Taking these steps will make a difference. The authors reran the Joneses’ plan after the family had taken these actions and the gap disappeared. Sort of.

Remember, the plans are constructed with probability-weighted aggregate data. If the Williamses also make these good choices, their inputs change and the gap returns, which shows the systemic nature of many of these problems. The average salary of a white graduate is higher than that of the average Black graduate with an identical degree.

I asked Kamila Elliott what she hoped readers would take away from the paper. She said systemic barriers keep Black families from building generational wealth—they have lower levels of home ownership, lack access to investing and face discrimination in the workplace.

Black families are also disproportionately affected by laws and regulation, experience higher levels of incarceration, fines and fees. The systemic issues limit the ability to build wealth for inmates and their families. 

“Black families are looking for ways to close the gap through education,” she said, “but issues with primary education, increased attendance at for-profit universities, persistent pay gaps, and higher debt ratios continue to present challenges.”

While these are controversial topics, the paper does not strike a political tone. Complex issues are not solved simply or quickly, and the authors have made a significant contribution to the dialogue in the financial advisory community by presenting a financial planning take and basing it in evidence.

The paper can be downloaded at https://theracialwealthgap.com/. I recommend reading the entire text.

Dan Moisand, CFP, has been featured as one of America’s top independent financial planners by Financial Planning, Financial Advisor, Investment Advisor, Investment News, the Journal of Financial Planning, Accounting Today, Research, Wealth Manager, and Worth magazines. He practices in Melbourne, Fla. You can reach him at [email protected].

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