Lazetta Rainey Braxton, CFP®, is back on the 2050 TrailBlazers podcast for her third appearance! Today, she and I are sitting down to talk about the history of money in the African American culture. Lazetta and I are both CERTIFIED FINANCIAL PLANNERS™, and we often work with clients who are part of a minority group. In our experience, both as advisors and as African American women, we have seen the many, complex money-related feelings that are often tied to the African American culture.
Lazetta and I cover a lot of ground in this episode. She opens up by explaining how starting money conversations with her clients as a financial advisor can often be challenging.
She knows that, many times, sitting down with a financial advisor might be the first time a couple has had a conversation about money. In the African American community, money conversations don’t often happen organically. Money might be viewed as a stressor, and talking about money might be seen as rude or uncomfortable.
Lazetta and I take the time to explore family dynamics and money, what guilt African American professionals may carry with them if they feel they’ve “made it” while their community still has financial need, and more.
This episode gets into the nitty gritty of what role money plays in the African American community - and Lazetta brings incredible insight and wisdom to the table both from her own personal story and her experience as an advisor. You don’t want to miss this episode!
What You'll Learn:
How African American community approaches money both as individuals and as a family
Ways that the financial services industry can target the African American community through the sale of insurance or high-cost, high-fee financial products
How the African American community views investing
Ways that family dynamics can impact an individual’s personal view of their own success
How there tends to be an expectation among family members that a successful individual will care for others in their family
How guilt plays into financial decisions
Ways that financial advisors can be open to and supportive of money-worldviews when working with African American clients
How faith and religion plays into money decisions in the African American culture
Rianka: 00:00 Lazetta welcome back to 2050 TrailBlazers.
Lazetta: 00:05 I'm excited as if it's my first time.
Rianka: 00:09 You are in fact a three timer. You were on a season one, season two and now girlfriend you are back on season three.
Lazetta: 00:18 Oh, I feel the love. I feel the love. Thank you. Rianka you're doing great things.
Rianka: 00:23 Ah, thank you. It is so, so, so, so my pleasure. I have enjoyed, just our conversation over over the past year, especially just off off record, off the podcast as we've talked about money and culture and now it just seemed like a perfect fit to just bring you back and, and have a conversation around the black community, specifically the African American community who we both have a pleasure of serving.
Lazetta: 00:55 Yes. And we also have the pleasure of being a part of as having African American heritage, owning our African American heritage and our culture.
Rianka: 01:05 Yes. For the listeners, if this is your first time tuning in season three, the theme is money and culture. And throughout this entire season we are talking about money of course, but also how it transcends into different cultures. And how there are some similarities, but there are also some differences and just with our upbringing and how we view money. Yeah. So with this conversation, is going to be a little different. It, it's, it's going to be both of us kind of chiming in and, and giving our perspective, our, our upbringing, our experience and, and, and hope that, you know, it touches the financial advisors that may be listening to this and hopefully increasing their cultural competency as well as some of my clients, your clients or even potentially new clients down the line who may feel this, the sense of afraidness to, to talk about money and, you know, kind of figuring out where does that come from.
Rianka: 02:07 I have this sweatshirt that says, I say the unspeakable and I think that that has helped me just in terms of my, my DNA. Yeah. That curiosity about why my family extended family community didn't talk about money when money is at the center of our, our lives. So the journey of talking about money in culture has to be anchored in a freedom, in a willingness to be vulnerable. And to say we need to have some money conversations. May not look pretty, but it's necessary. I mean, how about you? I mean, did your family talk about money?
Rianka: 02:57 No, no, we didn't have money conversations until something happened and it, it was always something unfortunate, you know, to happen. Like for example, when my Nana passed away, that was truly the first time that I understood the lack of finances that we truly had as a family. I always share this story about my Nana is the reason why I'm a financial planner and just coming back and forth to like from school, being aware that there was a career in personal finance, taking those classes, coming back home and sharing with her information about social security, 401ks, estate planning. By this time she's over 65 years old and so from a time perspective, she, she looked legit, did not have time to save. You know, she was on dialysis, she was still trying to work, bless her heart, and was in pain as almost like Nana, why?
Rianka: 04:06 Why are you not retiring? Like just stop working. There's this thing called a 401k. You were supposed to, you know, put in money throughout your life and social security that you can start taking out. And that's when we truly had a conversation that she wasn't ready to retire. And I was just like, wow. And then when she passed, you know, she was, my family was the first black family to move into this neighborhood in Norfolk, Virginia. And from what she shared with me about the discrimination that she faced, how both of her neighbors built fences, higher fences so that they wouldn't see into our yard or we couldn't see into their yard. Of course, 30 years have passed. So they became really great friends. But in the beginning it was, they were integrating this neighborhood and it was all red brick house. It was beautiful. She built an extension onto the house and when she passed, I found out basically how much the home was worth was how much was left on the mortgage.
Lazetta: 05:16 Wow. And I'm sure as people are listening in, they're saying, wow, regardless of race, there is lack of money talk in, in various families. I think we should probably anchor this in is just statistics that really highlight the wealth gap, the racial wealth gap that makes our conversation even more necessary to to figure out how to navigate the disparities. There's a New York Times article that says for every $100 in white family wealth back families just whole $5 and 4 cents. So yes, as African Americans, as blacks we say money talk is even more important because we have to make up or try to make up for lost time. And also each generation is trying to figure out how to navigate what they've inherited or not inherited. As you said before, in terms of homes, in terms of the wealth transfer.
Rianka: 06:17 Yeah. And this is just a prime example of how in some families you are able to inherit a home or you know, a home is passed down to the next generation so that you know, a mortgage which is our largest liability or rent is our largest liability on a month to month basis. If you inherit a home that's no longer, like you don't have to worry about that. Right. But if, if that's not being passed down to the next generation, then it's, we're still starting back. You know, there's no, there's no catch up, there's no, you know, finally I can take a breath. You know, and when people may be asking, well, how is she was in the home for 30 years that she still owed almost the same amount that the house was worth. It was because she was taking out the equity in the home throughout the years. And it wasn't because she needed it, it was because of family members and children asking for money throughout the years. And so that's something that we can talk about later on in a conversation, Lazetta. That I know we've both experienced, just as our income has increased, there's this sense of responsibility that we have to take care of our family in the village that helped raise us.
Lazetta: 07:34 Let's talk about it now, that family obligation that we feel if you made it, that you supposed to distribute the wealth to everyone, whether they made it or not. And that is an expectation and it is this, this obligation that you feel too, like you said, a give back, lift others up. And one of the things, even when I work with clients, I asked them, do you have people who will be financially dependent on you? And oftentimes I hear parents and helping a niece or nephew get through school or obviously they're also dealing with their own children as well, but the extended family is typically on, on the, on the payroll, line item for that budget.
Rianka: 08:30 Yeah. It's almost like, you know, for the, for the African Americans that are who I like to call first generation wealth builders, who typically are the first generation college graduates of their family. And so I just know with my experience, it literally took a village to raise me. Literally, I live with my Nana, live with my mom. I live with my dad, my aunt, you know, so when I finally graduated from college and at the age of 26, I started out earning both my mom and dad. I was just like, wow, I'm no longer live in paycheck to paycheck. I can finally like save money. Like what is this? You know? But I also felt this obligation within me to help everyone else because I saw them struggling and so it was, but thank goodness, right that I'm a financial planner and I had good counsel around me who basically said, and I, and I wrote an article about this, which I'll put in the show notes, is that you have to put your financial oxygen mask on first. And what I mean by that is anytime we are on the plane, right Lazetta that, what, what does the stewardess say to us?
Lazetta: 09:57 Particularly if you're seated next to, and we have a daughter, put your mask on first so that you can be able to assist anyone who's unable to insist themselves.
Rianka: 10:07 Yes. That's the analogy that I like to use, especially with my clients, who I see myself and them, is that I understand there's this innate need to help your family. However you have to put your financial oxygen mask on first before you put it on anyone else's. And, and what does that mean? That means that I want to make sure that you're putting money towards your retirement account. I want to make sure that you're putting money towards a emergency fund and if you have any consumer debt that you built while you were in school that you're paying that off. And also with student loans, student loans, for my generation, the millennial generation is the number one debt that we have. And it's, it is very crippling and it's, it's a lot of anxiety around it. So make sure that you're paying that off as well.
Rianka: 10:58 And then if you have extra money, then that's when you can help. And I just like you Lazetta, I say, let's put a line item right. Even if on a monthly basis there's not a family or friend asking money from you, but you know that it's going to happen. Just earmark money to and make it automatic and put it in a separate account. Maybe it's $25 a month, $50 a month, and it's just growing. So when uncle such and such come say, Hey, let me let, let me borrow $25 you know, borrow, borrow actually means can I have, and you are giving without the expectation of getting it back that because you actually can afford to give and you're not putting yourself in a financial detriment so that when you need help you can actually help yourself. And so I think about my Nana who that was her throughout her entire life.
Rianka: 11:54 If you needed a place to stay and you came to Norfolk, Virginia, you stayed at Nana's. If you needed something to eat you ate at Nana's, if you need, it's anything Nana somehow provide it. And now I saw it wasn't after until she passed away. I was like, this is how Nana did it. Yeah, she worked three jobs throughout her life, but it was also because she was pulling out equity within her home. And, and so I see that, right? I see a life of not putting your financial oxygen mask on first. And so that's why I am so passionate with working with my generation of saying, listen, I see what it looks like if you don't put your financial oxygen mask on first. This is why you must,
Lazetta: 12:33 and what came to my mind is certainly I am on the same page with you about the budget line item. You can use it as a reference saying, you know, my family fund is depleted. That's try next year and I go a step further. So if you've learned how to put your mask on first, then it's your responsibility also as you're giving to help others put their mask on first, ask some questions. Why do you need the money? What went wrong? How can you know we not let this happen again? Because if we don't try to educate and elevate than the wealth gap within our own family will continue to persist.
Rianka: 13:21 Yes. Educate and elevate. So what does that look like, Lazetta? You mentioned that you've have some clients who are, you know, the first generation wealth builders. You're doing a phenomenal job with educating your clients. So what are some of the tools or resources that after they work with you or while they're working with you that they are now passing on to their family?
Lazetta: 13:42 While, we are working together. I am adamant. So I started first by helping them kind of name the family members that may be draining their finances, talking about, in the initial conversations, who's financially dependent on you. I'm also coupling that with what are you proud about that you've done well with their finances and where you need to improve upon so that we can get everything out on the table. We can eliminate what I call that money fog, fear, obligation, and guilt. Whether the fog is because you've created it or has been imposed on you from that obligation guilt side from other family members. So having the conversation lifts the fog so you can be clear about who's responsible for what. And then from there we just kind of dissect about what yes, how life has gone well maybe habits you've seen from your parents that have gone well.
Lazetta: 14:42 Things that you've figured out because of conversations you've had at work or with another trusted friend who's done things well like heard you should max out your 401k and you should have three months of, you know, savings. And then looking at the things that are not so great, you know, whether you need, you know, retail therapy or you just love Tar-jay not Target, Tar-jay and your like how in the world I keep spending two or $300 at a pop, you know, for stuff that looks beautiful, but I have no space to put it. And then as we're kind of saying, this is my lifestyle, this is how I want to live. No shame, no fear zone at all. And when you start liberating people to just kind of take the deeper dive and kind of own how they want to live, it gets contagious. Then when people are asking for money, it's like, well, hey, I improved my situation.
Lazetta: 15:38 I, you can to. Then you start getting, you know, these, these advocates becomes contagious where it's not the expectation of because you've made it, I can't, you know, for somebody else in your family it's like I've made it and I can show you how now there's also this pot of money where you just know that circumstances beyond people's control within your family, like a job loss, right? Where you're trying to help them get a footing that's different from the family member who constantly refuses to get, get it together with things within their control for which you can help them out of your own experience. Just figure out how to get a budget and how to cut spending and think about how to get some other income. Not rocket science here.
Rianka: 16:29 What type of advice or coaching do you give your clients? Cause essentially we're coaching our clients to then coach and train their family members or friends. And so it's, what advice do you give your clients for the family members who may still be guilt tripping them of just like, well I babysitted you when yo Mama needed to go to work and blah blah blah. And like, this is how you treat me.
Lazetta: 16:55 Oh yes. And I do, especially when I'm working with them, just say, blame me. Well, my financial advisor. Yeah. You know, just like you said, well my pastor told me, well, my financial advisor, you know, told me that I, it's better that I be able to take care of myself and allow what I can do to help you out. Now, if they can't still figure it out, say you're more than welcome to speak with her. Ir give other resources that are within their community. I mean, there's so many resources to help people with the baseline budgeting, and, and even debt management that there is no excuse for someone not to be able to improve their own situation. And when the guilt comes, the, the buffer is back to what you said, I'm putting my mask on first. If I continue give to you, then that weakens, my financial, you know, household and no one gets ahead.
Lazetta: 17:55 And that's, that's real. That's absolutely real. So the having account, because that's who you are saying I'm going to give to family. That is just how I'm wired. Then you know what your budget is and that allows you to prioritize. That also allows you to figure out what is a kind of a charity case. Not in a negative way, but that's when things happen beyond people's control within your family. And then what you are saying, those who could do better, but you're also have a conversation to help them be better. And maybe that's your last donation to them.
Rianka: 18:30 And I will be remissed if I didn't mention this, if you have a partner, a spouse, a lifelong partner, please talk about money with them. I was just on another podcast, not too long ago and they shared a stat with me that spouses, longterm partnerships and it was a very high rate, Lazetta. I think over 60% of partners do not talk about money with each other. And as we know, that's the number one leading cause of divorce is money and, and just the financial strain. And so if you are, or if you want to help a family member or if you want to help a friend, this is definitely a joint conversation, a joint decision. This isn't like I'm gonna make this decision by myself because that's going to cause tension within your own relationship.
Lazetta: 19:25 Yeah. So I'm back to this philosophy that I have, you know, treat wealth as a family business and that starts within your own household. So as you were saying it, particularly if you are are married or even if you're single, what are your family's goals? Where are your family's objectives, you know, how are you aligning those resources to those objectives? And if those goals and objectives, you know, include somebody else's family members, particularly if you're married, if you marry someone, you marry their family too. That comes with the package. Right? And so with, with couples, when we were saying put your mask on first individually, that's for couples as as well too. And there may be different philosophies on bailing people out, you know, within the families. And those are the conversations in terms of your kind of strategic objectives. How do you, how do you view giving money to other family members?
Lazetta: 20:26 How do you even view having your own fun money between the two of you so that you have freedom to, to spend a certain amount of money the way you feel with no judgment as well too. And then when you start taking that concept outside of your own walls, you're bringing in conversations with your, your parents as well too saying, you know, we'll, we'll we be responsible for longterm care. Do you have a policy? Because that's probably one of the biggest areas, that there is you know pressure for kind of the sandwich generation, the people in the middle having to care for parents and children. How are they doing in terms of that retirement nest egg? So what we're going back to its disclosure, transparency of what are the funds look like to match up with your goals and objectives, which is no different than a business thinking about the stakeholders, the shareholders in mind.
Rianka: 21:28 So this is transitioning us to a of a point that I definitely want to talk about, especially within the black community historically. And for advisers, listen to historically we have always navigated towards insurance, particularly annuities and looking at like whole life insurance as a way to invest versus the stock market. Do you want to share it? Shed some light on that for us, Lazetta?
Lazetta: 21:55 Absolutely. Cause it's something that I'm very sensitive about, you know, for my clients in terms of exposure as African Americans historically, we like things that we can see and feel and know that there is a contract and that goes in line with what we've experienced within this, this country of having property taken from us. And so if we know we own it with the deed, if we own insurance because we see the contract and we're paying the premiums and even with annuities as well to that, that feeling of having guaranteed income, even if there are other opportunities to grow that income. So what am I saying? African Americans historically are anchoring their wealth in real estate, home ownership. Two they are very comfortable with insurance because insurance has been around for a long period of time. And with transition and wealth, at at death, those amounts typically aren't as significant as there could be for other investment opportunities for which I'll talk about.
Lazetta: 23:15 And then third of course with annuities with which has a component of insurance tied to it as well too. Now I'm not disparaging any, any of those asset classes, they are important. What I'm also saying is that as I see wealth transfer among the white populations which have significant more wealth, a lot of it is happening through the stock market, the ability to grow your wealth exponentially with this concept called compounded growth, while your money is constantly working for you. There are also tax considerations that that make stock ownership or exposure to the market more attractive as well too because you can have the benefit of a erasing, some capital gains as these assets of being transferred to other generations. So what I'm saying is with African Americans now, they have to be more comfortable with the stock market because a lot of their assets are in retirement plans. And there has to be that basic understanding and comfort level with knowing that there is potential for growth, noting the markets do go up and down. We're not saying that there's not that volatility or the ups and downs, but over long periods of time it has worked out well for other populations.
Rianka: 24:44 Yes. And you did a really great piece with CNBC, about how more black investors should look to the stock market to grow their wealth. So I'll make sure I'll, tag that and, and put that in the show notes. You also did a really awesome video. Ah, I saw Lazetta on TV.
Lazetta: 25:03 Hi Mom. Hi Mom, I'm on TV.
Rianka: 25:09 Alright, so I'll make sure I'll tag that as well. So you can see Lazetta in action talking about, you know, how African Americans can just educate their self more around the stock market and participate so we can have that exponential growth. Like you say it with compounding interest. Compounding interest is our best friend and, so that we can transfer some wealth. So Lazetta that if it's okay with you, I want to kind of talk about each sector that you talked about. Insurance, real estate, and then
Lazetta: 25:43 Annuities.
Rianka: 25:44 Annuities. Yeah. So insurance and this is the reason why I wanted to chat about it a little bit more. Again, like my Nana has been, unfortunately a great example of kind of like what not to do when it comes to a lot of things with personal finance. And when she passed, thank goodness she did have a small life insurance policy, so we were able to take care of the burial and my aunts and uncles got a little bit of change each, but she had about six AD&D policies and that is called accidental death and dismemberment.
Rianka: 26:27 And she's had them for many, many years and because it was no accidental death, none of them paid out. And so I, it was more so of like who knocked on her door to sell her this insurance. And I feel like a lot of that is happening within, again, the black community because it's more black insurance agents. Then there are financial advisors. There are a higher correlation or a higher percentage of insurance ownership whole like life insurance ownership as a view of investments or an investment vehicle. Then there are the actual stock market because there's a lot of African American, you know, insurance agents versus financial advisors. So we go sometimes with what we know and if, if there's a black person sitting across from me saying, yeah, you can double your money with this insurance product, I'm probably going to believe this person cause why would my, why, why would someone in my community steer me wrong? So yeah, let's talk about it.
Lazetta: 27:43 Yes, you, you said go with what we know and it's really who we know, right? Because you're right in our communities to door knocking, the, getting to know the family members. I remember clearly our insurance agent, loved her. She was a great spirit, you know, as a kid when she came by and it's like, oh, the insurance person is here. And as I got older and I kind of went through my, my parents policies, I'm like, oh, well this may not have been totally the right answer. At the time, but, you know, being a teenager, I didn't, I didn't know, you know, what my parents were, were purchasing. So how can we, how can we as, as advisors do a better job of saying or matching up what their goals are and how best to serve them. So we're not saying insurance is not the way that go.
Lazetta: 28:38 We're saying insurance is one of the many ways to compliment or support your life and wealth transfer. And that's why I'm, you know, so happy that there are more advisors of color, particularly African American advisors who are creating models such as us, to be able to just serve as our community. And, and that's why I say I'm the financial planner for the rest of us. That there are, the access to financial planning that takes a holistic approach, not just one avenue, not just an insurance agent or, you know, not just a real estate agent, but how do those two, for example, offer ways to support your overall family goals?
Rianka: 29:36 Yes.
Lazetta: 29:36 And the, you know, as we're thinking about even whether it's whole life where there's something leftover, you know, upon your death, if this is the right type of life insurance or term life, you know, these, I know, jargon must make people's heads spin.
Lazetta: 29:58 And what should I have? What purpose does it serve? You know, how much do I pay in? And, and that's what financial planners are for, to educate and to be broad in our understanding of how to financially serve households as well too. Now I want to move to the real estate. Let's talk about the real, the real estate. Because even in my family situation, my grandparents and I wrote about this too, build and pay for their own home. And so as a part of their wealth transfer, they left the home to who? All eight siblings. And when
Rianka: 30:40 That sounds like a recipe for disaster.
Lazetta: 30:44 Yes. But that is so customary in the African American community where that is the biggest asset to transfer next to insurance is home ownership. The equity within the home. And that is if there's still equity, right? Cause we talked about your Nana who decided to share her wealth while she was still living. She took equity out of her home. Whereas with my grandparents, they didn't take any equity out. They left the home to the family members, the siblings for whom couldn't decide what to do. So what happens when you don't take care of an asset over time, particularly with homes, it deteriorates. So wealth just washed away. We ended up having to demolish the family home. Now, the other siblings finally decided to let my father purchase it but to demolish, you know, demolition happened. The land is still within my family with my dad ownership. But there was so much wealth that was lost in the, in the process because there were not strategic ways of thinking about how to pay out family members who were not interested in the family home and still have something to show for the hard work and good stewardship of parents.
Rianka: 32:09 Yeah. And that's what I meant about, you know, it's the home is being left to eight owners, right? You just think about you with your, your friend or your partner or whatever you think about where are we going to eat? Right? That's, that's just two people trying to figure it out. And then at the end of the night, you both sit at home upset because you can not figure it out. So think about eight people, right? I'm trying to think about home ownership and, and I see this a lot, especially with my, older millennial clients who is probably the more well off, so to say. Then their siblings, they're helping their parents pay for the mortgage or pay for the home. And so what's going to happen when the parent passes away? The home is going to be left to my client. Whereas all of the siblings think like, Oh, when you know, mom passes, the money's gonna. You know, we're going to just sell the house and split it four or five ways. And that's not the case. So there's no, going back to what you said in the beginning, transparency, there's no disclosure because nobody wants to talk about the money. So that's, so that's one way of disaster. I think it's great that a home is being purchased and being passed down to the next generation. But there has to be disclosure and transparency. And if you don't know, ask
Lazetta: 33:34 even if your grandparents say get out of my face, I ain't talking about this, let's just keep it real and keep it honest. Because some of those conversations are just so on uncomfortable but somebody has to do it, someone has to do it. And there are models out there for families to transfer wealth. So case in point, maybe in the will there is, you know, first first opportunity for the children and those who want to keep the property and then those who want to buy out in looking at that or just selling the land. But the bottom line is wealth shouldn't be lost in the transfer when it comes to real estate. And the other piece of this is, can you imagine if they didn't finally decide to, you know, let my dad buy them out. Then you would have the next generation of ownership, which is exponential in terms of the grandkids. And there's lots of land tied up in about two or three different generations that it has to be cleaned up at some point.
Rianka: 34:41 So real estate is a really important piece as you share earlier apart just the African American culture because we want something that we can hold on to. So to say something else. I see a lot of which financial advisors should probably be aware of. Is that also with African Americans, not only do we want to own, we also want to own a rental property. Where did this come from?
Lazetta: 35:03 I think it's still the extension of what you know, if you own a home, you kind of know what it needs, what you need to maintain it. What I think we, how we in our community falls short is that we don't have the capital. You need a capital fund for home ownership. That capital fund is going to cover you when your renters tear up your home. When you have to fix stuff, right? When you got to keep landscaping up or if you can't rent it for four months and you got to still cover the mortgage on it. So we need as a community, even if we like property, that's fine. There are some just smart things to, to do and think of if you're going to extend yourself out and own other properties. And the major piece of this is having a capital reserve fund.
Rianka: 35:57 I love that idea, Lazetta. So it sounds like if you are someone who wants to own rental property, not only do you need your retirement fund, your emergency fund, but also a capital fund. So that again, when there are renters who, who are skipping their mortgage or something happens in their life where they can't pay, they lose their job. We don't want you to be in a financial bind where you have to then start pulling out of your retirement account so you don't lose the home.
Lazetta: 36:30 Yes. And once again, I'm sure there are some listeners saying this happens with my clients and they're not people of color. What I want to emphasize over and over again is that the wealth gap and the economic conditions compounds these issues within our community,
Rianka: 36:53 within the African American community,
Lazetta: 36:54 within the African American community in the US. So, yes, there may be similarities in the topics, but the degree of exposure to risk is amplified times over. Again, so there has to be just really a keen understanding of where financially the clients you are serving are and what a, some of the scripts that is a part of the African American community that may be still playing out within the financial planning process.
Rianka: 37:34 And speaking of money scripts, I know something that is both important in both of our lives and especially in the African American community is our religious belief.
Lazetta: 37:44 Yes. So what institution historically has the most longevity in terms of, organizational strength and that is the black church. Now we're looking at several generations later where there is still some strong residual, commitment to supporting church. So the black church within, you know, the African American experience has been kind of the, the center of economic distribution, good or bad. And it's best since it has supported people, when society couldn't really be there for them, whether it was helping them with rent, making sure they were fed. A place of refuge when the world was still just saying you're not welcomed here. And so as a part of the biblical understanding of Stewardship, I knew I grew up with this understanding of you, you give to God first, you give God the first of your fruits and that really equated to 10%. So if you're starting saying giving to God first and then yourself, you have to help people understand how to live off the 80% when the 80% reflects, you know, a terrible income gap, you know, wage gap as well too. So that cultural understanding of giving to the family and also giving to the church is a sensitivity that advisors have to be aware of when serving black clients.
Rianka: 39:25 I've seen it happen and I know it's happening. So it should go without saying, but you can't. As advisors, we cannot place our value on clients. And I know it's happening because I am getting new clients who are leaving their advisors because they're saying, they told me that I can't help my family or they told me that I need to put more towards my retirement account versus giving to God. And that's just, I mean, we can't do that. You know, we have to figure out how with the values that our clients have work around them and build a, a financial foundation that has strong, and also, help them reach their, their financial goals and, and be on a good financial trajectory.
Lazetta: 40:14 Yes. And this is where the f word comes into play here. Fiduciary. And I have to bring it into this conversation. That means keeping your client's best interests first. And in order to do that, they are telling you, our clients are telling us what is their interest, what are their goals? And if you don't have the cultural competency to understand that and take the deeper dive, then you're not being that fiduciary that they need and deserve.
Rianka: 40:46 Yes. And if you go back to episode one, Sandra Davis did an excellent job of just pulling out and helping to understand what the client's values are and how you as an advisor can then be a partner with them instead of sitting on the opposite side of the table. So definitely check back to episode one if you're trying to increase your cultural competency in a way of you know, asking questions that may not, that's not intimidating or a accusatory, but just truly trying to pull out the values and try to figure out how to best serve this client.
Lazetta: 41:25 And I just wanted to highlight, we've, we've talked about the disparities, right? The, the challenges that are compounded within the African American community financially. However, there's also great opportunities to, to help build wealth together it's just a matter of looking at different business models to help support and be a win win for the financial planner and for the client. So one of the things that we see, we know in the industry is the assets under management model. We're helping our clients build wealth and be exposed to the market. And as we're doing that, we can meet them where they are and where they are is based on the income that they're bringing in. And I have found, you know, retainer models where you are just like any other subscription in that they're paying for on a monthly basis or even bringing those dollars together quarterly where they can afford the advice and appreciate the advice and act on the advice where their balance sheet is getting stronger and stronger by the day and by the journey and by the plan.
Rianka: 42:40 Yes. And that's my business model. I know that I wanted to work with my community and other communities who are the first generation wealth builders. And I knew that AUM or assets under management didn't fit. That wasn't me meeting them where they are. That's them waiting, you know, until they got to a place where I felt like, okay, now I can take you on as a client, which is the AUM model. But for the millennial generation and even some Gen-Xers, we don't have time to wait to get this good rich financial knowledge. We need it now. So that we, when we are in our forties or 50s, we, we have amassed enough wealth where it makes sense to maybe then transition to an AUM base. But yes, I 100% agree with you Lazetta. And I think your business model is the same where we're meeting clients where they are.
Rianka: 43:36 It may not make sense right now to be charging clients AUM or assets under management. What I'm asking advisors, if you want to serve the underserved community in these version first generation wealth builders, you have to start thinking outside of the Aum box. I want you to start thinking of alternative ways that you can be a fiduciary and also work with these clients, understanding that we are business owners and that we can't give away our services for free. So how does it make sense or, or what makes sense? And for me, I have learned that the retainer based model makes sense.
Lazetta: 44:11 Amen. And Amen.
Rianka: 44:16 Yes. And speaking of opportunity, I think we've heard the stats, and Lazetta, you probably know them better than me. But from in the black community, there's like a $1 trillion spending annually per year. And so it's helping to educate, you know, just the black community of let;s transition to where you're spending those dollars and let's help you to now spend it on yourself
Lazetta: 44:43 and to know that they can trust, there are trusted advisors in our profession. Cause sometimes our profession gets a really bad rap and we're here to say that we have spent our lives, you know, specializing with skin in the game, literally on building up this wealth and in households and that there is the access to us. We're designing our models and living out of our own experiences and say we get it and we're in this community together. So yes, let's redirect those dollars. Building wealth and making sure it passes on generations to come.
Rianka: 45:27 Yes, yes, yes, yes. I didn't know we pinned one other topic. Annuities do, do we want to touch on that really quickly?
Lazetta: 45:36 Annuities as we're thinking about them you know, that guaranteed stream of income, a lot of our kind of grandparents, they saw it as their pension, right? That was something that was funded by their employers. When it comes to annuities, clients are funding them themselves. So it is another way, yes. Of having retirement income that can compliment other aspects or other assets. As we've talked about real estate investing, the stock market, we didn't touch on business ownership, which is pretty much, very live and well in the black community, particularly with black women who are growing businesses as exponential rates as well too. So our, our focus is making sure this is the bottom line. Make sure that you understand as a client what you are investing in. And if you don't know, then make sure whoever is offering to you make it as plain as possible.
Lazetta: 46:38 Know that there are diverse ways within assets and investments to reach your goals. Also know that within the African American community, we have been heavy on real estate. We've been heavy on annuities, we've been heavy on insurance. And now that we see that exposure to the stock market knowing it has his ups and downs, looking at it from a long haul is a way that the majority as we know today has built and transferred wealth. And it is, it is something that we cannot overlook and particularly so because a lot of our retirement accounts, because we don't have pensions anymore is really tied to the stock market.
Rianka: 47:22 Yes. And with the stock market, just I just want to double down on just educating ourselves around the market and knowing how compounding interest works. I'll put some information in the show notes around that just to stock market what it means to have an ETF. A mutual fund, what's a bond because I don't want us to be afraid to invest in the stock market. Also understand if you need, you know, the most common question I get Lazetta is like, I have $1,000, what should I do with it? And you, they think my first answer is like, oh, invest into the stock market. No, actually my question is, well, do you have an emergency fund. If the answer is no, then that's where that thousand dollars should be. Because when you put money into the stock market, you should not need those dollars for at least five years.
Rianka: 48:12 Any money that you are putting into the stock market, you need to think of it as a long term play. This is money that if, if the, if the market is being volatile and as gyrating up and down, you don't want to have to pull out that money when the market is down. And unfortunately the way that life works, that's when you're going to need it. And so you don't want to actually have moved from a paper loss, which is what we see and what we feel when we're logging into our our accounts and actually have an actual loss, which is when we pull money out of the stock market when it's down.
Lazetta: 48:50 Yeah. And I, I just have to say this cause here we are in 2019 and a lot of people may be feeling so great about the stock market because it's been going up for the last 10 years. So when you said not needing the money for five years, I'm almost saying not needing it for 10 years. Five is good, but 10, really gives you some time to let it do what it's going to do with what the cycle or two of the ups and downs. So baseline barbells, like you said, make sure you have that cushion account, that three to six months in savings and then also building that retirement account. And then from there, if you have this, this extra money, yes, put in the stock market because you can't let it grow if you want to do that, but you've got the basis covered.
Rianka: 49:39 Amen. Sister. There is of course so much more that we can talk about. And I'm being mindful of the time this season that hmm.
Lazetta: 49:55 I know it's just so good. These conversations and shining the light on building wealth and making sure that it covers for this season money and culture.
Rianka: 50:10 Yes. Yes. So before I let you go, Lazetta thank you so much for just having a conversation with me today. We both, again, have experiences with working with African American clients and then also just being African American ourselves. You know, within and with our upbringing, we have been able to share our experiences and learn from our mistakes, learn from our family mistakes, you know. Is there anything else that you want to leave us with maybe from a future client listening or for the other advisors and our profession that's listening?
Lazetta: 50:47 Yes. Give yourself permission to, to lift the money fog. We all are on this journey together. Just trying to make the best of what we have. So take the first step, have the conversation, reach out. Don't be afraid. You can trust those whom your gut tells you has your best interest at heart.
Rianka: 51:12 Yes. Hear, hear. Thank you so much for joining us, Lazetta. Three-peter, three-peter, thank you so much, Lazetta.
Lazetta: 51:22 Thank you. I appreciate your voice in this important matter.