Ariel Mutual Funds
and Charles Schwab
came together on Thursday for the first-ever Ariel-Schwab Black Investor Summit. The summit was a response to the findings of the two companies' 10th annual Black Investor Survey, which showed that African-Americans save far less money than Whites and are no more likely to be investors today than they were a decade ago. Panels at the Summit discussed possible solutions for getting blacks more involved in controlling their financial destinies.
Ariel Mutual Funds and The
Charles Schwab Corporation released today their 10th annual Black Investor
Survey at the first-ever Ariel-Schwab Black Investor Summit. The two
financial services companies convened the summit in New York City at NASDAQ
in response to the survey's findings, which show that African-Americans
save far less money than Whites and are no more likely to be investors
today than they were a decade ago. Panels featuring government, business,
and community leaders covered such topics as financial literacy, the role
of employers in promoting saving and investing, and the need for
individuals to take greater responsibility for securing their retirement.
"The truth is that many Americans are not saving enough to ensure a
comfortable retirement," said Schwab Founder, Chief Executive Officer and
Chairman Charles R. Schwab. "The problem is broad-based; but the 10th
anniversary of this research and today's summit serve as important
reminders that the need to better prepare for their financial futures is
even more pressing among this underserved segment of our population."
According to this year's just-released Ariel-Schwab Black Investor
Survey of 500 Blacks and 500 Whites earning more than $50,000 annually, the
median amount of money saved by Blacks surveyed is less than half of their
White counterparts ($48,000 versus $100,000). On a monthly basis, median
savings is $182 for Blacks versus $261 for Whites.
The survey was first conducted by the two companies in 1998, when 57%
of Blacks and 81% of Whites said they owned individual stocks or stock
mutual funds. A decade later, still just 57% of Blacks are stock investors,
compared to 76% of Whites. During the past ten years, the number of Blacks
who own stocks or mutual funds rose as high as 74% (in 2002) only to fall
again, while White participation has consistently hovered within a few
percentage points of 80%.
"The data is troubling because it suggests that barriers to investing
are just as formidable as they were a decade ago. Our industry and our
community must address this challenge aggressively," said Ariel President
Mellody Hobson, adding, "Government and employers also play a crucial
Black Retirees Need More but Save Less for Retirement
This year, Ariel and Schwab also conducted a first-of-its-kind survey
of middle and upper income Black and White retirees to assess their
investing behavior and how well they prepared for retirement. The survey
shows that retired Blacks have median savings of just $73,000 compared to
$210,000 for Whites. Blacks, on average, also retired earlier than Whites
(59 vs. 61) and are more likely to be relying on a pension or Social
Security rather than a defined contribution plan, such as a 401(k) plan.
Lisa Toppin, vice president of employee development and inclusion with
Charles Schwab, said the retiree survey confirms that retired Blacks may be
facing far greater financial challenges than Whites because of their saving
and investing behavior during their working years.
"Most Americans' first, and sometimes only, exposure to investing is
through their workplace," said Toppin. "Employers need to find ways to get
the message out about how to take charge of our finances, and we need to
start building understanding and awareness at an early age."
According to the Ariel-Schwab retiree survey, fewer Blacks than Whites
have gone through some of the basic steps of retirement planning, such as
calculating the amount of money they need to live comfortably in
retirement. However, those who consulted with financial professionals were
much more likely to have saved more than $100,000 by the time they retired,
and were much less likely to have retired early.
"With the right combination of planning, discipline and patience, a
retirement goal can go from dream to reality," said Toppin.
First-Ever Ariel-Schwab Black Investor Summit-A Call to Action
In response to the survey's findings, Charles R. Schwab and Ariel
Founder, Chairman and Chief Executive Officer, John W. Rogers, Jr. invited
leaders in business, academia, government and the non-profit sector to
discuss measures aimed at spurring wealth building and responsible
retirement planning among African-Americans. They were joined by United
States Treasurer Anna Escobedo Cabral, who addressed the actions that the
federal government is taking to encourage financial literacy for all
Americans. For the conference, Ariel and Schwab published "The Ariel-Schwab
Black Paper: A Decade of Research on African-American Wealth Building and
Retirement Planning." Interested parties can visit http://www.arielmutualfunds.com
or http://www.aboutschwab.com to download a copy of the paper.
The panelists and invited guests discussed proposals to expand
financial literacy programs with schools and community groups and
encouraged employers to analyze employee 401(k) participation by race. Two
Fortune 500 companies, McDonald's Corporation and Exelon Corporation,
shared how they took the initiative to track investment patterns by
ethnicity, which revealed a savings gap between Black and White employees
at their respective organizations. Exelon just recently completed the
tracking, while McDonald's, which began this initiative three years ago,
has subsequently enhanced its 401(k) program and increased participation
and saving rates among all employees. Of note, African-American employee
participation increased 21% or double the rate of White employees.
John W. Rogers, Jr., commented, "We can no longer afford to simply
admire this problem; it calls for action," said Rogers. "Today we took
steps to change the course of our country's financial future and to close
the savings gap that exists between Black and White Americans. My hope is
that a decade from now, both Blacks and Whites will be equally well
prepared for retirement and that there will be no need for us to continue
The random sample survey of 500 Black and 500 White households earning
over $50,000 annually is the tenth for Ariel-Schwab. It was administered by
telephone between June 23 and July 14, 2007. The margin of error is
approximately 4.5%. The retiree research conducted this year surveyed 300
Blacks and 300 Whites within the first ten years of their retirement who
earned over $50,000 annually before retiring. The survey was administered
by telephone between June 22 and July 11, 2007. Both surveys were conducted
by Argosy Research.
Ariel Capital Management, LLC and The Charles Schwab Corporation are
separate entities, but co-sponsor the "Black Investor Survey."
Ariel Capital Management, LLC is a Chicago-based investment management
firm and mutual fund company with over $14 billion in assets under
management. Ariel serves individual investors through its no-load Ariel
Mutual Funds and manages separate accounts for institutional clients.
Ariel's web site is http://www.arielmutualfunds.com. Before investing, you should
carefully consider the investment objectives, risks, management fees,
charges and expenses. Please read the prospectus carefully before
investing. Call 800-292-7435 for a prospectus. (C)2007, Ariel Distributors,
LLC, 200 East Randolph Drive, Chicago, IL 60601.
About Charles Schwab
The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of
financial services, with more than 300 offices and 6.9 million client
brokerage accounts, 1.2 million corporate retirement plan participants,
200,000 banking accounts, and $1.4 trillion in client assets. Through its
operating subsidiaries, the company provides a full range of securities
brokerage, banking, money management and financial advisory services to
individual investors and independent investment advisors. Its broker-dealer
subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org),
and affiliates offer a complete range of investment services and products
including an extensive selection of mutual funds; financial planning and
investment advice; retirement plan and equity compensation plan services;
referrals to independent fee-based investment advisors; and custodial,
operational and trading support for independent, fee-based investment
advisors through its Schwab Institutional division. The Charles Schwab
Bank, N.A. (member FDIC) provides banking and mortgage services and
products. CyberTrader(R), Inc. (member SIPC, http://www.sipc.org) is an
electronic trading technology and brokerage firm providing services to
highly active, online traders. More information is available at
To access the 2007 Black Investor Survey, log onto
http://www.arielmutualfunds.com or http://www.aboutschwab.com.
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