Black CFPs Make Up Less Than 2 Percent of All CFPs. Why More Black Financial Advisers Are Needed to Help Close Wealth Gap

On Nov. 4, Finurah will present its inaugural one-day virtual wealth summit. We will bring together thought leaders, proven experts, and the community for lively discussions on creating generational wealth, financing and more. Get access to the Finurah Wealth Summit 2021 here and click “Going.”

Photo by Thirdman from Pexels

In 2019 white households averaged a whopping $983,400 in wealth, while the average for Black American households was $142,500, a recent report released by the Hamilton Project found. This wealth includes real estate, retirement accounts, and savings.

Experts have chimed in with a range of solutions to close the wealth gap — from federal reparations for Black Americans to homeownership programs to baby bonds.

Another solution, some say, is increasing the number of Black financial advisers who understand cultural nuances to reach Black Americans and encourage financial habits that lead to accumulation of wealth. 

“Diversity is critical for remaining relevant, and the financial sector needs to be recruiting underrepresented groups in greater numbers,” Kimberly Foss, founder and president of Empyrion Wealth Management, told Bay Street Capital Holdings.   

Financial advisers support clients — ones who typically have at least $100,000 in assets — developing strategies that will help them build long-term wealth. They also help clients eliminate their financial risks. A financial adviser is essential for Black Americans who need the strategic tools and resources necessary to achieve and retain financial wellness. A financial adviser can develop a plan to help clients achieve specific financial goals. This might mean establishing a budget for some clients, while others may need long-term savings and strategies to help save money on taxes.

While anyone can call herself a financial adviser, it is best to hire one with credentials.

“Just about anybody can call themselves a financial planner or financial adviser,” Kevin Keller, CEO of the CFP Board, which sets and enforces the standards for certified financial planners, told U.S. News & World Report. “It really is a ‘buyer beware’ situation when a person is looking for an adviser.”

It’s best, advises Keller, to seek out an adviser who is a certified financial planner, or CFP. While a certified public accountant, or CPA, and a chartered financial analyst, or CFA, could call themselves financial advisers, they don’t have the same skill sets or professional requirements as a CFP.

“You can call yourself a financial adviser and have these designations but not have a fiduciary obligation that CFP would confer,” says Frank Paré, a certified financial planner and national president of the Financial Planning Association.

The role of a sound financial adviser is ever-evolving. A financial adviser meets with clients periodically to assess their finances, their goals and then make new plans. 

Yet, the representation of Black certified financial planners is lacking. The number of Black and Latino CFPs grew just 12.6 percent in 2020, according to recent data from the Certifed Financial Planners Board (CFP). That means fewer than 1,500 Black CFPs make up less than 2 percent of all CFP experts. 

“When people aren’t able to find an advisEr they connect with, they get discouraged and procrastinate or start looking elsewhere for guidance,” former Penn Mutual vice president Ande Frazier told Investopedia. “They’re turning to robo-advisers, the Internet, or their family members and friends for advice, therefore discounting the important role of the adviser.”

One of the first steps in finding a financial adviser is understanding the role Black financial advisors can play in building wealth for Black Americans. Finurah’s inaugural virtual Wealth Summit will help facilitate this conversation on Nov. 4 from 10 a.m. to 5 p.m. ET on Facebook Live.

In particular, a panel discussion entitled “The Financial Advisors Role in Creating Black Wealth” will include Elvyn Sanchez, vice president and senior financial advisor, Merrill Lynch Wealth Management; and Araya Mesfin, senior vice president–Wealth Management and Financial Advisor, UBS. Neil Nelson, co-founder of Diamond Diaspora Media, the parent company of Finurah, Atlanta Black Star, and The Shadow League, will moderate. The discussion will begin at 11:40 a.m. ET.

The keynote speaker of the daylong Finurah Wealth Summit will be famed Shark and businessman Daymond John of “Shark Tank.”

“I think that the only way to empower a community is money they can use to empower themselves and support each other. You’ve got to follow the money,” John told Entrepreneur. “That is going to give them the ability to get a deeper education or invest in their own businesses or raise their kids in better circumstances.”

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