John W. Rogers Jr. is chairman, CEO and chief investment officer of the multibillion-dollar firm, Ariel Capital Management. The Princeton graduate (economics major) is widely respected as one of the most successful entrepreneurs and financial experts of his generation.
Rogers appeared at the WVON Business Seminar recently to discuss diversity, fiscal intelligence and the road blocks that prevent the African American community from accumulating wealth and passing it on from generation to generation.
Here, Rogers explains why some of today’s black families are still struggling financially, and what we can do to turn the tide around.
Rogers says that black families have yet to feel the end of the recession because, generally speaking, blacks bypass the stock market — where wealth is created — and instead, invest in their homes.
“We’re still not investing in equities in the stock market, we have more of our wealth in the housing market, and the housing market got hit by a recession and therefore we took a bigger hit than white Americans — who are still more heavily invested in the stock market,” Rogers says.
“Research shows that African Americans are not as comfortable in the stock market; not as comfortable with starting a 401(k) plan at work; and we are not compounding our money.”
There is also a history of racism that has led to economic disparity, Rogers states: “That is a big part of the reason we haven’t been able to accumulate wealth and pass it along from generation to generation.”
Rogers added that the history of racism affected his own father’s financial growth in the real estate industry.
“My father tried to invest in real estate, back then, you couldn’t invest in the North Shore, Lake Forest or Hinsdale areas, and those homes boomed and those real estate properties boomed,” Rogers reveals. “He could only invest — during his generation — on the South Side and struggle through Jim Crow, discrimination and racism, and those properties [where he could invest] never increased the same.
“[My father] wasn’t able to create wealth the way his counterparts did, who had legal degrees or who weren’t as smart as he was. They had the opportunity to generate wealth and to one day build a trust.”
Last but not least, the economic disparity exists between blacks and whites because younger African Americans simply do not know where the lucrative jobs are, or even how to get a foot in the door on Wall Street. Rogers stated that the top hedge fund managers make anywhere from $1 billion to $5 billion a year in salary and bonuses.
“We are not getting into the careers where all the wealth is created. On Wall Street, you know that private equity firms and venture capital firms and hedge fund firms, these guys are creating extraordinary amounts of money, and had no black people working at those companies, and no black partners.
“And that continues to be the case today, probably with the venture capital and hedge fund [industries] put together, far as I know, you can count on one hand the number of African American partners in these lucrative fields,” Rogers says.
So what can African Americans do to stop the systemic economic disparity that is affecting families and communities?
“We have to have the opportunity to know about these fields and industries, and then we’ve got to get these white men to employ us, and include us, and give us the opportunity to share in the success,” Rogers advises.
College students can begin their journey to a Wall Street career by working in their university’s endowment office, Rogers argues.
“I tell young people all the time, wherever you go to school, work in the endowment office,” Rogers advises. “The endowment offices are hiring all these hedge fund, private equity, and venture capitalists people, and that’s a way to get your foot in the door, and build relationships. Maybe you can go and work in one of these lucrative fields after you’ve established relationships there, and get that $190 million in surprise bonuses; or run a firm that earns a billion dollars per year.”
John Rogers’ face lights up: “Think about what would happen in our community if we had people who were making a billion dollars per year; think of all of the philanthropy that would happen in our communities; the strength of our churches and our civil rights organizations, and all the jobs that would be created!”
To learn more about Ariel Capital Management, visit www. Arielinvestments.com.
