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That'll cost you


What are you willing to pay - in dollars, in friendships, in professional visibility - to get the world you want?

The COVID-19 pandemic shifted a lot of people's focus to resilience - our own, our jobs’, our communities’, the overall economy’s. We all want to be ready for the next thing, whether that’s the next pandemic, the next economic shock, the next natural disaster. We want there to be a plan in place so we don’t have mass layoffs and disruption, and can deal with the emergency in the smoothest way possible, with the least loss of life or economic well-being. We want to be ready to make a quick pivot. 

The recent murders of Ahmaud Arbery, Breonna Taylor, and George Floyd, the latter two by police, have ignited waves of protest across the country. These are not isolated incidents, of course: the phenomenon of racist violence has a long, ugly history in our country, and the disparity in treatment by law enforcement of Black Americans has been documented over and over again. This, despite the lower likelihood of Black people to be armed during an encounter with the police. I don’t want this; I will go out on a limb and assume that you don’t want this either, that you can clearly see the unfairness here. (I don’t want dead police officers either, for the record, and I deeply believe that better, and better enforced, standards of conduct for police forces would protect officers as well as the public.)

It is easy to separate ourselves. We are not like them, the people who would do harm to others. We have never knowingly inflicted violence on anyone at all, of any race. Why can’t everyone just be decent humans, and good and fair to each other? We wish, how we wish, to wave a magic wand and make everything okay. But thinking that way absolves white people of having to reckon with the ways we have been advantaged by invisible systems we never think about (if you click on only one link, click on this last one, it’s the one about redlining). Consider how the purchase of a home in a good area, often the first step toward real wealth for a lot of newly arrived, or newly middle-class, families, can have a ripple effect over generations in terms of tax benefits, the growth of the asset, and the use of the equity in the meantime for other purposes. Now consider how those benefits can ever happen if that initial step is blocked.

Achieving a more resilient economy will be hard. It will cost more, in at least two ways. As consumers, we need to be prepared to pay more for goods and services, if we want the businesses who provide them to build in the kind of resiliency that will keep them afloat in the next shock. As investors, we need to shift focus away from short-term gains and quarterly returns, and reward companies who take a longer view and who thus will maintain a stable workforce and the ability to respond to customers’ needs. And as planners, we need to be honest with clients about what those costs are and the impact on both cash flow and longer term returns.

Achieving an anti-racist society will be even harder. It will cost relationships and friendships. Imagine a situation in which a white person uses the N-word. If you are a white person, what would you do in that situation? Maybe you’re sure you wouldn’t be the person who said it. But what if the person who did is a friend? What if they are a client, or a prospective client? A prospective boss, a mentor, someone you otherwise admire? Would you be willing to leave that money, that relationship, possibly that job, on the table in service of the better world you want to see? Would you be willing to say why? If not, then I submit that you don’t really want to see the world change. You have found yourself in that situation, haven’t you? Here again is an example of the silent invisible systems that help those with power keep it, and keep others out. Until those in power are willing to acknowledge and pay these costs, I fear we won’t make much progress.

The financial services industry in general has certainly played an outsized role in creating and propagating these disparities. But the financial planning industry has an opportunity here to right some wrongs: from the development of service models that do not rely on traditional Assets Under Management (which itself depends on the client having already accumulated those assets, and effectively cuts off most of the population who have real planning needs but little in the way of an existing portfolio); to integrating clients’ life goals with their financial goals through empathetic listening, rather than simply generating a one-size-fits-all projection, and understanding the obstacles they face; to using our industry knowledge to advocate for legislative changes that will begin to break down the racist financial barriers that exist; to being an educational resource for clients and future clients; to making sure there is a path for advisors of color to succeed; to being truly honest with clients about the impact their choices have, both positive and negative, on both on short-term and long-term financial health.

I don’t have all the answers. But here is what I can do, right now:

  • Make a contribution to The Bail Project, a revolving bail fund - this means that every dollar they spend to bail someone out of jail comes back to them, and can be used again

  • Examine my business spending to ensure it is aligned with the goals of either supporting a Black-owned business or furthering the cause of democratizing the availability of reliable financial planning services to all

  • Include a step in client onboarding that will allow new clients to choose the cause they will like their fees to help support (click here to send me ideas for the list)

  • Establish free monthly office hours (details forthcoming) for anyone to call anonymously with questions about personal finance

  • Ensure I use my network contacts to connect rising young advisors, especially young Black advisors, with mentors and opportunities

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