The average black male in America currently has $35,454 less saved in his retirement fund than his white counterpart, according to the 2007 Ariel-Schwab Black Investor Survey as reported October 11 in New York City. The summit celebrated a decade of Ariel Mutual Funds teaming up with The Charles Schwab Corp. for the survey, which compares the African-American population's attitudes and investments to those of whites. This is the first year the study has surveyed current retirees as well as full-time workers.

The study looked at 1,008 working Americans and 604 retirees. Throughout the past decade, African-American investors remain extremely conservative in their investments. Their participation in the stock market has dropped from 64% last year to just 57% this year, the same percentage that participated 10 years ago. Only 10% of blacks are investing more than $500 per month into any sort of retirement account, as opposed to 22% of whites.  In addition, whites are more than three times more likely to roll over to an IRA or qualified plan than blacks, says Charles P. Nelson, Senior Vice President of Great-West Retirement Services in Greenwood Village, Colo. Much of the black population believes real estate is the path to wealth, with 45% of blacks citing it their most important overall investment.

CULTURE OF REAL ESTATE
John Rogers, chairman, chief executive officer and chief investment officer at Ariel Capital Management and Ariel Mutual Funds, calls the real-estate preference a cultural choice. "A lot of people in the African-American community don't have the opportunity to learn about the stock market," he says. "There is a real lack of exposure. It's the first time we're getting into investing so, of course, we're going to be more conservative and naturally cautious."

To Charles Schwab, founder, chairman and chief executive officer of The Charles Schwab Corporation, African-Americans' reluctance to buy stocks in addition to real estate means that "in 30 years from today they are going to have a very difficult time. They simply wont have enough money to meet their needs."

EMPLOYERS AS TEACHERS
Employers play a significant role in African Americans' investment behavior, according to the survey. 51% reported they became invested in their 401(k) plans due to automatic enrollment. Today, more blacks than whites report that they invest in a 401(k) or similar employer-sponsored retirement plans. Nevertheless, in retirement more blacks than whites say they wish they had saved more when they were working.

So where are these investors getting their information from? The majority of African Americans (70%) cite their main source of information on retirement planning and education to be their employer, while financial planners were responsible for 47% of their information compared to 52% of whites'. With blacks in nearly the exact same financial position as they were a decade ago, planners look to find a way to better serve this market. Rogers believes education and a presence of role models are the keys to a more financially literate black community.

"There needs to be more role models. There were no black portfolio managers in Chicago when I started, and people thought that no white individual would trust a black man with their money. Well, fortunately for me, they were wrong. It's important for single people of color to be in leadership roles in this industry," he said.

The folks at Ariel are themselves acting as role models by funding the Ariel Community Academy, an elementary school that teaches children about the stock market and even provides them with a fund to invest with as they see fit. Schwab has teamed up with the Boys and Girls Clubs of America to provide MoneyMatters, an after-school program that teaches troubled youth how to manage their money. Perhaps such programs will cause children to turn around and educate their less financially literate parents, a tactic that has worked well with quitting smoking.