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OPINION

To help close the wealth gap, put more money into Black and brown wealth managers’ hands

Of the roughly $69 trillion in wealth that is professionally managed in the United States, 98.7 percent is managed by firms owned by white men. You read that right: Firms owned by women and people of color control only 1.3 percent of that pie.

H. HOPP-BRUCE/GLOBE STAFF; NADIA SNOPEK/ADOBE

Life experience led Melissa Bradley to become one of the nation’s leading experts and social advocates when it comes to investing and wealth management. “I was tired of being poor,” Bradley said about growing up in New Jersey. “Just straight up. Poverty sucks.”

Watching her single mother work multiple jobs, including cleaning houses, to keep their household afloat and send Bradley to a private school, was an eye-opener in more ways than one.

“My school was a predominately white institution,” Bradley said. “I looked around at my classmates and thought, ‘OK, y’all aren’t smarter than me. So why am I on the bus and you all are driving Maseratis?’ Then I realized: Ah! It’s because their parents had wealth.”

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So she started teaching herself what it would take to close the individual wealth gap between her and her peers. It started with library books. That led her to study finance at Georgetown, then to a master’s program at American University. After working as the Obama administration’s chief strategy officer at the Corporation for National and Community Service, she focused on entrepreneurship.

“But it was out of my own personal resolution,” Bradley said. “There was nothing magical or mystical about my peer group that was wealthy. They weren’t smarter, they weren’t better, they weren’t faster. It was access to information and access to social capital. And I was like, oh, if that’s it, then I got this.”

It also spurred her drive to make sure other people of color got it too. She founded 1863 Ventures, an accelerator program based in Washington, D.C., that aims to generate $100 billion of new wealth by and for Black and brown entrepreneurs — what she calls the “New Majority.” She’s also cofounder of Ureeka, which aims to give small and medium-sized businesses the tools they need to grow.

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The need Bradley works to fill is real. Of the roughly $69 trillion in wealth that is professionally managed in the United States, 98.7 percent is managed by firms owned by white men. You read that right: Firms owned by women and people of color control only 1.3 percent of that pie.

The reasons for this are complex and varied, but it begins with barriers to entry.

“It’s extremely expensive to start these firms,” said Willian Huston, founder and CEO of Palo Alto, Calif.-based wealth management and financial planning firm Bay Street Capital Holdings. Huston said had he not been an entrepreneur who had already started a successful offshore call center business, his venture capital firm “would have run out of money in the first year or two. It can be cost-prohibitive.”

Even investors of color who break into the wealth management field find permanent hurdles that keep them from rising in the ranks.

“Even if you have a highly competitive person of color or woman, they are not able to build that business because they are not being allocated to by large institutions,” Huston said.

The result is that the people at the table giving investment advice, from Fortune 500 companies to public sector agencies, are almost uniformly white men, and they are in the sole position to compete and build those relationships. Everyone else is locked out.

And it doesn’t just impede the advancement of Black and brown investors and wealth managers. It makes it much less likely that those investors who do exist are in a position to help fund Black and brown businesses and help them grow.

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Bradley and Huston are among those trying to turn the tide by growing the field of BIPOC (Black and Indigenous people of color) wealth managers — a move that would also help more minority entrepreneurs, organizations, community groups, and other stakeholders succeed.

That goal is “consistent with the fiduciary responsibility of our organizations,” according to a Due Diligence 2.0. statement signed by dozens of investment management industry firms, including Huston’s.

The group created a comprehensive list of recommendations that can get a larger share of the wealth pie in Black and brown investors’ hands. For example, it can be harder for minority-run firms to demonstrate a minimum track record for handling large funds if they’ve been given fewer opportunities to do it. Considering other factors — such as the time individual investment managers have spent working collaboratively as a way of evaluating the stability of a firm —can help them draw investments and demonstrate their ability to succeed

Like many solutions to the racial wealth gap, helping Black and brown investors will help everyone. Bradley sees it as the way to the future.

“If people want to remain relevant as the majority of people in the population becomes people of color, for their own survival they need to make adjustments around race,” Bradley said. “As more and more people of color gain wealth, there is also a financial case for businesses on why they need to break some of those barriers.”

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Kimberly Atkins Stohr is a columnist for the Globe and The Emancipator. She may be reached at kimberly.atkinsstohr@globe.com. Follow her on Twitter @KimberlyEAtkins.