How to build wealth and career success
In celebration of Black History Month, CNBC invests in you features weekly stories from CNBC staffers and Financial Wellness Council members, including the lessons they’ve learned growing up, their advice to black youth, their sources of inspiration, and how they’re working to close the racial wealth gap.
As protests swept across the country last year, companies began announcing initiatives to promote greater diversity, equity and inclusion (DEI) within their ranks. Companies have pledged more than $50 billion to these grant programs.
Its a lot to do. Data from consulting firm Mercer shows that 64% of entry-level workers are white, while white workers hold 85% of managerial-level positions, indicating a promotion gap.
The Marriott Foundation recently donated $20 million to Howard University to build a pipeline of students for leadership positions. Anthony Wilbon, dean of Howard University School of Business, told CNBC on Wednesday, “Companies with a much more diverse leadership team have a greater likelihood or opportunity to outperform their peers.”
To help younger generations succeed, several other Black leaders in science, business and finance recently shared their lessons and visions for the future with CNBC.
A lack of diversity can stifle innovation and encourage groupthink. DEI also helps attract top talent. In a recent CNBC | In the Momentive Workforce Survey, nearly 80% of respondents said they would like to work for companies that value and promote diversity, equal opportunity and inclusion.
Americus Reed, CNBC contributor and professor of marketing at the University of Pennsylvania’s Wharton School, wants future leaders to seek and encourage diverse perspectives in their organizations, but cautions that these efforts must be done in the right way. “My advice to future leaders is to be very cautious about diversity, inclusion and equity,” Reed said.
It’s not enough to just create programs.
“It has to be created, but also managed. We need to understand how to bring different perspectives into our decision making – into our companies, our brands, our organizations. And we need to cultivate those diverse perspectives and manage them appropriately so that we can create the kind of organizations that can thrive.”
Starting a business is difficult, to say the least. There are around 30 million small businesses in the US and many are not surviving. Twenty percent of companies fail within the first year, 30% in the second and in the tenth year 70% of the companies fail.
For minorities, the numbers are even more worrying. Eight out of ten black-owned businesses fail within the first 18 months.
For Kourtney Gibson, president and partner at Loop Capital Markets, the most important thing people can do to transform the financial future of black Americans is to own them. “We can all own a piece of making the American dream a reality for all. Set a goal, measure it, monitor it. We have KPIs for everything we do in business, from measuring revenue to profitability to operating margins. Why not set a target for black economic inclusion? What gets measured and motivated gets done.”
Gibson is currently a board member of Canada-based sportswear brand Lululemon. Lululemon is a founding sponsor of the Canadian Journalism Foundation’s Black Journalism Fellowship.
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Isaiah McKinnon began his 50-year public service career in 1965 as a patrolman with the Detroit Police Department. When he started, he was one of fewer than 100 black officers of the force’s nearly 5,500 officers. McKinnon, an Air Force and Vietnam veteran, became the “front man” for a campaign to recruit more minorities into the force.
Almost three decades after joining the force, McKinnon was named Detroit Police Chief. At the time of his appointment, McKinnon openly criticized the department politics he had witnessed. He quickly shifted the department’s focus to community-focused policing, aimed at bridging the gap between law enforcement and communities by inducting officers directly into communities. “I’ve experienced hatred because of the color of my skin, but I use that to create change,” McKinnon said.
A graduate of the FBI National Academy and US Secret Service School, McKinnon has met many dignitaries, but one in particular catches his eye. “I have met six Presidents of the United States and countless other leaders. But the one who really taught me what it means to build wealth was Nelson Mandela. He inspired me to believe that true wealth comes from education, dedication, perseverance, love, and hard work and sacrifice. That’s why I stand as tall as I do today.
McKinnon is the author of three books, Stand Tall, In the Line of Duty and North Between the Houses.
Despite income and wealth gains for black families in America, white families have up to seven times more net worth on average.
However, in 2021 black purchasing power reached $1.6 trillion, with the ability to buy, save and invest nearly doubling since 2000.
Lanzetta Braxton is Co-CEO of financial planning firm 2050 Wealth Partners.
Much like commodities market expert Helima Croft recently told CNBC, Braxton says Black History Month is an opportunity to celebrate and reflect on the contributions of the black community. “For me, Black History Month is an opportunity to highlight and celebrate the contributions of black talent in the United States and around the world. As a black financial planner, I see black history being made every day by empowering black households, living their financial plan and living the life and legacy they deserve.”
Achieving a middle-class lifestyle has long been a symbol of the American Dream, which represents financial security and the foundation for children to thrive. But the dream of a medium-sized company is no longer the same as it used to be.
Historically, institutional barriers such as redlining have prevented many black Americans from accessing the wealth-building resources made available to white Americans.
Before the pandemic, black homeownership was already at a record low of 40.6%, compared to 76% for white homeowners. According to the Urban Institute, the huge gap between white and black homeownership is larger today than it was in the 1960s, when housing discrimination was legal in the United States
Bonawyn Eison, principal and managing director of equity derivatives at XP Investments, wants the same barriers that have been preventing black people from creating wealth to be removed. Access to capital and non-discriminatory lending practices are critical to wealth creation.
“How can our country help financially empower the black community? That’s literally the trillion dollar question. I think the same legislative and institutional powers that were put in place to create barriers to entry must now be used as tools to tear down those same barriers. Special attention needs to be paid to things like access to capital, black VC funding, lending practices and tax maneuvers to lead to real reform and impact.”
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