Inherited wealth plays a key role in maintaining the financial health of the generations to come. Despite the well-known American rags to riches story, the wealthiest families have benefited from these inheritances, not from newly earned money. In the last decade, Black/African American families have taken a closer look at how systemic barriers have presented challenges to wealth-building and are reimagining what it means to leave a legacy for their loved ones.
According to a 2020 report by the Brookings Institution, Black/African American families are growing higher assets now more than ever, even in the shadow of Jim Crow and other systemic barriers they’ve faced. However, Diverse Viewpoints: Exploring Wealth in the Black/African American Community, a recent study by Merrill found that uniquely, Black/African Americans are looking to redefine intergenerational wealth and their legacy, which included supporting the health and prosperity of their communities.
After conducting wide-scale research through deep conversations, online discussions, and surveys with affluent Black/African Americans, the findings showed an emphasis on leaving behind an inheritance as well as passing down traditional values. Twenty-one percent of affluent Black/African Americans said that inheritance and passing down wealth is part of their financial plan. Arian Simone and Dr. Nicole Garner Scott, both venture capitalists committed to closing the equity gap, recently told Essence that they feel intergenerational wealth starts with them. Dr. Scott also acknowledged that hard work plays a key role in starting the wealth building process.
“As a venture capital investor, I became very sensitive to the wealth gap and wanted to positively impact change in my community. Building legacy is key to our culture’s perseverance,” Simone shared.
Dr. Scott added, “Income allows a family to survive; wealth allows a family to get ahead, and generational wealth passed down allows a family to not just play the game but have a fair shot at winning.”
There are many reasons people are driven toward financial success, but much like Simone and Dr. Scott, many of us work hard to better the lives of our loved ones. Merrill found that 14% of affluent Black/African Americans said they are motivated by setting up future generations for success.
Many Black/African Americans who’ve achieved financial success acknowledge that passing on an inheritance or leaving assets to their children is not something they’ve seen frequently in their community. The Merrill survey also revealed that conversations about wealth transfer, inheritances, or estate planning didn’t typically happen in their families. Many Black/African Americans believe that intergenerational wealth has historically been a luxury afforded to communities that have not had to overcome systemic barriers to wealth accumulation. Jamie, who is recently married, had questions about what “traditional” family wealth-building looks like as Black/African Americans.
“I got married earlier this year and my husband and I decided that as part of merging our finances, we should go see a financial advisor. The advisor assigned to us was a white man in maybe his late 40s/early 50s. He asked about our lives and congratulated us on our wedding. He started talking about how he has been married for 20 years, and he and his wife started their investment accounts at the same financial institution because of its heritage and strong track record of financial success. My mind started to wonder – what heritage does he mean? This financial institution is over 100 years old, and as I looked around the offices I didn’t see much by way of diversity – of either gender or ethnicity. Whose heritage was he talking about?”
Despite the barriers of the past, many of Merrill’s study participants are redefining ideas of legacy. Respondents described a legacy as being able to pass on values such as hard work, a strong sense of responsibility, having an impact on the community, or being a role model to the next generation.
Research from Merrill showed that affluent Black/African Americans are looking to the future and want to work with a financial advisor – in fact, that majority already are. Through their study, Merrill is hoping to foster relationship-building dialogue in order to build stronger, more inclusive financial experiences for those looking to build a legacy for themselves and their families.
Learn more about Merrill’s study that includes insights and stories around wealth and identity from the Black/African American community at ml.com/diversity.
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