/  04.08.2022

Investing in real estate to build wealth is hardly a new concept as owning property has always been a significant driver of capital. Generational wealth includes financial assets — such as property, investments, money, NFTs or anything with a monetary value — that you pass down from one generation to the next. Intangibles like financial education, values and habits are an equally important part of the equation.

As a thought leader and tuned-in trailblazer, my mission is to generate wealth for my clients through real estate. I provide top-tier resources and the means to work with wealth professionals who look like you, are trustworthy and are at the top of their field. Fellows Luxury Group provides direct access to esteemed African American wealth management pros and entertainment attorneys who not only look like us but understand the disparities and challenges we face. Real estate is just the beginning — when you join forces with a wealth manager and surround yourself with the best team, true generational wealth building will begin.

The first economic conversation that we have with our clients is about the equity they will profit from as a result of owning property. The next question is: What will you do with that equity? The easy answer is to buy another property and build a real estate empire, but I implore everyone to think ever broader than real estate. I realized that my clients were benefactors of my more than 15 years in private wealth management, and they wanted information on how to create generational wealth.

Most times my clients weren’t sure what to do with the influx of income from their achievements. Assistant Vice President, Wealth Advisor of Bernstein Private Wealth Management E.J. Fortenberry gives his insight:

“I believe the narrative starts with the fact that when we think about wealth, we have to be mindful that the wealthy of tomorrow may look quite different than the wealthy of today. There is this evolving landscape where the color of wealth is changing, and more Black and brown people are contributing to wealth creation and wealth innovation. We have to recognize and acknowledge that there are gaps, there are potholes, there are landmines that may be ahead of us on this journey of creating, sustaining, and transferring wealth that require a different approach to education.”

We always think about wealth creation and attaining wealth as “more money, more problems,” which is true to some degree, but the focus should be on trying to find the right people to come along with you on that journey. So the question becomes: Who is on your bus? When you think about filling your bus, you need to make sure your team has people who have the ability to meet you where you are. Two people might have the same source of wealth and income (like when we think about athletes or entertainers or business owners), but how they access that wealth is very different, which brings us to the idea of equitable wealth management or equitable advice. Financial literacy is fundamental. Your team should be an ecosystem of professionals who help provide the information that will allow you to do what people of color have not been able to do with their wealth historically.

SVP/National Director and Head of Diverse Markets Strategy at Bernstein Private Wealth Management James Seth Thompson shares his perspective:

“How we like to think about this is equity, exposure, education and experience. When I think about the needs to create and sustain and transfer wealth, you really have to work with individuals, you have to be part of an ecosystem that has the right professionals at your table. You have to think about wealth management, you have to think about your CPA, you have to think about your lawyers and the business managers. These are the people in your circle that are going to help you deal with the anxiety and the complexity that comes with income and managing wealth.”

Wealth creation starts with income but when that income starts being generated, you also need to have a goal for it. You have to be self-aware enough to understand you need a clear roadmap. You’ll also need to start to educate yourself if you want to accumulate and generate wealth. For a long time, Black and brown people felt they couldn’t trust those on the other side of the table who were giving them advice — and they’ve had every right to feel that way. But, the faces of those people at the other end of the table are changing and since that is the case, we have to start reaching out and become intentional with our income and the goals we have for it.

Thompson took a moment to share with me what advice he would give to younger generations:

“Generations of all types, shapes and sizes will have to think about coin versus cash, digital currency versus traditional capital markets, etc. But if you have a goal for your wealth, it helps you define what role core investing and capital markets will have versus some newer but nontraditional forms of attaining wealth. So, you really want to understand what is going to support and diversify how you think about growing your wealth. You can’t turn your back on the most traditional ways people and families have created wealth over generations and generations. A lot of times that gets lost due to the fact that many of our newer generations may not trust the sources of the advice. That comes with the traditional ways of creating a legacy and transferring wealth.”

Think through a plan for your wealth and be intentional about it every step of the way, from budgeting and saving to where you allocate capital for investment. You have to develop healthy spending and saving habits, or it won’t matter whether you made $10 or $10 million — when it’s time to step away from the income-creating job you had, without good habits you won’t have anything left. When you think about athletes and entertainers who make millions over their careers but somehow end up broke 2-3 years into retirement, you think to yourself, “How could this happen?” The answer is really simple: They had no plan and were not intentional about their finances. The team that they had around them weren’t intentional about preserving and growing their wealth, either. I would urge younger generations to educate themselves on basic budgeting, planning and saving exercises. Then, when your wealth starts to accumulate and grow, start to build your ecosystem of trusted advisors.

On that note, one myth I would like to address is that professionals of color are not equipped to handle your business. As a people, we’ve had trust issues and we all need to be part of the change in that narrative. What do you say to people of color who may be distrustful of investing or distrusting of the professionals in those industries?

Fortenberry and Thompson share this perspective on that issue:

“When looking at the historical context of Black people being distrustful of the market, being a conservative population in general, what we’re not able to physically touch and hold on to when it comes to assets have been things that we have tended not to invest in. Now, when you think about wealth and the face of wealth, historically, it has not looked like us. To be really blunt, most people of color looked at that world as a white people opportunity because the industry, banking system and financial services in general have not been equitable to us as a people. However, the same way that the face of wealth is changing, the faces of the people giving the advice is rapidly changing as well. There are a greater number of people of color that are now professionals in the financial services industry. Those professionals now have a greater chance of helping dispel some of the myths and misconceptions and empowering and encouraging people of color. There is an affinity to the culture, an affinity to the struggle and an affinity to the opportunity.”

Another challenge we have to look at concerns what we have historically had access to. Rising wealth management is not necessarily a brick-and-mortar business and when you think about us as a people, people of color tend to trust brick-and-mortar institutions. POC communities are huge consumers of retail and we trust certain brands, so a business with a physical presence means a lot. However, you don’t find a lot of advice in your local bank or at the check cashing place. What you find there are accounts — not the advice or education that is actually needed. As you move up on the wealth and innovation spectrum, from where you are today to where you want to be, you will need someone to hold your hand through the process.

Along the way, two things that can derail your journey are anxiety and complexity. Those two components make up what I refer to as ‘sudden wealth syndrome.’ It’s that moment in time when you have the resources and you want to execute, but anxiety and complexity derail you because you aren’t sure of the next steps.

My team addresses the unknowns. We help our clients see the pitfalls and potholes before they get there, and we help prepare them to navigate those challenges. That is the value of securing advice instead of just securing accounts.

The more we see one another successfully engaging an advice model to support our wealth journey, the more POC communities will participate. The way we expedite that process is to be super intentional about meeting the different needs of Black investors. So, for me, that’s the call-to-action to all wealth advisors — make sure you are very proactive, and make sure you’re doing equitable deep discovery to recognize each person’s starting point. Everyone in that wealth creators’ ecosystem has to take it upon themselves to ensure that all people, regardless of background, receive the same types of advice and education because that will ultimately be what it takes to close the wealth gap.

If investing in real estate is how you’d like to start your process of building generational wealth, selecting the right real estate team is crucial to the success of buying and selling. For a complimentary consultation please call me at 1-408-9912 or email me at [email protected]

If you are a wealth creator and want to start to think about how to build and sustain generational wealth, please reach out to:

James Seth Thompson

SVP/National Director, Head of Diverse Markets Strategy

Bernstein Private Wealth Management

[email protected]

212-823-2675

E.J. Fortenberry

Assistant Vice President, Wealth Advisor

Bernstein Private Wealth Management

[email protected]

310-286-6097

This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Bernstein does not provide tax, legal, or accounting advice. 

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