The number of African-Americans investing in stocks and mutual funds is increasing, according to a survey released in April by Charles Schwab & Co. and Chicago-based Ariel Mutual Funds.
Roughly 64 percent of African-Americans surveyed this year are investing in stocks or mutual funds, up from 57 percent just two years ago, according to the survey. While the community of black investors is expanding, the community of white investors has remained relatively stable over the same period, at the 81 percent to 82 percent level.
Respondents to the survey had household incomes of 50,000 dollars or more.
Duane Davis, a broker with First Union Securities in Winston-Salem, N.C., and a founder of the Coalition of Black Investors (COBI), says this "underserved" market is an opportunity for all brokers. African-American investors generally prefer to do business with African-American brokers, he says. But black reps are scarce. "We're used to working with people who don't look like us," Davis says. "So, there's a huge market out there."
The African-American market requires education, Davis says, so seminars and conferences are usually the most effective marketing tools. Black investors have a general distrust of financial institutions, says Michael DeFlorimonte, vice president of specialized markets at Schwab. So "demystifying" Wall Street and the investment process is important.
COBI itself organizes conferences and has a referral service that brings black investors together with its 300 black brokers and financial advisers. See www.cobinvest.com for more information.