Piece of the Pie

On an April evening the Charles Schwab branch near my office, which is typically locked and shuttered by the time I head home, was full of people. The discount brokerage was keeping its doors open later than usual to offer investment advice to an underdeveloped market niche: black investors.

Armed with a survey showing that middle-income blacks are less likely than whites to invest in stocks (57 percent of black Americans who earn more than $50,000 a year invest, compared with 81 percent of whites), Schwab has teamed up with the Chicago-based Ariel Mutual Funds to promote securities investing among African Americans.

The Ariel/Schwab survey shows that blacks are less likely than whites with similar incomes to be knowledgeable about investment offerings and less likely to feel they know enough "to make good investment decisions" on their own. The firms are working to close this gap with a national marketing campaign in newspapers, on radio stations, and on Web pages popular with black audiences.

It's no secret that black Americans, even when earning as much as whites, have accumulated far less wealth. Census data show that African Americans typically possess only one-third the assets of whites with similar incomes. This gap likely results from three factors: Blacks have less inherited wealth, don't save as much, and get poorer returns on the money they do save.

For instance, the Ariel/Schwab survey found that blacks tended to save less and to place their investments in conservative vehicles such as real estate, which resulted in a much lower accumulation of retirement wealth than whites ($42,000 to $88,000). In at least one area, however, there was no disparity: Roughly one-third of blacks and whites expect Social Security won't be around when they retire.

This makes the Ariel/Schwab effort to bring the bull market to black Americans even more important. Says Mellody Hobson, Ariel's senior vice president for marketing, "Our mission is to make the stock market a subject of dinner conversation in every black home in America."