Amid the stubborn and persistent racial wealth gap, one nonprofit in St. Louis has launched a pilot program providing grants and financial planning services to residents of a rapidly gentrifying Black neighborhood. Join Invest STL Policy Design + Activation Partner Michelle Witthaus and St. Louis-based Signify Wealth Founder Stephen Rhodes for a discussion moderated by FP Chief Correspondent Tobias Salinger on how the program came to be, how residents are using the grants and why financial planners are integral to the effort.
Transcription:
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Tobias Salinger (00:13):
Hi, I am Tobias Salinger. I'm the chief correspondent at Financial Planning. Our parent company is Aris, welcome to the Leaders Forum, where we bring together senior executives and innovators to share their experiences and perspectives on the most pressing topics. The subject of our discussion today is the nonprofit Invest STL program called Rooted Cultivating Black Wealth in Place. We've got a couple of great guests today. Michelle Woodhouse is a policy design and activation partner with Invest STL and Financial Planner. Stephan Rhodes is the founder of Signify Wealth, also based in St. Louis. Welcome to you both. Thank you so much for joining us. Thanks for having us and both of you. Yes, absolutely. Both of you have provided such critical information and insights for our future on Rooted and why it's so important to the future of wealth in our country. We are halfway through rolling out our four-part feature package this week on our website@financialplanning.com. One quick programming note for the audience before we jump in. Please feel free to chime in with questions at any time. I'll be sure to pose some of them to our panel as we go. And to get started, for Michelle, how did the mission and financial backing of the Rooted Program come to be?
Michelle Witthaus (01:49):
Yeah, so Invest STL was working with a group of residents in the West End in visitation park neighborhoods in St. Louis. The resident group was called We Collab, and that group was really wanting to create a neighborhood plan. They were seeing lots of outside investment coming into the neighborhood, and the neighborhood did not have an official city plan. So they got together, they worked with consultants, they created a neighborhood plan, and they got that plan adopted by the city of St. Louis. Along with that, as they were going through this planning process, there were a lot of concerns around the outside investments happening. There used to be a lot of vacancy in the neighborhood. There is not as much vacancy in the neighborhood now. The residents were excited that there's less vacancy, more people are moving in. They wanted this, but they started to become concerned about what would happen to the existing residents if they would be priced out or feel pressured to move outside of the neighborhood.
(02:49):
So they just became concerned for the existing residents there and especially the lower neighborhood. So that was initially what kind of got us thinking in this way. We also heard there was a group of residents who started meeting around how to build generational wealth. And so those kind of two pieces let us know that there was an appetite for something like this in the neighborhood. And along with the funding opportunity we had from Wells Fargo, it seemed like a really good fit. Wells Fargo, we had an established relationship with their philanthropy team at the local office in St. Louis and Vienna. Beltran actually just said, what would you all do if you had a million dollars? If you could dream big, what kind of thing would you want to see in St. Louis if you had a million dollars? And that's when we were able to pitch this idea.
Tobias Salinger (03:46):
That's excellent. And Stephan, that's where you and other pro bono planners come into this picture. Can you tell our audience a little bit about the process of working with a couple of the participants in the Rooted Program and what stood out to you so far about it?
Stephen Rhodes (04:08):
Yeah, well, it was actually really exciting to be a part of the program. Full disclosure, I found out about it because Michelle actually just reached out cold, which I thought was starting individual the way that I did. I had to do a lot of that initially. So I think I still have a little bit of a soft spot for people that have the courage to do that and instantly turned into a warm call. And when she started to share about what they were trying to accomplish, it really resonated. And so it was eager to be a part of the program. And working with the participants was phenomenal. I mean, I really, really enjoyed it. It it's phenomenal people. And again, it's just a reminder that I think a lot of times we have perceptions of how people are, and not just these participants, but just people in general.
(05:03):
And then when you start to have conversations, you realize that there's so much you have in common. My particular participants were actually really fun to work with. I think I got the best of the lot, but I'm sure the other planners would probably say the same. But it felt like I was working with family members and that probably was unique to me because of my background and some of the folks that I started working with early on in my journey in the financial planning space. I knew that probably was very different for some of the other folks that come from different backgrounds. But yeah, it was very fun, very easy conversations and it was just a reminder of that brilliance and everything else, it's broadly dispersed, but as I heard someone that I call a mentor mentioned that's broadly dispersed, but opportunity is not. So the idea that these folks here are looking for the right opportunities. And so anything else, I think a lot of people say that you try to do work and you somehow think that you're going to be the one that is the blessing, blessing the others. And then you walk away realize like, my gosh, I'm smiling and I feel so much joy after my sessions, which has been really cool.
Tobias Salinger (06:22):
And just in listening to the two of you talk about it, it really stands out to me just how this program is really altering a lot of legacies around the wealth management industry around city planning. Particularly in St. Louis, there are a lot of residents who moved into the West end after a prior city plan in the middle of the 20th century caused so much displacement and destruction. There were many residents who moved into this area in the West End. For any attendees who may not be as familiar, this program provides a $20,000 grant for investment for longtime residents. 50 of them were chosen at random, and planners like Stefan are working with two of them at a time and thinking through and managing their investments over time in this effort to build generational wealth, as you both said, and prevent displacement in a gentrifying area there in St. Louis to send it back to you. Stefan, I want to ask both of you this, but we'll start with you. Why was it important to have the Rooted program in the West End in Visitation Park particularly, and what qualities do you think make those areas especially applicable for scaling wealth building and displacement prevention efforts nationwide?
Stephen Rhodes (08:07):
Yeah, I think that I could answer that question from two perspectives. The global perspective from the city and the history and what has happened in the city at large from a racial standpoint historically, and then also specifically what happened to that particular region. But then also from a personal perspective, I just think I was so interested in being a part because I'm the product that was raised predominantly by a single mom, one of five. And so I easily could have been someone that you put in that category that didn't have access to those opportunities. And part of the reason I got into the space that I'm in now is because I always thought, man, I wish that there was someone that could have offered advice to my mom who didn't have enough money to make it onto an AUM minimum for people in our space, but still needed help with planning out and thinking about stuff that she did have to steward.
(09:08):
And it just really wasn't an option for her. And so I think that has always resonated with me and which is what's becoming to get into the space. But then I think also I saw that in the residents that I've come across, and we can talk a little bit more about this a little bit later, but there is just, and again, I want to be careful when we have these conversations because this area is historically black neighborhood, predominantly black neighborhood now that obviously is changing. And so we can easily say that we kind of lump all black people together, but we're a wide variety of people and not all of our experiences are the same as a lot of diversity there. But what I experienced in my upbringing and then also some of the participants is that there's just not a level of trust with institutions.
(09:58):
They've had real life examples and they know of people where this has actually happened. And I think that lack of trust extends to the financial services space as well. I think that it's a reality. How we got here is a whole different conversation. So for me, I thought it was important to be a part of the program, not only because I would've wanted someone to do that for myself, but I also thought that coming from a similar background and a similar demographic that I could potentially maybe connect in a different way and help sort of bridge some of that trust gap that I think is important for the participants. So that to me was the two things that I thought were really important, why that area in particular needed this program. But I think also it's just that unique area that they're in where this has been an area of town that has been overlooked for quite some time and now it's not in it's hot area. But then the people who've been there and who endured, as Michelle alluded to earlier, are being pushed out in some ways. And so to be a part of allowing them to be rooted in the naming of the program and everything was just phenomenal, I think is really, really powerful.
Tobias Salinger (11:16):
It is such an important undertaking, such an important point you make in terms of building that trust. It is so perfectly understandable why there are a lot of people who don't have trust in the financial services when you look back at practices like mortgage discrimination, redlining, other residential segregation practices that even led local realtors organization to apologize a couple of years ago. And we can certainly talk about whether an apology is sufficient when there have been so many practices like this for so long that have contributed to the racial wealth gap that we see today. And that's why I do think it is such an important undertaking going on with rooted at invest STL that is really trying to reverse that and trying to build that trust through financial planning, which I think is something that would be really exciting for our audience to know about as planners out there in the field, getting to see how the financial planning process is integral to this. And we'll get to that a little bit more in a second. But Michelle, I want to also ask you about this. Why is it so important that this program is going on in the West End and visitation park, and what about these neighborhoods really can make it possible to replicate this nationwide?
Michelle Witthaus (12:52):
Yeah, so over the last probably 15 to 20 years, we've seen the southern part of our city become heavily gentrified. And I think people didn't really expect it to happen because we had so much vacancy and population loss in St. Louis. So we have this really unique point in time to come together right now and try interventions in the northern part of our city where gentrification has not fully taken hold yet. And you have people living in the West end. For decades, several generations of families have been there and bought their home when it was considered a financial asset, experienced white flight, saw disinvestment in their community and saw their biggest asset, their home dropped significantly in value. And now that white people are moving back in their home is once again a financial asset. And so thinking about how do we help people hold onto that asset?
(13:55):
How do we help them improve that asset when for decades they were unable to get loans to help maintain their property, how do we help them build wealth through that asset again? And mostly how do we make sure that they're the ones who benefit from what's happening in the neighborhood instead of people moving in, becoming the ones who buy a home, renovate it, and they're the only ones who gain and not the existing community that really is the lifeblood of that community. And so we have this really unique point in time to try something like this, and I don't think this intervention will be suited for every neighborhood in St. Louis. I think that using this intervention alongside a neighborhood that's seeing outside investments, outside developments would really be good in tandem. And I think for scaling this up, and the reason that we are doing a study around this is because we want to show that this works. We want this to be another tool in the toolbox that we can use when we see gentrification happen, to really protect existing residents and make sure that they're benefiting.
Tobias Salinger (15:04):
And it also reminds me of just some other insights you've told me about the West End, just the unity of the neighborhood and the welcoming nature of a lot of people there as exemplified by the city planning process that Invest STL was a part of where people really care about their community, they care about each other and they take a lot of pride in their community. It was really evident to me and just walking around for a few days and all the great people I met while I was there last month in terms of the financial planners like Stepan and others who are working with Invest STL. I also want to ask both of you, I'll start with Michelle this time. Why are the pro bono services of financial planners so integral to this effort?
Michelle Witthaus (16:04):
Yeah, so mean we definitely, we want to highlight that a lot of the reason that people don't have money to invest is because of these structural issues. So it was important to us to provide the $20,000 for them so that they actually had something to work with. But we also knew that people who get wealthy usually have advisors, they have people who guide them along the way. And that's something that the majority of, I guess I don't know, regular people in the United States, wealthy people in the United States do not have access to and we don't grow up learning that knowledge. So we wanted to think about, we didn't want to be patronizing in the fact that we wanted to teach people financial literacy because low and moderate income people have a unique ability to stretch dollars and make money work for them. So we know they know how to use their money, but are they thinking about wealth?
(17:04):
And that was really where the financial planners came in. We wanted advisors to come in and get them thinking about wealth and not just the day-to-day that they already do of how to stretch a dollar. So it was like the money was important, but that advising was as equally important to us. And you said something about scaling. We are very fortunate that we were able to find enough advisors, financial planners to volunteer on this project pro bono, but I do think if we were looking at scaling something that would be citywide or definitely a lot more people than 50, there would have to be some additional compensation for financial planners. I don't think we could get every financial planner in the city to volunteer
Tobias Salinger (17:50):
Well, and that would be
Michelle Witthaus (17:51):
Great. That would be great if the financial planners were a sector that were really engaged and working well with the nonprofit sector. So I'll just throw that out there as a possibility.
Tobias Salinger (18:01):
Well, but it is true. It is an important factor to think about. There has to be sustainable capital that is behind an effort like this when there's been so much capital denied before. So I think it is such an important point. Stephan, how do you see it as a planner? Who's one of the folks helping these residents think through and manage their investments?
Stephen Rhodes (18:33):
Yeah, I thought to echo what Michelle mentioned, it was critical in my opinion to have the actual capital. It's one thing to sit down with a person and you map out in theory what they should do. In some ways they may have walked in and arrived to some of those same conclusions. The problem is that they don't have a solution because oftentimes there's more month than there is money. So to be able to provide that capital I think allows the participants the opportunity to actually put some of those things in place. No different than, I work with a lot of athletes, so I use sports references. We can talk about the game of basketball. You can watch film about the game of basketball. At some point you got to step in the gym and lace them up and see, and you're learning happens at a different level when you participate than if you're just on the sidelines watching.
(19:25):
And so I think the idea that providing the capital actually allowed the participants to chance to put some of this in place. But then of course, I think this is true of everyone you can hear about talking head on IG or someone that is giving you some high level advice on what you should do with your money, what you should not do with your money. But I think everybody walks away with that, Sam, that sounds great, but you're talking to a broad audience. I need someone to talk to me. I need help with my stuff. So yeah, you're going to potentially give me this 20 grand, but I've got this, this and that, and I've got questions about this and read about that. And so I thought it was critical, just like the reasons that anybody else would need that. It was really the best practices to put to partner with advisors because again, in the athlete space and some of these other places is idea of sudden wealth.
(20:20):
But you walk into a new amount and that can mean that you can have a myriad of responses. Some people go wild and crazy. Other people are so afraid to do anything because they feel like that they're going to, I got this one chance, I don't want to blow it. And so then it sits someplace and it could be so everyone is in a different place. And so to have an advisor, a planner, who can then connect with them one and help them think through what makes the most sense from their perspective, I think is really, really impactful and important. And then of course it all happens via that trust like we talked about earlier.
Tobias Salinger (20:58):
Yeah. Well very, very interesting to think about and something that we're going to be interested to hear about as the program moves forward in future years. And as we've kind of alluded to, there is such a large racial wealth gap in this country. There is such a history there and $20,000 is certainly a significant number, but that doesn't equate to overnight wealth. So there's a lot there. It's a big undertaking when you think about it in that context. Stephan, as a financial planner supporting this effort, how are you going to, what would you say would be the main signs of success with the mission of Rooted?
Stephen Rhodes (22:04):
Yeah, I think for me when I looked at this, if Rudy can take a step in the right direction of helping individuals in this particular neighborhood, people who have not built trust with people in the financial industry, if this now allows someone to say, Hey, listen, my perspective on industries and people in the financial services space has now shifted in a positive way, then I think that to me is a measure of success. I mean, one of the ways that I looked at this was about what happens if when I'm meeting with my participants, if I didn't necessarily reach out to them to schedule the meeting, did they call me? And they did. They were like, Hey, when are we getting together again? And I was like, oh wow, there's a level of trust that's here. And so the 20,000 don't get me wrong, is important because for all the reasons that we stated, but as you alluded to, it's not going to mean that all of a sudden you go from one level to the other extreme.
(23:09):
I think that very few people make that sort of leap. I think the majority of people who build wealth, it's an overtime process and it's actually done with other individuals and that includes professionals. And so I think to be able to have conversations and instill trust to be able to talk to participants and say, Hey, listen, it's really important. It's okay for you to be able to trust that you can put your money into the bank that now opens up the doors in a different way that might not have been available prior to that. So I view it based off the idea of if they're more open now because of the program to trust other individuals that can help them continue to grow and learn, then that's how I look at it from a success standpoint.
Tobias Salinger (23:57):
Excellent. And for Michelle, what can you share about how these 50 participants have decided to invest their grants at this point? And how will Invest SDL be evaluating the success of the program from your side?
Michelle Witthaus (24:17):
Yeah, so it's important to mention that people in the program are able to use the 20,000 in a myriad of ways. So they're able to open an investment account, they're able to renovate a home, they're able to buy a piece of property or start a business. And they're not restricted to using those funds in just one bucket. So if they want to put a little bit here and a little bit here, they can do that. So the numbers I'm going to give you are not going to add up to 50. So wanted to preclude that. So we have 24 people that are using their funds to make renovations and repairs on their home. We have 21 people who open an investment account. And I was honestly more surprised by that one. I didn't expect that many people to open an investment account. There are three people who are going to be purchasing property and nine people who are opening businesses or scaling up their existing businesses.
Tobias Salinger (25:18):
Great, great. And you told me a little bit about the evaluation process. Can you fill our attendees in on that?
Michelle Witthaus (25:29):
Yeah, so we're partnered with the Urban Institute, which is a national nonprofit research firm in dc and they have a lot of expertise in wealth building and lots of other nonprofit sector issues like affordable housing and gentrification and things like that. So we're doing a three year study of this project. We are comparing the 50 people in the project to the other 125 who were not randomly selected. And we'll be comparing those two groups over the course of three years. And we're looking at financial things. So we're looking at debt assets, employment, and then we're looking at some other social determinants of health. So we're looking at health, mental health, neighborhood connectivity, and yeah, we'll be publishing those results when we have them.
Tobias Salinger (26:23):
Excellent. Well we look forward to that and we so appreciate the opportunity to discuss this with the two of you. I think it's a great note to end on and we will certainly be keeping in touch at financial planning. We thank you for both appearing today and for the work that you're doing with Invest STL in the Rooted Program. These are important topics and too often they do get swept under the rug or ignored. And because of the work of people like yourselves, this is allowing there to be not only greater awareness, but greater wealth building among longtime residents of a great community there in the west end of St. Louis. So everyone, please give another virtual round of applause to our guest, Michelle Woodhouse of Invest, STL and Stefan Rhodes of Signify Wealth. And don't forget to check financial planning.com for the feature and all of FPS Wealth Management news. Go ahead and subscribe while you're there for financial planning. I'm Tobias Inger. Thanks again to our panelists and everyone have a great afternoon.
Michelle Witthaus (27:44):
Thank you so much.
Stephen Rhodes (27:45):
Thanks.
