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Every cloud has a silver lining and-for the resourceful few-the makings of an opportunity.
First the cloud. According to the 1999 Ariel Mutual Funds/Charles Schwab & Co. Black Investor Survey, 64% of African Americans who are not investors say a "lack of knowledge" about investing is a primary reason why they don’t invest (compared with 55% of whites). Those numbers may seem disturbing, but some finance firms are seeing the vacuum as an opportunity to address the lack of investing among African Americans.
"We look at these statistics as an opening to make a difference in the community," says Vernon Marrow, president and chief operating officer of Baltimore-based Legacy Unlimited L.L.C. Legacy, a three-year-old financial services holding company, is focusing on the African American community as a niche market. A financial services company with an educational thrust, the firm wants to provide the minority community with an entrée into wealth creation.
"There are two major reasons why African Americans lack knowledge when it comes to investing," continues Marrow. "The first is that no one took the opportunity to educate us about the investment process. Secondly, we’ve created the idea in our minds that we gain success through consumption."
Marrow and partner Brian Morris, Legacy’s chairman and CEO, both had backgrounds in the financial services industry before establishing the company in 1996. Morris started his career as an investment executive for Provident Bank of Maryland before working as a financial consultant for Merrill Lynch. Marrow spent several years at Signet Financial Services as an assistant vice president and investment specialist. They met after both joined the financial services firm of Legg Mason Wood Walker Inc. in 1996 as investment executives. In less than a year’s time, they came up with the concept for Legacy. After investing approximately $350,000 of their own money as well as that of some investors, they set up shop.
Legacy Investor Services, Legacy Consulting and Legacy Insurance Group are all subsidiaries of Legacy Unlimited. Through their seminar series, the duo says they’ve provided investing services and advice to about 250,000 people in the company’ s relatively brief existence.
Mellody Hobson, senior vice president and director of marketing at Ariel Mutual Funds, says the very formation of a company like Legacy means the African American community is getting some attention-which is long overdue. "Companies such as Legacy reinforce the value of the African American market," she says.
With a clientele that is 90% minority, Legacy is projecting revenues of $2 million in 1999. The firm recently formed a partnership with Aetna, allowing Legacy to take over the 403(b) retirement plans for Morgan State University, Coppin State College and the city of Richmond, Virginia, public school system. These deals alone represent more than 500 active accounts for the firm. Legacy also has an educational initiative with the city of Baltimore, teaching financial planning to 14,000 employees. For more information on Legacy, call 410-244-8687 or log on to www.legacyunlimited.com.