The New Demographics

The Wealth Gap: A Path For Economic Empowerment

Wealth transfer considerations for the black community

A new blog from the American Savings Education Council (ASEC) examines the myth, at least for Black Americans, that hard work alone can close the wealth gap. Learn more here.

FEBRUARY 18, 2021 — In September of last year, the SEC Investor Advisory Committee featured a panel on Minority Community Investor Inclusion. Ray Boshara, Director of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis pointed out that it was a myth — at least when it comes to Black Americans — that hard work, personal responsibility, and “good” choices alone are the keys to closing the wealth gap.

The reality, according to research,[1*] is that an overwhelming wealth gap remains when comparing blacks and whites even when adjusted for education, family structure, and other factors. Why? Many potential structural reasons were given, including the fact that a dearth of Black financial advisors might make it challenging for Black Americans to find trusted financial help. This “structural” view of the wealth gap between Blacks and whites ascribes poor wealth outcomes to poor opportunities for Blacks to amass wealth.

In this American Savings Education Council (ASEC) blog honoring Black History month, Cynthia Hoes of Nationwide Retirement Institute provides more insights into this topic as well as what one initiative — the FARE Alliance — is doing to increase racial diversity, drive greater equity, and foster inclusion within the financial services industry and the communities served.

Aging & Racial/Ethnic Diversity

The U.S. population is getting older and experiencing growing racial and ethnic diversity. According to the U.S. Census Bureau, the U.S. population is expected to become majority minority in 2045.[1] As Americans prepare to live and thrive in retirement, there are unique financial and retirement planning considerations for racially and ethnically diverse communities, including the Black American population.

Black American buying power is on the rise due to increasing education levels, Black-owned businesses and employment. Today, the Black population makes up roughly 13.4% of the population with over 1.4 trillion dollars in buying power.[2]

That said, there remains a persistent and growing wealth gap in the Black community. The median wealth for White families is $188,200, compared to $24,100 for Black families[3]. Further complicating this, the average White household income is $72,204 whereas Black household income is $45,438.4

While systemic racism has created disparities in Black communities across multiple facets of life including employment, wealth, home ownership, education and banking opportunities, there are ample opportunities to educate, address and solve for the wealth gap that exists.

Intergenerational Wealth Transfer

An overwhelming wealth gap remains when comparing blacks and whites even when adjusted for education, family structure, and other factors...

An important factor that impacts wealth building is intergenerational wealth transfer, or receiving a family inheritance, gift or investment. An unfortunate reality is that only 10% of Black families receive an inheritance compared with nearly 30% of White families[3]. This creates a persistent and negative hurdle in the Black community. Further complicating this is the lack of gifting or financial support for large expenses earlier in life such as college tuition, home ownership and weddings which may increase debt or cause other lasting impacts.

Encouraging Black Americans to save early, consider the support of a financial professional and invest in tax advantaged, employer-sponsored savings vehicles is critical. Providing culturally relevant financial education about the social and cultural impact of wealth building and wealth transfer is imperative. We must reframe wealth transfer as a mechanism to provide loved ones with social and economic freedom and the ability to invest into programs, companies and initiatives that are focused on increasing equity in the Black community.

While there is much work to be done, the financial services industry is well positioned to be a driver of long-term sustainable change. Nationwide, alongside M Financial, NFP, Morgan Stanley, Huntington Bank, Miami Life and National Brokerage Atlantic; the Employee Benefit Research Institute; and a range of historically black colleges and universities including Howard University, Hampton University, Lincoln University, Virginia State University, Virginia Union University and Winston-Salem State University have banded together to tackle some of these challenges head on through a new initiative called the Financial Alliance for Racial Equity, or the “FARE” Alliance.

FARE Alliance members are focused on attracting, hiring and retaining a highly diverse workforce within the financial services industry. Further, FARE Alliance members are committed to improving research, education and awareness of retirement and financial wellness in diverse communities. Over the long term, the Alliance hopes to foster greater diversity in the financial services industry and increase financial wellness and equity in diverse communities to enable better financial outcomes.

If you are interested in learning more about the Financial Alliance for Racial Equity please email [email protected]




1. Demographic Turning Points for the United States: Population Projections for 2020 to 2060. U.S. Census Bureau. Revised 2020
2. Catalyst:
3. Federal Reserve’s 2019 Survey of Consumer Finances released in September 2020
4. Census Bureau 2019 Current Population Survey
NFM-20598AO 2/10/2021