The financial industry has a long history of blocking the ability to grow wealth in Black communities. Making a positive impact in wealth building requires a shift in ideology, Krista Cooksey said.
"If you are of the mindset that Black communities are inherently different or function differently or are not worthy of investment to begin with, then that philosophy is going to propagate into how you then allocate resources and allocate money," said Cooksey, 31, a researcher at Washington University in St. Louis and a grant recipient in the Invest STL Rooted program. "At the root of it is ideology and philosophy around what these communities look like to begin with and the worthiness of investment to begin with."
The second installment of Financial Planning's feature on Rooted explores why planners are integral to the success of the program. The design of the nonprofit equitable development group's grants to 50 residents of St. Louis' West End revolves around the organization's approach in tapping 25 pro bono financial advisors to help them manage the investments. The process of connecting the grant recipients to their planners displays how these financial professionals are assisting in cultivating wealth among the area's residents and, organizers hope, for longtime residents of gentrifying neighborhoods across the country. The
As part of an effort thought to be the first of its kind because of that added factor of fiduciary planners counseling clients on the management of the grants, the participants and the advisors are trying to build trust and wealth in a way that's effective for the residents and could be replicated nationwide. Their personal success on those fronts carries a larger significance.
Working with "a financial planner was really the best option we felt for our participants" to provide the "knowledge out there that helps certain people get ahead" and do something different than financial literacy programs based on an "assumption that people don't know how to manage their finances,"
"We didn't want this to be a project that helps them in the moment and that's it," she said. "We wanted this program to really ensure longevity."
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The design of the program
Witthaus spoke with other organizations and municipalities that have run guaranteed income and reparations programs, but she said that Rooted is "really kind of the only one like this." Invest STL developed the program, "
The "financial institutions and financial planners who stepped up to help us figure out how best to support participants throughout this initiative" include
Last year, the organization chose the participants through a random selection of 50 out of 175 applicants who had each lived in the neighborhood for at least a half dozen years. The applicants had a median income of $35,391. After the assignment of two participants to each planner and meetings about their overall financial pictures and their long-term goals, they got the choice of buying or renovating a property in the West End or a smaller area within the neighborhood, Visitation Park, starting or scaling a business in the community or creating an investment account. Two dozen opted for home repairs, 21 launched investment accounts, one bought a vacant lot, one is looking for a property to purchase and the others opened or expanded businesses, according to Witthaus.
"We had a significant amount of people who wanted to open an investment account," she said. "We also had a very significant amount who wanted to make property repairs. We knew that was probably going to be a big one because the houses in the neighborhood are large and old. They're very expensive to maintain. They're able to really protect their assets."
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To measure the impact, Invest STL will conduct annual surveys, qualitative and quantitative studies and comparisons with another group of 125 residents who are completing yearly assessments. The first surveys will be completed later this summer.
Besides those studies on Rooted, the Urban Institute "will assess its implementation and outcomes — including whether this could be a viable strategy for closing the racial wealth gap more broadly" over the three-year period ending in 2025, researchers Michael Neal, Noah Johnson and Fay Walker
Neal sees "a lot of potential across two dimensions" to put "another tool in the hands of local policymakers to address displacement" and with "the degree to which it answers the question more precisely and more concretely, 'what can we do with the increased wealth?'" he said. Often research about closing the wealth gap or combating displacement recommends certain policies that, if enacted, will boost Black wealth, Neal noted.
"The research kind of stops there," he said. "This is a more concrete idea around, now that we've done all the work of building wealth, what can it help and how can it reduce or stem a family's vulnerability?"
The scale of the problem
The program aims to solve that problem by halting the displacement of Black residents through gentrification of an area that's close to Washington University, an entertainment district known as The Delmar Loop and the border to suburban St. Louis County.
The way that Wash U is "encroaching upon the West End" has the same effect as the expansion of Saint Louis University decades ago in the Mill Creek Valley, according to Vivian Gibson,
"It's like there are blinders to what was going on in the Black community, to just contain it, push it away or not look at it," Gibson said. "They're all in the city adjacent to what were poor black communities that were just easy for them to take over, and it's still happening today. It's a lot slower than just coming in with bulldozers, but it's still happening."
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That wider backdrop of local — and national history — displays the steep challenges facing the Rooted program.
One participant, Tameka Stigers, deployed her grant toward business, such as her beauty salon and spa on Delmar Boulevard,
"A lot of times we think of residential displacement when we talk about gentrification, but the businesses and business districts are just as important," said Stigers, 43. "If you're doing it full time, you have to build a team. So you're creating jobs. That's the important thing is to build teams and create jobs. And that helps create wealth and build generational wealth not only for the business owners, but for those people we're able to employ."
The success of the participants depends on a "period of just understanding where they are" and "being able to truly build trust." said Stephen Rhodes, the founder of St. Louis-based RIA firm
"It may end up being the very thing that you knew right off the top of your head that you wanted to do. … They need the space and the time and someone to help them lay out the different alternatives," he said. "They're not exposed to the planning process. They're exposed to being pitched a product."
Deploying the capital
Getting advice from the planners has felt far different from prior interactions with financial firms like banks that may offer to answer any questions but cause people to wonder, "What do you really want from me?" said participant Jerica Robinson, a social worker with a career accelerator organization. Robinson, 35, invested her grant.
"To be able to have a financial planner, you can tell the person actually cares about what you're talking about," she said. "And I know in other spaces that it costs to be able to have that particular person, but it doesn't feel like I'm getting on this person's nerves or that they don't want to help — like they're just available and they're willing to answer questions."
Cooksey is "doing a little bit of mixing" with her grant, investing some of it and planning to launch an online boutique selling items like purses and shoes, she said. The grants and accompanying advice could break through the traditional disconnects, Cooksey said.
"Historically, certain pockets of communities have been put in such a place and position that all they can think about is their survival," she said. "And so the moment you get people out of survival, the moment they're able to say, 'OK, wait, now my eyes have been open to everything else. I can take it in. I can read a little bit. I can relax. I can think about the long term. I can think about development. I can think about all these different things because I'm not worried about that $5 being used to feed me and my family. Now I'm saying, 'Oh, wait, I got an extra $5. OK, yeah, I could put it in an IRA. I could put it in stock. But, again, people are always like, 'Well, why don't people invest? The lens is so blurred because a lot of people don't understand that. That's the barrier."
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The participants that Alicia Lewis, an
"I know they had some hesitations about even spending the funds in the first place," she said. "There's a traumatic component and that's where the behavioral finance comes into play — it's almost like you turn into a bit of a therapist in a sense. That's a lot of what we do on a day-to-day basis."
The "very complex question" of how planners can aid underserved clients "goes back to individuals" because there's "no blanket answer for everyone," said Ryne Vickery, a
One of them decided to use the grant to repair a roof and a fence at his home, which is a "good investment" because it enables him to maintain the value and "be able to stay there," Vickery said. For younger potential homebuyers, renting could give more flexibility and the costs for maintenance and upkeep of the house can mount to the point that the equity "is not always going to be positive" after 10 years, he noted.
"It doesn't make sense for everyone to buy a house because you have these expenses for the house that people don't always account for," Vickery said. "There are all these small factors that add up to a really big dollar amount that should influence a decision about whether to rent or to buy."
Personalized planning for the future
In that complicated picture about personal growth with national implications,
He's a community impact and sustainability leader with
Invest STL had "a really interesting idea" with its option to deploy the grants toward opening or expanding small businesses, Smith said. "They want to stay in the neighborhoods that they're in and build generational wealth, and they've created some unique tools that aren't always available to historically marginalized communities."
The presence of the planners is "critical," so that the participants can "have that longer-term conversation" and think through, "What does investing in us really look like?" said Dara Eskridge,
"It's not a huge amount of money, but it's more than the average person typically has on hand to invest in themselves, their family and their place in that community," Eskridge said.
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The difficulty stems from the scale of need for resources such as "affordable housing that fits the neighborhood," according to Gibson. The grants are "just not enough" to fully repair some of the 100-year-old houses that haven't had significant upgrades for the past 40 years, she said. Her sister's home houses four generations, and she needs a bigger investment to "leave a house worth something to her grandchildren," Gibson said.
"My sister is 86 years old and living in the very house that we moved into when we left Mill Creek," she said. "She's at an age where she can't really afford to live anywhere else, and she can't really afford to keep up the house."
Planners recommending certain strategies without a full grasp of the inherent challenges would be akin to "a doctor giving recommendations without fully understanding the patients," Rhodes said. During the introductory phase of the planners' interaction with the participants, he spoke on the panel about how he grew up in "a similar background and what that means," he said.
"There's a humility that has to be present that states, 'Hey, you don't know everything that there is to know about these participants,'" Rhodes said, citing the premise of a chapter of "
For instance, clients "could have legitimate reasons" why they don't trust banks and want to keep their money in a safe at their homes, even at the risk of eviction, Rhodes added.
Advisors should "go in trying to understand," he said. "You can assume that's an opportunity to ask more questions."
Vickery's clients in Rooted consist of a younger woman who's "at the beginning of her accumulation phase of her financial life" and an older man seeking some "peace of mind and clarity as to what his retirement might look like," he said.
"It goes back to the initial conversations of, what do you want to accomplish in the short term and the long term?" Vickery said. "My job is not to say, 'Hey, do this, do that.' My job is to guide them in the direction that they were going to, with information they might not have had otherwise."
