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Guest Column — Closing the Racial Wealth Gap With Education and Financial Planning

As a financial advisor, I have witnessed the profound and long-lasting generational impacts of the racial wealth gap in our society, which exists due to historical factors that continue to impact the wealth, earning potential and distribution of assets in our communities. According to the Bureau of Labor Statistics, the median weekly earnings in 2022 for Black Americans was $896 and Hispanic Americans was $837, compared to $1,101 for white Americans.

READ — Do Hispanics Bear the Brunt of the Energy Crisis?

Historical factors continue to impact today’s Black communities, and because wealth and overall livelihood are so closely linked, it is important to consider the unique financial planning needs this gap has created for Black individuals — and why building generational wealth is so important.

For too long, minorities have been left behind when it comes to creating wealth, often due to systemic barriers that make it harder to access the resources and opportunities required to build intergenerational wealth.  

To address this issue, we must prioritize and amplify effective strategies including education, financial literacy and access to financial planning to ensure that everyone has an equal chance to build wealth and create a better future.

Keys To Building Generational Wealth

Studies consistently show that education is strongly correlated with higher income and greater financial stability. For example, according to the Bureau of Labor Statistics, the median weekly earnings of someone with a bachelor’s degree are over 60% higher than the median earnings of someone with a high school diploma. In addition to higher wages, education also provides individuals with valuable skills, knowledge and networks that can help them navigate the complex world of finance and investment. 

Achieving financial equality requires that we invest in education at all levels. This includes providing adequate funding for schools and expanding access to higher education through scholarships, grants and other forms of financial support. Innovative programs that help students from disadvantaged backgrounds succeed in furthering their education and skill set also need support and funding to continue their important work. 

Like education, financial planning is foundational to creating generational wealth however, there is a lack of trust in financial institutions given the history of discriminatory practices that have targeted Black Americans. 

READ — The Importance of Filling Our Community Pipelines with a Financially Literate Workforce 

For instance, Black Americans have historically had less access to essential financial education and resources on important areas such as life insurance, banking, homeownership, building credit and financial coaching. However, it’s important to recognize that not all financial institutions are the same. 

While there is much to do to address the broader systemic issues, each day is an opportunity to bolster individual situations. It’s time to lean into new resources and build trust with financial experts who understand your unique needs and have experience working with Black Americans. This is a person-to-person relationship that requires open communication, transparency, and willingness to work and learn together to improve financial literacy and build wealth and economic security.

The racial wealth gap is a significant challenge for Black Americans, but it’s not insurmountable.  By proactively using the financial tools and resources to learn what you don’t know and relying on an experienced and trusted advisor, individuals and families can take steps to change the trajectory of the racial wealth gap toward creating a more equitable and prosperous future.


Unknown3A Denver-based financial advisor, Derek Ansah is a Certified Financial Planner and serves a diverse group of clients at Northwestern Mutual in Denver, Colorado.

Northwestern Mutual Guest Column — Key Considerations for Selling Your Business

When it comes to your business, understanding how much it is worth can be challenging and involves answering many different questions. Do you plan on selling your business any time soon? If so, who are you planning on selling it to? Whether it’s an employee, family member or strategic buyer, with 2023 right around the corner, now is the time to consider developing a financial preparedness plan for business succession planning.

READ — Exit Planning: New Study Shows Most Colorado Business Owners Are Not Ready to Sell Their Businesses

Value Your Business

The day-to-day challenges of running a business often impede our ability to understand its value and formulate a game plan around getting the outcome we desire. Not only do I encounter this with clients as a wealth management advisor for the Colorado Northwestern Mutual office, but as a business owner myself looking to sell down the road, I have a front-row seat to the same set of challenges.

Rather than basing how much your business is worth on a recent sale of a similar enterprise, or performing a Google search of earnings before interest, taxes, depreciation and amortization (EBITDA) multiples in your industry, consider scheduling an independent valuation with a professional to help you understand where value is attributed. It can be both surprising and enlightening to find out what the outside market values most, or least, about your business.

Once you have a valuation, you have a benchmark to drive and clearly understand future growth, and can spend time performing in those areas that enhance value. Furthermore, when the valuation is updated each year, you receive quantifiable feedback about the changes you are making in the business.

Develop a Financial Plan

Selling your business at the price you desired and finding out later you must unexpectedly return to work due to the market environment, taxes or unforeseen health changes is not ideal.

“Reverse engineering” what your future lifestyle and estate plan requires is the first step, and you can achieve this by working with a certified professional to create a comprehensive financial plan. Some of the considerations for a successful financial plan include:

1. Tax implications

This should address current tax issues, tax that is related to the business sale and tax implications during retirement and upon passing.

2. Asset management

Do not mistake an investment portfolio for a financial plan. How your assets are allocated now, how they will be allocated post-sale, where assets are located (taxable or non-taxable account) and what performance is needed to allow your plan to work are all common themes surrounding asset management.

3. Risk management

In the event of a disability or premature death, where will the money come from to execute on your buy-sell agreement with your partners? Was your life insurance structured as an asset or established for a finite period of time to cover death? Do you have a plan for long-term care during retirement? Protecting your current ability to run the business along with weighing your future desires are all important considerations.

READ — How to Avoid Risk While Running your Business

4. Estate planning

When the financial plan reveals that you will be unable to spend all of your wealth, would it make sense to gift shares of the company to children or future grandchildren before the explosive growth of the share value? There is so much to address on this front that having a plan that works in concert with an estate attorney is essential.

Tax Considerations

Is your business structure today the most tax-efficient for current income and a future exit? Do you have a business structure that will award you the best tax outcome when you plan on eventually selling your business?

In addition to engaging your planner, consider hiring a law firm with knowledge of the tax and estate planning front to work alongside your CPA to determine the best strategy.

Build a Team Around You

In addition to building a management team to help run your business, you should also invest in a comprehensive financial planning team. Now is the time to take a fresh look at what advisors are on your team, who is needed and who needs to be replaced.

In addition to a CPA, a valuation expert and an attorney who can bring business organization, estate planning and tax knowledge to the table, a CERTIFIED FINANCIAL PLANNER™ professional or CFP® will make sure the outcome you desire is never out of focus when tax strategy, business organization, estate planning and differences in opinion surface.

Exiting the business that you started and/or ran for years is complex and emotional. The earlier you begin the methodical process of building a trusted team around you and creating a financial plan, the higher likelihood of receiving the true value of what your hard work has built.

Royce ZimmermanRoyce Zimmerman is the wealth management advisor for Northwestern Mutual.