Reflecting on Tuesday’s discussion on race-based wealth inequalities, I’m thinking about how automated financial guidance may help to reduce the black-white wealth gap. We learned that centuries of government policy have undermined blacks’ ability to accumulate assets. Most shocking to me was Ira Katznelson’s point that, “Between 1945 and 1955, the federal government transferred more than $100 billion to support retirement programs and fashion opportunities for job skills, education, homeownership and small-business formation” that primarily benefitted whites (http://www.washingtonpost.com/wp-dyn/content/article/2005/09/27/AR2005092700484.html). Still, I wonder whether automated guidance has the potential to help blacks better manage the wealth they do accumulate.
I first learned about roboplanners while working at a consulting firm this summer studying the future of automation across six industrial applications ranging from emergency rooms to retail stores. An innovation of the last five years, these algorithm-based services often come at a fraction of the cost of human planners. Though existing technologies do not offer retirement or estate planning assistance, they still help consumers make decisions on how and where to invest their money.
Also, while roboplanning may make guidance more accessible to the black community, a 2013 Wall Street Journal article by Daisy Maxey documents how some African-Americans feel that they don’t need financial advice at all (http://www.wsj.com/articles/SB10001424127887324634304578539110358585512). I question the writer’s assumption that this is a pervasive attitude amongst middle-income blacks, and would like to more about structural barriers preventing blacks from accessing this guidance. Moreover, regardless of the distinction between structural and cultural arguments, 19% of black Americans have financial advisors, compared to 30% of the overall population. Perhaps culturally-targeted marketing of new automated tools could yield new black consumers and begin to close this gap, underscoring that even those earning “a good income” and “build[ing] wealth” should still seek advisory services to further their financial gains.