Attacking racial barriers to financial success in the black and minority community will take a concerted effort that should include financial advisors, according to the Rev. DeForest B. Soaries Jr., founder and CEO of the dfree® Financial Freedom Movement, an organization that focuses on racial equality.

If progress is to be made in advancing equality for minorities, financial advisors and advisory firms have to help lead the effort from both a top-down and bottom-up perspective, Soaries said during a panel discussion yesterday at the 2020 Conference of African American Financial Professionals, which was held via teleconference. Organizations and firms such as Prudential, which sponsored the panel discussion, have to lead from the top, and advisors need to reach out to individuals on a community level, he said.

Soaries is a former secretary of state for New Jersey and is the senior pastor of First Baptist Church of Lincoln Gardens in Somerset, N.J., where he focuses on economic empowerment. The conference was presented by The American College of Financial Services.

“We have to meet our people where they are,” Soaries said. “In part, that means working through the churches. Not everyone in the community attends church, but everyone knows someone who does.”

The absence of banks in the black community is one of the many barriers to financial equality, he said.

J.P. Julien, a partner at McKinsey & Company, a management consultant based in New York City and a sponsor of the event, said, “Only 25% of minority children born in poverty make it to the middle-class, and black families have one-tenth the wealth of white families,” in part because of the financial barriers they face. “We have to address the external barriers the community faces, but we also have to address the internal barriers” of a lack of education and financial literacy.

The black community is struggling with a 15.5% unemployment rate compared to a 10% unemployment rate for whites, Julien said. The overall unemployment rate is 11.1%, according to the Bureau of Labor Statistics. “Covid exacerbated the problems already present in the minority community, which is more at risk of the pandemic creating a major problem than whites,” he added.  

“We have to recapitalize the businesses in the black and minority community,” he said. “If we can close the wealth gap between the minority and white communities, we will raise the overall GDP of the country.”

“The problem of racial inequality is so vast, that we sometimes do not zoom in to analyze and fix the barriers,” Soaries said.

Financial advisors can reach out to members of the community through the many connections they have, said Salene Hitchcock-Gear, president of individual life insurance and Prudential Advisors. “We have to get the minority community engaged. Each advisor should reach out to one person in the minority community.

“The wealth gap between the black and white communities is a business opportunity for advisors,” she added.

Prudential has started projects in Detroit, Newark and Atlanta to make inroads into the minority communities, she said.

“We have to make these efforts into a movement” that will resonate with the community and help people make smart financial decisions, added Lata Reddy, senior vice president of inclusive solutions at Prudential Financial and chair of The Prudential Foundation.