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A legacy more valuable than money

Affluent Black/African American families prioritize teaching the value of hard work and financial know-how. Here, they share tips all families can find useful.

 

By Tamara Holmes

 

ONCE, WHEN I WAS CHATTING WITH SEVERAL WHITE CO-WORKERS, the subject turned to how they had spent the money they’d inherited. One colleague made a down payment on an investment property. Another paid off student loans. I couldn’t add anything to the conversation, because no one in my family — or any of my Black/African American friends, for that matter — had ever received such a windfall or expected to get one.

 

 Nedra Agnew headshot“You can’t begin to pass on financial values without a solid foundation in basic financial education.”

— Merrill Financial Advisor Nedra Agnew

For the majority of Black/African Americans in the U.S., even affluent ones, the experience of intergenerational wealth is novel. “Many of us are first-generation wealth creators,” notes Merrill Financial Advisor Nedra Agnew, who puts herself in that category. “My grandmother didn’t write checks drawn on a comfortable bank account; her method of paying bills was getting money orders,” she says.

 

Perhaps because of that — as well as the legacy of systemic inequities passed down from previous generations — we’re determined that our children will have a different experience. According to Merrill’s report, Diverse Viewpoints: Exploring Wealth in the Black/African American Community, affluent Black/African American survey respondents were likelier than the general affluent population to have a financial plan to pass on wealth to their children and to want to set them up for success. “Passing on wealth is also about the financial values and work ethic the next generation needs in order to prosper,” says Agnew. “We want our children to understand that they’ll have to be just as committed as we were to achieving success.”

 

So how can we instill those values? Here are some tips that Black/African American — and all  —  families can use to pass along a financial legacy that goes beyond assets.

Teach kids the relationship between saving and spending

“You can’t begin to pass on financial values without a strong foundation in basic financial education,” says Agnew. “Those lessons about money can start early,” notes Valerie Galinskaya, managing director, Merrill Center for Family Wealth.™

 

 Valerie Galinskaya headshot“Lessons about money can start early.”

— Valerie Galinskaya, managing director, Merrill Center for Family Wealth™

Brenton Hamlet, a Merrill financial advisor who made Working Mother magazine’s 2021 list of Working Dads of the Year, agrees. “I want my kids to see what money can and can’t do,” he says. That’s why he has given John-Ryan, 10, and Marley, 6, each a piggy bank with slots for saving, spending and giving. “When one of my kids wants a new toy or video game, I'll ask, ‘How much of your own money are you going to contribute to buying this?’” he says. “They'll have to give me some dollars out of that spend bucket.”

 

As children get older, the same strategies can still be useful. Sandra Williams, a client of Hamlet’s and a retired lawyer, expected her daughter to work during the summers so she would become comfortable earning her own money. And while Williams financed her college education, when the daughter wanted to go to graduate school and law school, “I decided she needed to have some skin in the game, so she had to take out student loans.”

Introduce investing early

Affluent Black/African Americans  are more likely than the general population to value what financial advisors can do for them; 58% reported having an advisor relationship, compared with 49% of the general population, the Merrill study found. Even so, historical exclusion may have left Black/African American people more skeptical — and more conservative — when it comes to investing as a way of building wealth. The most recent Federal Reserve Survey of Consumer Finances found that only 34% of Black families owned some form of stock, compared with 61% of white families.1

 

 Brenton Hamlet headshot“Be sure to place success in context: The moves that made it happen, the work that was put in.”

— Merrill Financial Advisor Brenton Hamlet

There are ways to help future generations become more comfortable with investing. Williams and her wife, Theressa Shields, have five grandchildren ranging in age from nine to 26. Now that their children, both daughters, are adults, Williams and Shields are focused on providing their grandchildren with financial experience. One way they’ve done this is by giving each grandchild $1,000 and helping them research and invest the money in companies they buy products from, such as video game manufacturers. “If they invest in something they’re interested in, that's a lot more fun for them,” Shields says.

 

Hamlet recalls another of his clients whose son saved money from his work on a movie set when he was 17. When the teen told Hamlet he wanted to buy an expensive pair of sneakers with some of his savings, Hamlet suggested that investing the money in the sneaker manufacturer, as part of a broader, diversified portfolio, might benefit him more in the long run. The teen chose to invest in the stock, and now at 25, he regularly talks with Hamlet about new investments.

Point out role models – and be one

 Shelley White-Picott headshot“With what I've acquired, I have to remember that it's not just for me to have. I need to share it with others.”

— Merrill client Shelley White-Picott

“Role models are perhaps the biggest key to Black and African American wealth,” says Hamlet.  “If you see someone who owns their own business, you go, ‘That's the way to do it.’” Expose your kids to different professions and entrepreneurs of color, Hamlet advises. If those individuals aren’t in your social network, look for programs or organizations that give kids access to people who have accumulated wealth. Also, Hamlet suggests letting kids know about your financial successes and those of others in the community,  “but be sure to place success in context: The moves that made it happen, the work that was put in.” Black/African American parents want their kids to understand that success isn’t just magic or luck.

 

And don’t forget to be a role model yourself — for your children as well as other Black/African Americans. Shelley White-Picott, one of Agnew’s clients, remembers shopping at a local grocery store when the customer in front of her didn’t have enough to pay for her groceries. White-Picott picked up the tab. When the cashier asked how she could afford to do that, White-Picott told the cashier she’d teach her. She returned to the store with a gift for the young woman: a book on investing. “With what I've acquired, I have to remember that it's not just for me to have,” says White-Picott. “I need to share it with others.”

Use your estate plan as another opportunity to share lessons learned

At some point, you will want to create an estate plan to pass on your wealth, too. Use it as one more opportunity to share with your children the lessons you’ve learned about success and what the money you have earned has allowed you to do for your family and your community. Your advisor and an estate planning professional can help you craft a plan to transmit wealth to your heirs in a thoughtful way. But “the conversations that are part of the estate planning process are as important as the plan you end up with,” notes Galinskaya.

 

These efforts by Black/African American parents may already be having some impact on the next generation. Since that conversation I had with co-workers about inheritances some 20 years ago, I’ve seen members of my own family change their financial trajectory because their parents passed down values as well as assets. Now, when my nieces and nephew find themselves in a conversation about inherited wealth, I know they will have a lot to say.

 

Tamara Holmes has written and edited for dozens of publications, including USA Today, Real Simple, Essence, Black Enterprise, Working Mother and Heart & Soul magazines.

 

1USAFacts.org, “What Percentage of Americans Own Stocks?” March, 2021

 

The Working Mother/SHOOK Research’s “Top Wealth Advisor Moms” list, October 12, 2021. Data provided by SHOOK® Research, LLC. Data as of 3/31/21. SHOOK Research considered women advisors with children living at home under 21 years of age. The ranking algorithm is based on qualitative measures derived from telephone and in-person interviews and surveys: service models, investing process, client retention, industry experience, review of compliance records, firm nominations, etc.; and quantitative criteria, such as assets under management and revenue generated for their firms. Investment performance is not a criterion because client objectives and risk tolerances vary, and advisors rarely have audited performance reports. Rankings are based on the opinions of SHOOK Research, LLC and not indicative of future performance or representative of any one client’s experience. Rankings and recognition from Working Mother/SHOOK Research are no guarantee of future investment success and do not ensure that a current or prospective client will experience a higher level of performance results, and such rankings should not be construed as an endorsement of the advisor. Neither SHOOK nor Working Mother receives compensation from the advisors or their firms in exchange for placement on a ranking. SHOOK Research is a trademark of SHOOK Research, LLC. All rights reserved. For more information: http://details-he.re/zaDsnS

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