It’s time, sis. Don’t let the looming global financial crisis keep you from taking control of your finances and working your way towards wealth. It’s possible, and we couldn’t be more thrilled than to share with you these must-have tips Real Simple compiled who reached out to five Black women financial advisors who dropped heavy gems on how to access wealth-building tools and resources. Are you ready to make the Forbes list? Then keep reading! Thank us later.
The Financial Advisor Disconnect
The American College study points out that the financial services industry must do a better job of connecting Black women to the entire wealth-building journey while also increasing awareness about what’s possible.
Part of making that happen, however, involves Black women being able to connect with financial advisors they feel comfortable working with in the first place—a task that can be daunting for anyone, says Andrea Koryn Williams, a wealth management advisor with Northwestern Mutual.
“Financial planning is really esoteric for anyone and when you’re dealing with a professional who speaks in a lot of jargon, it can be overwhelming,” says Williams. “It’s an obstacle for most people. And when dealing with people who are not from your community, it can feel like it’s difficult to get what you need.”
The key, however, is to not let these challenges derail your efforts to find someone you can work with, says Dominique Broadway, an award-winning financial advisor and creator of the Finances Demystified Bootcamp.
“Very often, as Black women, we are not targeted by financial advisors,” says Broadway, who focuses her practice on helping people realize their financial dreams. “However, don’t let this be an excuse not to seek out financial advisors.”
How To Find the Right Professional for You
So how is one to get started on the search for a trusted financial advisor? Williams suggests a variety of steps including visiting the CFP website, where you can search for a qualified, comprehensive professional.
“A board-certified CFP is going to be a fiduciary and must provide unbiased, comprehensive advice,” says Williams.
She also suggests interviewing several professionals in order to find a professional who’s the right fit for you and your needs. Some of the questions Williams suggests asking when screening potential advisors include:
- What is your philosophy around planning, risk management and investing?
- How often will we review my financial plan and goals?
- How do I pay for the services being provided?
- What happens when my circumstances change or if I have complex needs?
It’s also a good idea to ask for referrals from family members, friends from college, church friends, or other common interest groups.
“While there is no one way to decide if someone is trustworthy, I would advise asking for feedback from those who have worked with this financial advisor and gone through their process already,” says Williams.
Learning How the Stock Market Works Is Essential
Having a financial advisor is really just one piece of the wealth-building puzzle. Educating yourself about the stock market is another critical step, and not one to be taken lightly. Lakisha Simmons, PhD, is living proof of this.
Simmons, author of The Unlikely AchieveHer workbook and founder of BRAVE Consulting, a women’s empowerment firm, retired at 41 years old after amassing $900,000 in investments. She now focuses her time on working with other women, helping them to become financially independent.
“When I changed my mindset from spending to saving to investing, everything changed for me,” says Simmons. “I shifted from fear to confidence with investing because I took time to educate myself.”
As part of this effort, Simmons suggests learning all you can about retirement accounts, how they work, what the IRS contribution limits are, and how they reduce your tax burden. After that, says Simmons, start investing and know that no amount is too small when getting started.
“Many workplaces offer tax-deferred accounts, but the vast majority of women are not taking full advantage of these benefits to build wealth,” says Simmons.
An added benefit of taking the time to educate yourself about these topics is that you will be savvier and more well-informed when meeting with a financial services professional.
“The best way to make the most of a relationship with a financial advisor is to know your goals and have some knowledge about the stock market and retirement accounts,” says Simmons.
Understand the Many Ways to Build Wealth
Having a financial advisor is an important step. Educating yourself about the stock market and retirement plans is also critical. But your work is not quite done with either of these things.
“One of the best ways for Black women to actively build wealth is to start understanding all of the ways that you can build wealth,” says Broadway, echoing a sentiment all three women emphasized.
Williams dives a little deeper on the subject, explaining that there are multiple pillars to wealth and they include entrepreneurship, real estate, investing, and insurance.
“Building wealth is not about picking one thing that will significantly augment your situation,” Williams explains. “It’s about being diversified.”
It’s important to incorporate each of the pillars into your overall financial strategy (or as many as possible), to manage risk and make sure you’re not heavily allocated in just one of these areas.
Real estate, says Williams, is a significant wealth accumulation tool. “Whether you’re purchasing a home for primary use or as an investment, appreciation and gains are almost inevitable if held long-term,” she says.
As for investments and insurance, they work dynamically together to satisfy a well-balanced financial picture, says Williams. Investments work offensively to help you accumulate for goals, such as retirement, and insurance can help you plan for the what-ifs in life.
“Black women should fund both insurance and investments at suitable amounts as determined by a financial professional,” she advises. “Most financial advisors are licensed in both insurance and investment and will not only be able to make a recommendation, but also help implement the strategies.”
Make Your Financial Freedom a Priority
Each of the steps recommended here are an important part of the overall process. But along with these tangible actions there’s one more item to add to your to-do list: Make your own financial freedom planning a priority.
“No one is coming to save us,” says Simmons. “My best tip for those who want to build wealth is to make it your main focus. Educate yourself, spend money on things you value and cut in the areas you don’t. Pay off debt. Invest in your workplace retirement accounts. And put energy toward creating your own financial plan.”