debilitating effect that student debt has for decades—not just on that individual but on families.”

Mr. Smith believes strongly that “anyone can achieve success if they believe they are worth it and think deeply about how to achieve their goals.”

From an August 2020 article in Urbjournal.com, here are 5 pieces of advice Mr. Smith gives to all young professionals:

  1. You need to recognize and use all your skills – Understanding and evaluating your skillset is important; it will let you know what skills you have and more importantly, which ones you need to improve or acquire. It will also give you a very good indication as to who you need on your team, depending on what skills they have.
  2. Give yourself the best chances of succeeding – To achieve a level of success, you’ll need to give yourself the best chances of succeeding by picking promising sectors and business industries which are projected to grow in the long-term. By focusing on growing and promising industries, you’ll give yourself the best chance of coming up with innovative products, services or solutions that create demand.
  3. Learn to take risks – Taking risks whilst you’re young is important. Smith has consistently taken risks. “So what makes me tick? I didn’t want to be ordinary. I wanted to create something that had not been done on this planet,” Smith said. Taking risks doesn’t mean jumping into any and everything – that can be as detrimental as not taking enough risks. In Smith’s words, “take thoughtful risks”.
  4. Recognize the importance of diversity, and work to increase it – Diversity has become increasingly important to companies, everyone is looking at ways to increase the diversity of their leadership and people. And, Black professionals have an important role to play: yet, to become successful, you first have to get through the door by creating processes and institutions which value equal opportunity above all else. “We must get as much mass pushed through the system by opening up the process as wide as you can. We need to take that approach instead of going retail in which corporations only select one or two exceptional students from elite schools,” Mr. Smith said.
  5. You’ll need to make sacrifices – It’s no secret that to achieve success, you’ll need to make some sacrifices. For Mr. Smith, it was work-life balance: “Our world isn’t designed for spectacular success and a balanced life” he said in an interview.

References:

  1. https://www.vistaequitypartners.com/about/team/robert-f-smith/
  2. https://www.townandcountrymag.com/society/money-and-power/a32804478/robert-f-smith-summer-2020-cover-interview-philanthropy/
  3. https://2021.vistaequitypartners.com
  4. https://urbjournal.com/the-rise-of-robertfsmith/
  5. https://www.wsj.com/articles/whos-afraid-of-robert-smiths-philanthropy-11559084951
  6. https://robertsmith.com/videos/

The Youtube video interview features Robert F. Smith and Robert Green, President & CEO of the National Association of Investment Companies (NAIC). NAIC is the largest network of diverse-owned private equity firms and hedge funds. NAIC is focused on increasing the flow of capital to high-performing diverse investment managers often underutilized by institutional investors.

Closing the Black Wealth Gap

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Black families have one-eighth the wealth of white families as a result of economic discrimination and institutionalized racism.

This year marks the 100th anniversary of the Tulsa Race Massacres. Over two days, a white mob in the city’s Black district of Greenwood killed an estimated 300 Black Americans and left nearly 10,000 destitute and homeless. The Greenwood area was known as Black Wall Street, an epicenter of Black business and culture.

The Tulsa Race Massacres is just one many thousands of violent and economic incidents throughout American history that created the wealth gap. As such, the Black wealth gap was created through centuries of institutional racism and economic discrimination that limited opportunities for African-Americans.

Wealth was taken from these communities before it had the opportunity to grow. This history matters for contemporary inequality in part because its legacy is passed down generation-to-generation through unequal monetary inheritances which make up a great deal of current wealth.

The racial wealth gap is a chasm with Black families owning one-eighth the wealth of white families. According to the Survey of Consumer Finances, in 2019, the median net worth of Black households was $24,000 as opposed to $189,000 for white households. This shortfall in financial wealth creates a cascade of inequalities in education, homeownership, and simply saving for emergencies.

Historically, Blacks were limited to certain neighborhoods and had more trouble borrowing to buy a home than white home buyers. Additionally, Black workers don’t advance to the top positions in companies at a proportional rate as other groups.

Moreover, African American families have had fewer opportunities to build generational wealth through home ownership, investments and inheritance. In this century, many Black families were stripped of their wealth and financial security by by both public and private institutionalized racism whether called Jim Crow or redline policies.

There are other factors: Many African-Americans, particularly older ones, are too conservative as investors. Only 34% of Black families own stocks, while more than half of white families do, according to a Federal Reserve. It is important to help African American investors get more comfortable with owning risk assets such as equity stocks, ETF and mutual funds that build wealth over the long term.

Do not seek shortcuts to build wealth

You must build wealth over time. If you’re saving 15% or 20% of your income over 30 years, there’s a good chance you will be wealthy. These methods truly work whether you’re making $50,000 or making $500,000 a year.

‘We just had an 11-year bull market. If you didn’t take the appropriate amount of risk, you’re significantly behind,” says Malik Lee, an Atlanta financial advisor whose clientele is more than 90% African-American.

American Dream for Black families

The heart of the American Dream for Black families is financial wellness, independence and freedom. There are many ways to express the American Dream, including owning their home, not living paycheck to paycheck, and being able to travel. Today, 69% of African American families are confident the American Dream is still attainable, according to MassMutual’s ‘State of the American Family’ survey.

Financial wellness for most families is the heart of the American Dream. American families tend to view financial wellness in terms of five common financial priorities:

  • Having an emergency fund
  • Feeling confident in both short-term and long-term financial decision making
  • Not carrying a lot of debt
  • Being financially prepared for the unexpected
  • Not living paycheck to paycheck

Black families are taking steps to secure their financial future and dreams, but more needs to be done to keep the American Dream alive. The top financial regret across all consumer groups surveyed is “not starting early enough.”

References:

  1. https://www.barrons.com/articles/this-advisor-wants-to-close-the-black-wealth-gap-accepting-risk-is-key-51625077456
  2. https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Net_Worth;demographic:racecl4;population:1,2,3,4;units:median;range:1989,2019
  3. https://www.brookings.edu/blog/up-front/2020/02/27/examining-the-black-white-wealth-gap/
  4. https://www.massmutual.com/static/path/media/files/mc1133aa_09248mr-final.pdf
  5. https://www.forbes.com/sites/brianthompson1/2021/06/17/the-key-to-closing-the-racial-wealth-gap-black-entrepreneurship/