By Josh Katzowitz, WCI Content Director
When Dr. Latifat Akintade was growing up, she had no financial role models in her community. Her dad took care of the money in their household, and the subconscious message she received was that men were supposed to be the ones who handled the finances. She had nobody else she could look to for advice.
The most Jacqueline Howard—a senior director at Ally Invest—learned when she was a child was that all she had to do was get a college education and buy a house and then everything in her financial life would be just fine. In her community, she had nobody else she could call for insight.
The only thing Emanuel Perez was taught when he was in high school was that if he wanted to “make it big,” he’d either have to become a hip-hop star or a professional athlete. He had nobody else in his community who could tell him otherwise.
These days, Akintade, Howard, and Perez know what they’re doing with their money, where they want to go on their financial journeys, and how they want to impact the generations of Black and brown investors that will follow them. But it wasn’t an easy start for any of them. Nobody who looked like them and who knew where they came from could teach them. In essence, they had to figure it out on their own.
“I think that was a problem, not having those people you can connect to,” Perez told me last year at FinCon. “If you’re turning on CNBC, you’re listening to white noise. It didn’t speak to me. If you can speak to the generation that’s following you and speak their language and meet them where they’re at, that helps.
“Speaking from my experience, there weren’t a lot of people around me who were investing. . . In a lot of Black and brown communities, we weren’t taught that. The most I was taught was ‘to save my money,’ and that was it.”
That’s what Howard and Ally Invest attempted to change when they created the Stock Market Challenge that would help students from historically black colleges and universities (HBCUs), like Perez, and other underserved areas get investing experience.
According to a 2019 Ariel-Schwab survey, only 18% of Black Americans under the age of 40 had learned about the stock market from their families, as compared to 23% of white Americans. That’s probably a reason why a 2020 Pew Research survey found that, while 61% of white American households held at least some stock, only 31% of Black and 28% of Hispanic households could say the same.
Overcoming a Late Start in Learning Finances
The most important advice Howard’s parents imparted to her was to make sure she owned a house. Her mother was a teacher. Her father was a police officer. They both had pensions, so even if they knew about how investing can grow your money for retirement, they didn’t necessarily need to worry about it. They knew they had a steady stream of money coming to them later in life.
Instead, they made a big deal about owning your home. They owned theirs. Howard’s grandparents had owned theirs. And soon after college, Howard bought her own. Only later did she realize that while owning a home is a great way to make sure you’ll always have a place to live, it made your money illiquid and static. Owning a home was not much of an investment strategy.
“For me growing up,” Howard told me at FinCon, “investing was not a part of the conversation at the dinner table.”
That lack of knowledge was a barrier for Howard as she got older and began earning more money. It also hindered Perez until he got to college. That’s when fellow friends and students introduced him to Robinhood and the wonders of low-cost investing from the convenience of your phone. Perez didn’t have a role model he could watch on CNBC. He had to rely on his college buddies to show him the way.
“There’s a sense of camaraderie with those friends,” Perez said. “It’s very galvanizing. It’s like, ‘You come from a similar place where I come from.’ That really helps.”
Getting involved in the Stock Market Challenge last summer was also a turning point for him. The idea behind the challenge from Ally Invest’s point of view was to make deeper commitments to diversity, to democratize investing, and to reach the next generation of investors (and, of course, to find possible customers).
It was a five-week program where the 40 students of color who were chosen met with coaches once a week for two hours to learn about the stock market and the strategies they could use to invest in it. Maybe the participants hadn’t talked about money around the dinner table when they were growing up, but in the Stock Market Challenge, they could glean knowledge from coaches who understood their backgrounds. Learning from people in their community was key, because, as Perez would say, those coaches know exactly where you had been and how you grew up.
“We’ve had white investment advisors, and we’ve had Black investment advisors,” Washington Post columnist Michelle Singletary told me last month after her WCICON22 keynote speech. “It just so happened that the one who put us on the right track was African-American. I do think that made a difference. She was able to understand why we were so conservative. She could understand why we tithe. She was like, ‘OK, cool. Let’s do this.’ She pushed us out of our comfort zone. It is important to have folks like that. It could be male, female, Hispanic, Black. Somebody who looks like you and knows your historical background can make a difference.”
Becoming Financial Role Models for the Next Generation
One of the biggest eye-openers for Guy DeWeever II occurred when he was hired for an internship with a nationally known financial services company.
Like Perez, DeWeever didn’t have financial beacons as a child, and like Perez, he thought the only way to make it big was through music or sports. That changed with DeWeever’s internship when he realized his closest confidantes knew next to nothing about investing and that he could be the one to teach the older generation.
“You grow up around the people that you refer to as ‘aunts’ and ‘uncles,’ the friends of the family, and you think they’re doing great. It looks like they are,” DeWeever, who also participated in the Stock Market Challenge, told me. “When you sit down and actually help them look at their finances, you see that sometimes adults don’t know what they’re doing, either.”
DeWeever wants to break that chain. That’s why he made a deal with his younger brother Aidan, who’s a freshman in college. Guy knows Aidan is scared to lose money, so the older brother made his younger sibling a deal: I’ll give you $1,000. You can invest it. Whatever you earn will be yours. If you lose every penny of this $1,000, it still won’t cost you anything, because it’ll be coming only out of my bank account. That was Guy’s way of being the role model he never had.
“You continue to see predatory investment things that go on in the Black and brown communities. Some people do try to invest and they get burned. You hear the horror stories,” DeWeever said. “There are a ton of role models in sports and music and fashion and entertainment. But when you talk about being frugal or being financially savvy, that’s not really ‘cool.’ I don’t think it’s impossible to change that. It just takes the right people.”
Akintade, meanwhile, is trying to lift up people of color and women. The practicing Gastroenterologist runs The MoneyFitMD website, and she gave a presentation on “How to Be a Cash Flow Boss” at WCICON22 (you can watch her session in WCI’s brand-new CFE 2022 course). As she says on her website, Akintade helps women physicians “go from financially overwhelmed to financially confident” and it starts “with transforming your relationship with money.”
Playing that kind of role model is key for her.
“Anytime you are one of the few, you become an example of what’s possible,” Akintade told me via email. “The goal is to always hold the door for others to come in. Others include women, minorities, and women physicians. There still are a lot of disparities in wealth, so yes, the absolute goal is to help others learn sooner.”
That mindset is important for Howard, the Ally Invest senior director, as she raises her 12-year-old son. Already, she’s trying to put him on a path toward financial literacy, whether it’s writing a two-page paper on cryptocurrency or teaching him the value of saving and investing. Last summer, he told her that he wanted a new video game system. It was an expensive investment, so Howard told him that they could buy the system but that they would also purchase stock in Microsoft and Sony so he could visualize the impact of his purchase on his everyday life and on the companies in which he now had a personal stake.
“Those,” she said, “are the conversations I’m having with my son.”
Howard didn’t have those kinds of chats around the dinner table with her parents. Neither did Perez nor DeWeever. But for underserved communities of color, it’s a vital conversation to have—to change the financial culture in those communities and to democratize investing and financial literacy for everyone.
What I’m Reading This Week
How Much Does Burnout Cost?
We know that physician burnout can cause an individual doctor to forgo hundreds of thousands of dollars (and probably millions!) if they leave the profession because of their mental well-being. But how much has burnout cost when it comes to annual excess healthcare expenditures?
According to Mayo Clinic research, it’s hundreds of millions of dollars per year in the US. Researchers determined that primary physician turnover costs nearly $1 billion per year in excess expenditures, and since burnout is such a significant cause of that turnover, it’s estimated that $260 million of that is directly due to that mental fatigue.
Considering the research reflected doctors facing burnout in 2017-2018, well before the COVID pandemic, chances are that the $980 million figure is much higher these days. Especially if upward of 50% of doctors are now feeling at least a whisper of burnout.
Lego Bricks; Not Gold Bricks
This story is a couple of months old, but I thought it was enjoyable, especially if you were thinking about investing in commodities as the stock market struggles early in 2022. As the New York Post reports, researchers found that retired LEGO sets had risen in value 11% annually from 1987-2005.
Apparently, LEGO sets also don’t have much correlation with the stock market and the LEGO market actually increased during the 2008 recession and the 2020 Coronabear.
More from the Post:
“The best investments are ‘thematic sets’ based off famous buildings, holidays or entertainment franchises like Star Wars. Among the most expensive models are replicas of the Millennium Falcon, Imperial Star Destroyer and Taj Mahal.
‘Tens of thousands of deals are made on the secondary LEGO market,’ Professor Victoria Dobrynskaya said. ‘Even taking into account the small prices of most sets, this is a huge market that is not well-known by traditional investors.’”
Match Day Is Coming!
One of the most nerve-wracking weeks in a medical student’s life is finally here. Match Day is set for March 18. I attended the ceremony for my wife a number of years ago, and I can recall the energy and nervous anticipation that filled the air in that auditorium before the envelopes were unveiled and then torn open.
I detailed the nerves felt by a quartet of graduating medical students in part 1 of my new series From Fourth Year to the Real World, and I hope everything works out well for all the soon-to-be interns who are now officially physicians. Fingers crossed that you get what you want.
Money Song of the Week
During the pandemic, when we were all locked inside our houses for most of the day, the band I listened to most was the metalcore quartet called Jinjer. If you’ve never heard of Jinjer, check out the video below. The way singer Tatiana Shmailyuk performs the song, Pisces, might be the biggest surprise you see today. Seriously, if you’ve never seen it before, it’s bonkers.
OK, now that we know that Shmailyuk can growl like a demon and sing clean like an angel in the very next second, let’s take a listen to Jinjer’s take on reaching the top of the pyramid of success and money and whether it’s a lonely existence once you get to that pinnacle of your financial life. It’s a 2019 song called On the Top, and it features lyrics like . . .
“Unsatisfied need makes you push forward/Greed, striving for its reward/Like a racer on the mark, you burn your rubber/Like a starving shark looking for its supper.
You run, run, run, run, run/Until it makes no sense/Your feet are sore but you're still running for accomplishment/In this eternal marathon for success/Another day, another dollar, undying motto of progress.”
And . . .
“You're not afraid to lose your mind/In the name of profit/Red ribbon is the finish/And the finish in the coffin.”
The members of Jinjer are Ukrainian, and as far as I’ve seen, the band has remained in Kyiv as Russian troops have invaded the country. Here’s hoping everybody stays safe.
Tweet of the Week
A heartbreaking story about risk from the beginning of the Space Age.
— Morgan Housel (@morganhousel) November 19, 2021
Did you have conversations about money or investing around the dining room table when you were growing up? Who did you look to as a financial role model? Comment below![Editor's Note: Josh Katzowitz is the Content Director for The White Coat Investor, and his work has appeared in the New York Times, Wall Street Journal, Washington Post, Los Angeles Times, and CBSSports.com. A longtime sports writer, he covers boxing for Forbes, and his work has been cited twice in the Best American Sports Writing book series. For comments, complaints, suggestions, or plaudits, email him at [email protected]]