APU Business Everyday Scholar Podcast

Investment Clubs Aim to Close the Minority Wealth Gap

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Podcast by Dr. Bjorn Mercer, Program Director, Communication, Philosophy, Religion, World Languages and the Artsand
Dr. Andre Rawls, Faculty Member, School of Arts, Humanities, and Education

Once a month, 26 Black women get together to discuss how they’re going to invest their money. In this episode, Dr. Bjorn Mercer talks to Dr. Andre Rawls about her role in forming numerous investment clubs that help educate women about financial investment strategies and wealth accumulation. Learn how an investment group works, how it changes the mindset of how members spend money, the importance of financial literacy in minority populations, and why it’s necessary to correct people’s beliefs about money and wealth accumulation.

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Dr. Bjorn Mercer: Hello, my name is Dr. Bjorn Mercer. And today we’re talking to Dr. Andre Rawls, Associate Professor in the School of Arts, Humanities, and Education. And today our conversation is about organizing to address the racial wealth gap. Welcome Andre.

Dr. Andre Rawls: Thank you for having me, Dr. Bjorn.

Dr. Bjorn Mercer: You’ve led investment groups in the Chicago area for years. And can you describe how these work?

Dr. Andre Rawls: Certainly. We have a network of investment organizations that is primarily African-American women. We started in 1993, based on the Beardstown Ladies book that came out around that time. Beardstown Ladies was a group of women in Beardstown, Illinois that had started investment clubs and were said to have outperformed the market. So we literally took their process right out of the book and copied piece for piece and started organizing African-American women to do exactly the same thing.

We started one club, and for three years, we just learned about how to invest before we actually put any money on stock at all. Once we started investing and developed the processes, then what we started doing is developing a process for spinning out other clubs for teaching other women how to come together, how to invest, and what investments can do for them in terms of wealth accumulation.

Dr. Bjorn Mercer: And that’s absolutely excellent. When you first started the club, how much did people know about investing?

Dr. Andre Rawls: We knew nothing. It was a zero start. We didn’t even know the language of stock. We had the second investment counselor that we had, helped us understand things like beta and price-to-earnings ratio and all those things that we talk about now very comfortably. We had no clue, none of us could read the Wall Street Journal nor could we read the stock pages in the newspaper. So we learned everything from scratch.

Dr. Bjorn Mercer: And I can see how, if you don’t know, like you said, how to read the Wall Street Journal, that obviously is a hindrance. And so that leads to the second question is, what does a social and economic significance of people of color in general, and African-American women in particular understanding wealth accumulation?

Dr. Andre Rawls: That’s probably a bigger question than we have time for. I think that what we have to look at is that the disparity between understanding what wealth is and understanding how to acquire it becomes very different in communities of color.

I was recently on a call where one of the people on the call was a broker from Northern Trust Bank. And the money that we talk about in our clubs, some of our clubs have been in business a long time and they may be up to $100,000, that’s no money to Northern Trust. They don’t think that that’s a “big account.” For us, in our community, that’s a lot of money.

So what you have to do in the process is not only work with wealth accumulation, but work with a change, a paradigm shift in thinking about money and thinking about wealth. So it’s different on so many levels, socioeconomic, political, and especially the way you think about how your money comes in and goes out.

Dr. Bjorn Mercer: And that’s an absolutely wonderful point, where when you talk to bankers and you think about how much, I’ll say the average person might have in the savings, or their overall wealth. And that might seem small for bankers, but in reality, that’s a huge amount of money for that person. And so the next question is, what is the primary factor that has made the club successful throughout the years?

Dr. Andre Rawls: The one word that I think is most important is transparency. There is always a question of, “Where is the money, what’s going on with the money?” And all of the clubs, the way we keep accounting is, every meeting, all the money is on the table. You know how much everyone has, you know where all the money is invested, you make collective decisions on buying new stock, you make collective decisions on selling stock. There are no secrets, there is no hidden agenda, especially when it comes to the dollars. I think that’s one of the key factors in making this work.

Dr. Bjorn Mercer: Now, for those who don’t know what an investment group is, can you briefly explain, as the group, you pool your money, correct?

Dr. Andre Rawls: That’s correct. You think of it like a mutual fund, you have a group of people that come together. And one of our clubs, the smallest amount that we have of any of clubs is $25 a month. And we always convince the women that you waste $25 a month, you waste it on coffee, on donuts, on things that you don’t need, and that don’t help your waistline, so you might as well take that $25 a month and invest it together.

When you do that, you’re not looking at anybody’s bill money, anybody’s grocery money, you’re looking at a little of the extra money you have left over. And when you invest it, it doesn’t hurt, you don’t really feel it. But when you put 10 people together with $25 a month, you’ve got $250 a month, which then accumulates to the year, you invest it in some good stock and it starts to really look pretty productive after a while.

Dr. Bjorn Mercer: And throughout this process, I’m assuming everybody who’s part of it, their financial literacy goes up and up, because not only are they trying to think, “Okay, well I need $25 a month. And then I need $25 month after month.” They have to really take a deep dive into their own budget I’m assuming also.

Dr. Andre Rawls: We have done some things, especially in our youth clubs, and we have two clubs that have young people in it, where we actually did financial literacy. We taught them how to write checks, how to balance checkbooks, how to do a budget.

But for the adult women, we focused more on learning the stock market and that kind of thing, but indeed it does make you look at everything differently. When you get up in the morning and see that you’re using a product and you have a vested interest in that product, it makes a big difference.

Dr. Bjorn Mercer: I can really see that. And I like what you said about, in the morning, if you have a cup of coffee. And I think back in my youth, a while ago, I used to get Starbucks. And I rarely get Starbucks anymore, but a few times a year, honestly. But I think about just how much money I’ve spent at Starbucks, just for coffee or this or that. When if you took all that money, or even took half of what you would spend at Starbucks and invest it over a few years, that would be a little pot of money, which would go far. Now, do you find that the women’s behaviors start to change, is it all of a sudden, or is it a slow burn where they’re like, “Oh, if I do X and Y, this will happen”?

Dr. Andre Rawls: I think it’s a lot slower process than we might think. We’re a lot more interested in shopping at places where we own stock. Before we go to Starbucks to pick up that coffee, we want to know, do we have stock in Starbucks? We look at where we go to restaurants based on where our stock is. That kind of thing makes us, incremental changes.

And then we start to look at, are we spending smart? We don’t look at just spending for the sake of spending. I think that the ladies in the club that have been in for a long time are very conscious of where their money goes. There was also a time when some of the ladies didn’t want to invest in stock that wasn’t green. All kinds of consciousness issues have come up in the process of studying stock.

Dr. Bjorn Mercer: And that’s absolutely wonderful, also because the stock market can be, what I describe as devoid of ethics. Where you just invest, it doesn’t matter what stock you invest in as long as it returns. When you invest into a stock, you’re essentially investing into the company, what they do, what they create, and really how they approach the world. And so have you found that there’s some stocks that you will not invest in because of certain actions they do?

Dr. Andre Rawls: I find that an interesting question. We have had meetings where the discussion has been around whether or not to purchase a stock. And the one that immediately comes to mind is Playboy. At one point, Playboy was a very lucrative stock and some of the ladies were like, “Oh yeah, we could make a lot of money.” And other ladies were like, “No, that exploitation is something that we’re not going to buy into.” And so we’ve had very energetic, if I can use that word, discussions about some stock that we would not buy, and we did not buy it as a result of the discussion.

The other thing that came to mind when you were talking about, that is that we make some decisions based on what the companies do in the world. One company was a company that produced disposable diapers, and they were going to have disposable diapers in a country that did not have good disposal systems for anything. Which meant that the impact on the community, the impact on the environment was going to be devastating. And they decided as a group not to buy that stock as well.

Dr. Bjorn Mercer: And that’s a wonderful decision. It’s one of those things where, like today, in 2021, you would think that companies would look at their products, look at how they impact the environment and really try to change, but we are well beyond, I’ll just say, “the olden days” where a company creates a product and it’s exciting and new, so they get it out there. And then later down the road, they’re like, “Oh, well it might impact local people this way, or it might impact the environment this way.”

All companies know exactly how it’s going to impact, they’ve done the studies. And that’s why investment groups like this is so wonderful, because even just having those discussions, like you said about the diapers or Playboy, those are wonderful discussions to have, because not only are you thinking about the companies around you or even the companies that you’re using, but you’re also just helping everybody just be more informed about the world.

And this is going to sound naive, but the world’s so big, it’s hard to know, and to be educated on everything. Where you put your money is such an important part, and especially acting socially and responsibly, and sometimes with some sort of advocacy, is a really important thing. Have you found that the women in your group really enjoy those conversations? It seems like they would.

Dr. Andre Rawls: I think that most of the women in the group are very bright people. Not only do they enjoy them, but they, I think look at the world differently because of them. There were times, in one stock that we held that we did write a letter to the CEO and advocate for positions on certain things. And I think at the time it was, they had taken a position on hiring wait staff that was gay, and we were very upset about the position. And we wrote as shareholders and took a stance on behalf of what we believe.

Your ears perk up a little bit differently when something comes on the news and you have vested interest in it. And when you consider the greater majority of African-Americans, Latinos and other people of color, have no vested interest in most of these corporations, other than as a consumer, we’re taking a much different stance on the world and it’s very important.

Dr. Bjorn Mercer: I guess a followup question I have for you is, I’m going to use some stats from the US government, so census.gov, where I’ll state the stats, and I’ll say, when you talk to people, do they realize these stats? So in 2017, 2018, so it’s about two years old, the median household income in the US was about $60,000. So the median household income for white was almost $70,000. And then for the average Black family was $40,000. And then for Asian, it was $83,000, and for Hispanic was $51,000. Do people realize that disparity? And these are just raw stats. Stats don’t lie.

Dr. Andre Rawls: I think the response is not only do they realize it, but they live it. The disparity is not just numbers. It’s that inability to do some of the same things, go some of the same places, enjoy some of the same guarantees that this country holds for everyone, because you’re living at a 60% income of the rest of the world.

Dr. Bjorn Mercer: And this leads us to the next question is, what are some of the belief systems about wealth that have to be addressed?

Dr. Andre Rawls: We have so many incorrect belief systems about wealth. And one of the things we talk about when we start to talk to women about starting investment clubs is understanding some of the paradigms that we live with.

For example, one of the things that you will hear somebody say is, “Money as the root of all evil.” That is not the correct statement, it’s a biblical quote. The correct statement is, “The love of money is the root of all evil.” So it’s that kind of misunderstanding, money is evil, money is dirty, money is bad. That starts the process of, “I should not have money.” When in fact that is not the correct thinking, there’s nothing wrong with money. What is wrong is if we pursue it in a way that is wrong.

Dr. Bjorn Mercer: I completely agree. And I would say that money is freedom in a simple sense. Because if you have money and if you have it in the bank and say, you don’t have to work for a certain organization, then you’re free to then do what you want. You’re free to support who you want. And you’re free to let your dollars support that.

And the phrase of money is the root of all evil is too simplistic. It doesn’t tell the truth of the complexity of money, especially in a world in which every generation that has ever existed has to have money, has to use money. And it’s kind of an acute philosophical saying, if you have money, you’re like, “Oh, the money is the root of all evil, but I don’t have to worry about my bills next month or where I eat,” but it’s something easy to say.

Dr. Andre Rawls: One of the other sayings that I like to share with the ladies is, “How many times did your parents tell you money doesn’t grow on trees?” I always like to tell them, “But here’s what we don’t realize, money does grow, and we have to learn to make it grow.” So it’s that kind of difference in thinking that we work on with the investment clubs.

Dr. Bjorn Mercer: And that’s great, having to work on letting money grow, which is absolutely perfect. And so this leads me to the next question. How is the work with the investment clubs congruent with your history?

Dr. Andre Rawls: First of all, before I started teaching at APUS, I worked for the State of Illinois as Section Chief for HIV/AIDS. So I have been in the throes of fighting for justice, fighting for rights, fighting for equality since I was about 17, 18, 19 years old.

But I was in college in 1966 and ’67, right at the beginning where the Civil Rights Movement merged into the Black movement, and where right after the time Black folk started wearing naturals, and there was the love scene on one side, and the Black scene on the other end. The late ’60s and early ’70s really normed the rest of my life. I think it was very important to who I am and to what I do.

I find that in some ways, it’s interesting that I’m in the midst of the capitalistic system, and that is in investment, but it is a way of organizing. And you can’t fight systems from the outside. If you don’t understand how it works, you can never make inroads to change.

Dr. Bjorn Mercer: Absolutely love that. And I’ll try to remember everything you said, because there’s so much good. I like how you said you can’t fight the system from the outside. And I completely agree with that. I find when so many people want to change, they want to change the world, they want to do this and this, which is great, and I completely agree with that, but the easiest way to hopefully change something is to change it from the inside.

Because if you try to change it from the outside, that means that you’re an outsider trying to change internal policies, which people on the inside will completely say no. Within our capitalist society, which is what we have. But there’s a lot that needs to happen within a capitalist society. And so a question I have for you is, having gone through the ’60s and the ’70s and those changes from those decades, what recommendation do you get for people today, for Black, for white, for Asian, for anybody who is looking to change the world positively?

Dr. Andre Rawls: I think that I firmly believe in the Stephen Covey habit that says, “Seek first to understand, and then to be understood.” I think that if we could adapt that as our way of being, that we seek first to understand what the conditions are, what the problems are, what the concerns are, why is it this way. And then to be understood in terms of what we need from that system, that we would have a better chance at making inroads and change. It’s like you said, we have to have those hard conversations, but they have to be informed conversations.

Dr. Bjorn Mercer: I absolutely love that. And seek first to understand, then be understood. One thing I’m always talking about, and one of the classes I manage here at APUS is Information Literacy. And if everybody really sought, seek first to understand, there are so many things that we have to understand. If they just understood where we came from. And that’s not to say that it’s negative and the country is bad, nothing like that, but just with eyes open to really understand, I think just so many people would be in a better place to then move forward and have conversations about what we’re trying to change today. Any other suggestions for people today, or with investment groups?

Dr. Andre Rawls: Well, before I get back to the investment groups, I think the other thing I want to say as a suggestion is, we live in a world where people are headline conscious, and they don’t read the text of the article. I think we need to read more and really investigate what’s going on and not be swayed consistently by just the headline. We’ve come out of four years of headlines being shaped in ways that were not necessarily congruent with truth, and we need to get back to understanding what truth is that’s under the headline.

In terms of the investment clubs, right now we have seven clubs that are currently in existence. Some of them are virtual, which is a new experience. We’ve learned that we can do virtual clubs. Some of them are family clubs where people have joined together in their family groups and started clubs.

Dr. Andre Rawls: And we’re trying to move the investment clubs from just the club system into greater investments, like buying franchises and going further so that we can show that there’s a progression to this. Many of the club members that were the original club members from the ’90s have started other clubs and moved forward.

So it’s a process that we really feel is workable. I can teach any group how to do it, I don’t ever charge for it, it’s my gift. So if anybody wants to reach me through your podcast, please have them reach out, I’d be happy to share information.

Dr. Bjorn Mercer: And that is absolutely wonderful. And it really makes me think of, in today’s world, it’s not that it’s fragmented because that’s overly dramatic, but we really need to rely on our community, the people around us, our family.

And to have these kinds of investment clubs, especially with people, again, just who live around you, and you have a shared vested interest in just being successful, and that you can have great conversations and learn from each other is just an absolutely wonderful organization. Great conversation today, Andre. And any final words?

Dr. Andre Rawls: I just was thinking as you said, that the investment club is one place where a group of 26 women get together once a month. They don’t talk about men, they don’t talk about each other, they don’t talk about anything negative, all they talk about is how to make money. And it’s wonderful. Thank you very much for letting me share.

Dr. Bjorn Mercer: Thank you. And I wish you the best of luck, and for the investment clubs. And today we’re speaking with Dr. Andre Rawles about organizing to address the racial wealth gap. And of course, my name is Dr. Bjorn Mercer. And thank you for listening.

Dr. Bjorn Mercer is a Program Director at American Public University. He holds a bachelor’s degree in music from Missouri State University, a master’s and doctorate in music from the University of Arizona, and an M.B.A. from the University of Phoenix. Dr. Mercer also writes children’s music in his spare time.

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