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The Fast Company Executive Board is a private, fee-based network of influential leaders, experts, executives, and entrepreneurs who share their insights with our audience.

How fintech leaders can help close the racial wealth gap

It is our responsibility to ensure that everyone has equal access to setting up financial stability for their family and generations to come.

How fintech leaders can help close the racial wealth gap
[Photo Source: fizkes/Adobe Stock]
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Systemic racism plays a major role in our personal finances. We need to change that.

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When my co-founders and I started our company in 2017, we set out to help as many American families as possible avoid the painful and costly process of going through probate to settle a loved one’s estate. Today, most Americans die without a will. Their families can spend up to two years and $50,000 in probate court to finalize their estate. It doesn’t have to be this way.

In recent years, I’ve become much more aware of my white privilege. Black, Indigenous, and people of color (BIPOC) communities continue to struggle to stay afloat financially, mainly due to a system that has set them up to fail. While growing a startup is challenging for anyone, I know I am fortunate not to have to overcome additional obstacles facing BIPOC communities.

For example, Black families in America average less than 15% of the wealth of white families. According to 2019 Federal Reserve data, the median Black household has a net worth of $24,100. The median white household net worth: $188,200. In the under 35 age group, the median Black family had $600 in wealth, compared with $25,400 among young white families.

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These numbers don’t just reflect the difficulty some families face in covering the cost of basic, fundamental daily needs. They also shed light on the challenges of planning for long-term financial sustainability.

Planned inheritances are a tool to help keep families afloat while maintaining a certain economic status for generations. It is clear today the racial wealth disparities in America are coming to a head. Coupled with significantly lower rates of homeownership, fewer inheritances, and lower working wages, BIPOC communities are not on a level playing field with their white counterparts.

That has to change. Underserved communities must have the same opportunities and awareness about securing their wealth for generations to come, not to mention access to education and information about financial planning. I recently spoke with Ruby Taylor, MSW, a double HBCU alum, social worker, advocate, and founder of the Financial Joy School. She pointed out the challenges of educating underserved communities about the importance of building generational wealth. Specifically, she mentioned that while our society focuses heavily on retirement planning and resources, in order to close the racial wealth gap we need to put more emphasis on how to make money work for you—how to maximize whatever inheritance you do absorb by investing it and building generational wealth over time.

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FELLOW FOUNDERS AND CEOS

Now is the time to take action. Here are small steps that can help:

• Make a donation or bequest gifts to charities that combat systemic racism, including the NAACP, National Urban League, and the Jack and Jill Foundation.

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• Support and hire BIPOC advisors for your business and board.

• Open an account at a local Black-owned community bank.

• Shop at 15% Pledge-contributing retailers.

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• Join the Fintech Equality Coalition, which aims to redesign a more inclusive and equitable financial ecosystem.

• Donate to the Financial Joy School, which will empower and inform one million future Black investors this fall.

It is our responsibility to ensure that everyone has equal access to setting up financial stability for their family and generations to come.

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Cody Barbo is Founder & CEO, Trust & Will