Legacy Starts with Me: A Conversation On Black/African American Wealth

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Legacy Starts With Me: A Conversation on Black/African American Wealth

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Legacy Starts With Me

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Earl “Butch” Graves, JR.

Chief Executive officer, BLACK ENTERPRISE

Andy Sieg

President, Merrill Lynch Wealth Management

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Earl "Butch" Graves, Jr. (00:20):

Hi, I'm Earl "Butch" Graves, Jr. CEO at Black Enterprise. Thanks for joining me for this special conversation about African Americans and wealth. Black Enterprise is partnered with Merrill Lynch, a leading provider of investment and wealth management services and a division of Bank of America on a new campaign called "legacy starts with me." It highlights key takeaways from Merrill's diverse viewpoints research, illuminating the unique financial motivations, challenges and goals of affluent African Americans. I'm here today with the head of Merrill Lynch, to talk about those findings, including how our communities are securing multi-generational wealth through entrepreneurship and what Bank of America is doing to support black owned businesses. Please welcome the president of Merrill Lynch wealth management, our friend, Mr. Andy Sieg. Hey Andy, how are you?

Andy Sieg (01:16):

Butch, it's great to be here. We're so happy to be working with you and Black Enterprise.

Earl "Butch" Graves, Jr. (01:20):

Well, it's a pleasure. Love to know a little bit more about "legacy starts with me." And it's a great name, but in the African American community, what we really want to do is start to focus on how we build wealth over a lifetime, which has been why our partnership means so much to us, and that our tagline for Black Enterprise is wealth for life. But love to know about this research project, what you guys did about it and what were the findings that came out of it and this unique name, which I love, called "legacy starts with me."

Andy Sieg (01:56):

Well, Butch, thank you. One of the things that we've discovered, over the last five years, our focus has really been causing Merrill Lynch to step forward and provide more in the way of advice as well as capital in the black community. And beginning two years ago, we realized we didn't have the depth of insight around the African American household, how they thought about their long term financial priorities and values. And we would really benefit from some research. Some fascinating results. We saw that relative to other affluent investors, African American families, 40% more focused on topics revolving around the community, how to get back in the community. Much more focused on family and how to support family.

Andy Sieg (02:50):

In terms of where Black Enterprise is focused, so many black families, they view wealth much more broadly. It's not just my investment portfolio, it's business that I'm involved in. And when we drilled in there, we discovered the black responses to the survey were four times more likely to be thinking about starting a business and becoming an entrepreneur than the white community or other segments that we focused on. So it was tremendously helpful because that's the kind of insight that helps our advisors be on their front foot and be more active and more relevant to clients.

Earl "Butch" Graves, Jr. (03:26):

Sure. I mean, I think Andy, at the end of the day, one of the terms that is both foreboding and mysterious at the same time is the term wealth, right? And it's confusing. And I think more often times than not, what I've said to folks is, oftentimes we confuse income with wealth, right? And you can have high income and have no wealth. Wealth is really your assets minus your liabilities, not just what are quote, "the things that you've accumulated and disregarding your liabilities," but wealth as a term seems like something that people can't get to. You know what I mean? It seems like that they've got to reach or they'll never attain it. And I think wealth should be about how you live better and how you pass on. You live well during the time you're here. And more importantly as you said, intergenerational wealth starts with me. How do you pass on to the next generation?

Earl "Butch" Graves, Jr. (04:36):

How do you advise your financial advisors on when they sit down with a client, black or white, and they're nervous. Most clients sitting down, they're nervous and like they don't want to show, but they don't know too much about financial advice. How do they put people at ease and what do they talk about to gain them, to get in the business of even saving and investing?

Andy Sieg (05:00):

Well, man, there's so much in that question. Such a great question. Maybe just for a moment, start with the word wealth, because there are two sides to the coin. On the one side, wealth can be aspirational. Hey, I'd like to be wealthy or I'm motivated to save and invest in order to be wealthy. The other side of the coin though, is it can be daunting and people can feel like, hey, am I in the right room? Do I really belong here? Therefore, for our advisors in the firm, one of the things we want to do is we want to be as welcoming and create a feeling of inclusiveness so that we get the positive from the concept of wealth and we don't have this idea that, Hey, this is beyond me. I'm not rich yet or maybe this isn't the firm for me.

Andy Sieg (05:54):

But one of the things fundamentally, when we sit down across the table and there's a huge financial institution behind us, but it's one to one human relationships. And so what we spend a lot of time thinking about is how do we begin a dialogue around what a client really cares about, their priorities, their kids, what's keeping them up at night? And I think by doing that and by taking this big, sometimes scary idea of wealth management and bringing it down to, Hey, what matters to Butch and his family? And let's work on that together. That's kind of the best approach we've found to make this a more welcoming, inclusive concept.

Earl "Butch" Graves, Jr. (06:32):

But Merrill has so many different things available at different levels. Right? And so one of the things of demystifying this whole idea of saving and investing is to recognize, Hey, we've got products for everyone, from those who are just starting to those who have millions of dollars ready to invest. But it's unlocking that, right? And getting people off the snide on it. I push this with our own staff. We have a smaller staff obviously, but I kept saying to them, listen, the most magical thing in the world is called compounding? I said, and there's nothing like it. And so to the degree that we've got a 401(k) plan, we had a number of African American employees who were not contributing to the 401(k) plan. And I was like, that is actually an investment in yourself and we're matching it up to a certain point. So it's almost like they're leaving free money on the table.

Andy Sieg (07:36):

Yeah.

Earl "Butch" Graves, Jr. (07:37):

But it's getting people to that point. In the research that came out, and you said there was a number of things that came up to you that were fascinating in regards to how people look at things. What were some of the things that you thought, wow, we really never thought about that and we need to do more here to help, to fix that so that we can get more people as ultimate or more of as audiences as our clients?

Andy Sieg (08:00):

Well, I'll tell you candidly. One of the things that just, again, struck me was a conversation with clients. It came through in the quantitative data, but it came through even more strongly in focus groups that we held was African American clients saying, Hey, when I'm thinking about my kids, hopefully I'm going to have some wealth to leave to them, but I've got another thing on my mind. My parents didn't leave me a lot of money, but boy, did they leave me with a set of values and a work ethic and a feeling about how to handle my self, how to take care of my family, how to focus on my community. So many of the clients in terms of what they expected from a Merrill Lynch relationship was not just helping me kind of build my financial assets, but what can you do to help me make sure that those values I got from my parents are going to pass on to my kids and that they don't get kind of lost in the world that we're in today?

Andy Sieg (09:02):

Where that hits home is in many cases, clients who have been more successful, Hey, how do I think about the money that I'm giving away? How do I make sure that I'm supporting groups that are going to make a difference in the community and then have my kids alongside me while we're doing that so that they're kind of picking up that same sense of values that I inherited? And obviously if we can play that role with our clients where we're helping them do things that are going to be meaningful to the next generation and meaningful to the community, that's about the greatest role that Merrill Lynch can play.

Earl "Butch" Graves, Jr. (09:36):

Right. Of course. I mean, because the role of a financial advisor has changed. People used to look at it like, well, that's my quote, "stock broker."

Andy Sieg (09:47):

Right, right. You got it.

Earl "Butch" Graves, Jr. (09:48):

And so they were like, well, it's a stock broker, so I only call them for when I have to do a trade, but a financial advisor... what people really want is like a doctor. You're a financial doctor. And one thing about our community, it's extraordinarily loyal. And once they sort of, this is my doctor, they stay with that. If this is my financial advisor, they're going to stay with that person. But that relationship is a long-term relationship. It's not okay, I want to call you up and say, I want to buy a hundred shares. Yeah, that can be part of it but it's, well, I need to look at everything that you've got and what's taking place there.

Andy Sieg (10:26):

I mean, you nailed it in terms of the change in our business. Merrill Lynch is a place to go to buy stocks and bonds. That was a concept in the seventies, but still a lot of people, they don't have a fresh view of the business. So we're talking a lot about, Hey, what's the modern Merrill? Which is this idea of how can we help you across your financial life? Many cases we think of our job as helping our clients integrate their financial life. Take your investments but also you're thinking about goals and financial planning and your banking and lending, and we're going to integrate it for you, make it easy for you to see it on an app or on a website and make sure you've got an advisor that you trust across the table who can talk about it all. And if we can do that, that's the kind of relationship we think... give people confidence and peace of mind for the long term. And the business today reflects that.

Earl "Butch" Graves, Jr. (11:25):

We talked in 2020 right after the pandemics. And I'm going to call them twin pandemics. But the original pandemic being the pandemic of COVID 19, which has obviously changed everyone's life forever. But there was another pandemic that happened, which was the pandemic of racism. And the racism didn't just start, but it became, I'm going to call it sort of post George Floyd era. And the challenges that African Americans face that became live and in color. And the fact that people were at home, I think actually elevated what people were seeing because now they had a front row seat and it was continuous, over and over and over again and said, is it really this bad? And people said, yeah, it is this bad and it's been this bad for a long period of time. Difference is that now we actually have a video of it.

Andy Seig (12:24):

Yeah.

Earl "Butch" Graves, Jr. (12:25):

Merrill Lynch, like other companies was disturbed by it but you guys did something that was extraordinary, frankly, Bank of America, Merrill Lynch, above and beyond what others had done. Right afterwards, Bank of America made a $1 billion commitment to fighting racial injustices and trying to create racial equity which was very unique. So it's an extraordinary commitment that you've made for a four year commitment over time. And it's not one to say, oh, we're going to do this real quickly and go away. But oftentimes what you have to understand is that we here in African American community, people make promises and pledges, and then it disappears, right? And it ends up being a knee jerk reaction to something that's taking place, but there's really no plan to execute. You guys not only have a plan, you have an investment, you have a commitment, you have a plan to execute.

Earl "Butch" Graves, Jr. (13:30):

So tell us about the journey over this past year. I mean, what led into... First off let me say, what led into making the commitment in the first place at 1 billion and then raising it to 1.25? And then what has been your experience over this past year, this first year of undergoing it?

Andy Sieg (13:47):

Well, of course, Bank of America for many, many years has been involved in economic development and helping address issues of racial injustice. And then last year with the murder of George Floyd, with the rest of the country, I mean, we realized this is a moment and we needed to step up and we needed to act with even greater urgency. And so much of the credit goes to my boss, our CEO, Brian Moynihan. He personally almost immediately said, Hey, this is a moment for us to step forward as a company. And sized the billion dollar program himself essentially with our management team and then quickly it became a little larger at one and a quarter billion.

Andy Sieg (14:38):

I think several aspects of this are very unique. It's trying to take an integrated view of what matters in communities, that it's not just education or just jobs or just social services or just provision of capital. It's seeing all of these things happen in a coordinated way in a community, that's how you can really move the needle and affect people's lives. There was also, and I think a lot of this had to do with Brian's personal push, a feeling that we're going to get out of the gates quickly, deploy capital and make a difference as fast as we responsibly can. So today of that commitment, $360 million has already been invested into a wide range of programs.

Andy Sieg (15:25):

And then the final thing I would mention, which I think makes this very unique is, it's a focus on institutions that are already credible in making a difference in the African American community in particular. So supporting minority owned banks and becoming an investor or a depositor in those banks to give them the capacity to do more of what they're doing already. We took one of our top investment bankers, pulled him off his job, and he spent most of the last 18 months identifying black owned and otherwise minority led venture capital firms around the country so that we could become the largest investor in minority owned venture capital firms around the country. Knowing that they probably have more clear access and understanding of who needs money today and could help us put funds to work more quickly. And then finally, HBCUs. Bank of America's had longstanding relationships with HBCUs, but it also was a moment to say, we can do more in terms of connecting in many cases, HBCUs with employers and helping create job opportunities, as well as support what's happening on campus.

Earl "Butch" Graves, Jr. (16:47):

Sure.

Andy Sieg (16:47):

And this is the desire to do it in a way that was visible, was also driven by kind of a realization that if Bank of America steps out and Merrill Lynch steps out, maybe the rest of the corporate community would step out as well. And one of the things that's been great is other financial institutions and other large employers are doing many of the things that I just talked about. And hopefully collectively we can turn the trajectory, but it's going to be a long continued fight at Merrill Lynch in particular with our business, historically not particularly focusing on the African American community.

Andy Sieg (17:29):

Topics like hiring, marketing just becoming a place that graduates from HBCUs could envision themselves working at Merrill Lynch. That's one of the things that I think we can do very practically to make a difference, because today only about 5% of Merrill Lynch financial advisors around the country are black. In our training program, that number's 8%, which is good. It's about 10% of our market executives who lead our markets around the country. But when you think about where we should be just proportionate in terms of representation, we're nowhere close. So I like to say, I'm pleased to see the progress that we've made, but I'm nowhere near satisfied.

Earl "Butch" Graves, Jr. (18:20):

Right. Well, listen, there's a lot to unpack in that, but the truth of the matter is that, and I can say that sitting from a person who's overseeing and looking at black owned businesses, the fact that there's a commitment, right? There's two main obstacles that black owned businesses face. One is access to capital, which is sort of an obvious one. But the second one which really applies to supplier diversity is one of scale. And that's actually even more difficult because in excess of 90% of black-owned businesses are sole proprietorships. So all they're doing is employing themselves. They're taking care of themselves, which is fine, but it doesn't help generations of families and others. You have to be able to employ more people.

Earl "Butch" Graves, Jr. (19:09):

And so in the same way, and I know some of the black owned banks, who've received some of your deposits and investment in it, part of what the black owned banks really need and what you guys have led with is, they don't just need deposits because at the end of the day, deposits are great, but they can't put the deposits to work. It actually costs them money, right?

Andy Sieg (19:36):

Yeah.

Earl "Butch" Graves, Jr. (19:36):

Because they're taking a deposit. They really need to have working loans. They need to have performing loans that they can put on their books and begin to take in money that way so that it ends up working well for them. And so that's one of the things that you guys have done that's really made an impact. That I've talked to the black owned banks, I understand what is... They've given me feedback. Did a little bit of homework myself on this before-

Andy Sieg (20:04):

Thank you.

Earl "Butch" Graves, Jr. (20:04):

But it has really worked. And so you guys should be congratulated on that because it's important, but I would also encourage you to look at it and say, what are the things we have as loans that we could actually move over to them that would perform well for them, because that's how they're going to be able to put more capital to work.

Andy Sieg (20:27):

I think that's a great observation. The importance of being a provider of capital and I mentioned equity capital kind of going through local venture capital firms, one of the things that Merrill Lynch today... If you said to me, Andy, why do you have confidence that Merrill Lynch can be a bigger factor in the black community today than Merrill Lynch was 10 years ago, 20 years ago? The answer is Bank of America because a Merrill Lynch financial advisor sitting down with a black entrepreneur, hopefully there'll be an investment management opportunity, a financial planning opportunity for the entrepreneur and his family but if we can be relevant as a lender to that entrepreneur, that's a whole different story.

Earl "Butch" Graves, Jr. (21:15):

Yeah. I mean, corporate America has a responsibility in my view to do business with the communities that they serve and to make sure that the business that they're doing with it is commensurate with the population that it serves because you can't be in the city of Memphis, I'm going to use that, which is 70% African American but yet when you go to see, where are contracts being put out? And there's 2% and 5%, what have you, that starts to tear away at the confidence of the community to say, how committed are these folks? But the best way, and you just laid it out perfectly, which is, it's a holistic approach to approaching the African American community.

Earl "Butch" Graves, Jr. (22:08):

And I would tell you, it almost starts with where you're recruiting in school. And are they getting jobs and what have you, because what we're looking at is you ought to walk the walk, not just talk the talk. So you can't identify the challenge unless you know exactly where it is. So if the challenge is, Hey, we only had... In your case, you had 5% African Americans that are financial advisors, which is frankly, actually ahead of the curve-

Andy Sieg (22:35):

I'm sad to say, I think you're right.

Earl "Butch" Graves, Jr. (22:37):

Unfortunately, as it may be, but the fact of the matter is you're ahead of the curve in what the financial community as a whole, financial institutions have, where they stand on this. But that's the simplest way because from there you go to, well, I've hired this person, they're out of college, they're doing investing and now they can buy their first home.

Andy Sieg (22:58):

Yeah.

Earl "Butch" Graves, Jr. (22:58):

And now they get their first home they can go to, well, who's looking to them and who's done some stuff? Oh, Bank of America has. So they say, okay, well, can I get a loan through Bank of America? Yes, I can. Do I have a loan officer that happens to look like me? Yes, I can. Then they have that, they get married, they move on, they have kids. And then they say, okay, well, I've got to start to prepare for that. Who do I talk to? And now they say, well, I need a financial advisor and that financial advisor can help them. So it's really growing it over a period of time, but very few people or very few companies, I should say, in financial services, have ever really said, like you guys have that, Hey, this is important. You're important.

Andy Sieg (23:41):

No, you laid it out a perfectly. One of the things you're getting to when you talk about hiring is really near and dear to my heart so I want to just call it out because Merrill Lynch has probably trained more professionals on Wall Street than any other firm since the second World War. One of the things we discovered though, is we looked at our training classes, there were a lot of communities that didn't feel like hopping into the Merrill Lynch training program was something that they could be successful doing. And we wanted to understand it. And we landed on the fact that it was still perceived as way too much of a sink or swim mentality in our training program. And a feeling like, if I didn't come from a circle of wealth, if I didn't know wealthy people, it'd be very hard for me to be successful as a Merrill Lynch financial advisor.

Andy Sieg (24:38):

So during the pandemic, actually, we were not in position to do a lot of hiring. So we said, let's hit the pause button on our training program and we rebuilt the Merrill Lynch training program so that today, most people that join us and are first setting out to become a financial advisor are going to spend some time working in the Bank of America branches to learn some of the basics of our business and be licensed appropriately, then transition to Merrill Lynch and to beginning to reach out and talk to people who have investment needs of different levels. And then we're going to set the bar that we expect 80% to graduate. And then let's focus on how do we support them with the right content, the right leadership and the right access to leads and referrals because Bank of America today touches 60 million U.S. households.

Andy Sieg (25:36):

So you need to show up to be a Merrill Lynch financial advisor with integrity, a work ethic, a sense of teamwork. You do not need to show up with a Rolodex of wealthy people because we can help bring you to places where you can make a difference with clients. And I wanted to tell the story, because frankly, I'm hoping that people who are listening to us today say, Hey, maybe I'll think freshly about a career at Merrill Lynch. And nothing would make me happier than to see multiples more black African American young people, saying, Hey, Merrill Lynch is a place that I could build a career.

Earl "Butch" Graves, Jr. (26:18):

And the other thing that's been extraordinary and it's important too, but is extraordinary is that this Bank of America, Merrill Lynch story is that, it's not just, can we bring in people at the entry level and we can train them and what have you, and that you can, and that you guys are committed to and doing, but the truth of the matter is that when I look at you versus the other financial service firms, not only do we see them, African Americans at that level, we see them at the mid level and we see them at senior level and frankly we see it on your board of directors. Right? And that is something that I think that story needs to be added to what else it is you guys are doing.

Earl "Butch" Graves, Jr. (27:04):

Because, you have an extraordinary... By the way, you didn't just decide, okay, COVID 19 happened, George Floyd happened, oh, let's go run out and go get some board members that happen to look like me or happen to be African American. You've had these folks that were on your board for a long period of time. And in fact, your lead director is African American.

Andy Sieg (27:27):

Yeah.

Earl "Butch" Graves, Jr. (27:28):

Speak to a little bit about, in our sort of closing moments, what is Merrill Lynch's and Bank of America's broader commitment to having African Americans, to having a diverse company and how you think that that enriches Bank of America and Merrill Lynch versus others.

Andy Sieg (27:47):

Well, I don't want to come across Butch like I'm just here to say great things about my boss. However, leadership matters and Brian Moynihan is a leader who's uniquely in my experience, committed to this being a diverse and inclusive organization. And Brian personally has been chairing the company's global diversity and inclusion committee for 20 years. He was chairing it 10 years before he became CEO and he has been chairing it. He kept the job and said, I may be CEO and chairman, but I've still got to chair what we call the GDIC. Kind of flowing from that was a feeling that at every layer of the company, the board, the management team, kind of the senior ranks below the management team, and then down across the 200,000 people that work at Bank of America, we should see representation at all those levels.

Andy Sieg (28:48):

And as you said, it's not something that could possibly happen overnight. It takes a commitment over time and a discipline over time. And here's a place where when I have a business review every quarter with Brian, we spend as much time talking about the diversity of our employee base and whether we're moving forward that quarter, as we do spending time around how many new clients do we bring in? What are our revenues and expenses? And did we book the profits that we expected to book in the quarter?

Andy Sieg (29:16):

And I think for all businesses, it's a great model because it's very easy to make exciting, broad based statements and it's fun to make them, but the real progress is the gritty day-to-day work to say, Hey, did we move? Do we move a few inches forward this month, this quarter? And if that's happening year-after-year-after-year, eventually you get to a place where a company is beginning to look like America.

Earl "Butch" Graves, Jr. (29:42):

All right. Well, Andy, I appreciate you taking the time to meet with me to discuss our journey on building wealth in the African American community. I appreciate the commitment that Bank of America and Merrill Lynch has made towards building wealth and finding out more in regards to how they can assist in building wealth in the African American community. And love your leadership personally on it and Brian's leadership on this. It's been extraordinary and we are delighted to be a partner with you in this journey. So thank you again for joining me today.

Andy Sieg (30:20):

Hey, Butch, thank you. Such a thrill to be here, and we love working with you and your team. A lot of exciting days ahead.

Earl "Butch" Graves, Jr. (30:27):

Very good. Thank you buddy.

Andy Sieg (30:28):

Thank you.

Earl "Butch" Graves, Jr. (30:29):

Appreciate it.

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Legacy Starts With Me presented by Merrill (logo)

1 on 1 Legacy Starts With Me presented by Merrill (logo) – images of Andy and Butch

Legacy Starts With Me: A Conversation on Black/African American Wealth

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