WASHINGTON - The Investment Company Institute of Washington, D.C. is joining forces with the National Urban League of New York to educate African-Americans about their need to save for retirement.
The two groups announced their joint venture, which they are calling "Investing for Success," at the ICI general membership meeting in Washington, D.C. earlier this month.
The ICI and National Urban League will hold investment seminars specifically for African-Americans in five major cities throughout the U.S. They will also produce educational materials. The seminars will begin in June or July, said Milton Little, executive vice president of the league. The cities have not yet been selected and the print materials have not yet been written, Little said.
The joint effort was prompted by a recent survey indicating that even financially-secure African-Americans are less likely to invest in mutual funds, stocks or bonds than their Caucasian counterparts, Little said.
Ariel Capital Management of Chicago and Charles Schwab & Co. of San Francisco conducted a survey among 605 African-Americans and 607 whites earning $50,000 or more in February of this year. The survey showed that 82 percent of the Caucasians owned stocks, whereas only 64 percent of the African-Americans did.
The average retirement savings for African-Americans was $44,000 versus $69,000 for Caucasians, the survey found. Furthermore, only one-third of the African-Americans cited retirement as their most important reason for saving, whereas nearly half of the Caucasians cited retirement as their number one reason for saving, according to the survey.
A large majority of the African-Americans surveyed indicated they believe racism and a lack of financial education continue to put them at a disadvantage. More than 81 percent answered that "racism continues to be a major obstacle for African-American wealth creation" and 75 percent agreed that African-Americans are at a disadvantage because they are "less likely [than Caucasians] to have a financial head start," the survey found.
These findings prompted the National Urban League to educate African-Americans at all economic levels about the need for investing, Little said.
"We were going to be doing this regardless" of whether the ICI partnered with the league, Little said.
In the past, the National Urban League has worked to help African-Americans buy homes and repair credit, Little said. Chase Manhattan Bank of New York and Bank of America of Charlotte, N.C. have helped in these efforts, Little said
Most African-Americans regard home ownership as their only means of creating wealth, Little said. It is about time that more African-Americans learn about the power and potential of investing, especially for retirement, Little said.
The National Urban League was founded in 1910 to help African-Americans gain civil rights and improve their financial independence, according to the league. Recent efforts have included trying to reduce police brutality against African-Americans and other minorities, helping African-Americans on welfare find work, improving education, finding better jobs and fostering entrepreneurship, Little said.
The forthcoming "Investing for Success" program is the first time that the Investment Company Institute has worked to improve financial education among a minority group, said an ICI spokesperson.
Arthur Levitt, chairman of the SEC, in a statement, praised the joint effort as a "significant development [that] complements the Commission's efforts to educate investors."