Recently a friend invited me to a banquet held at a downtown Washington, DC, tourist restaurant directly across the street from the Treasury Department. He nonchalantly informed me that our free steak and salmon dinner would accompany a seminar on “integrated wealth management.” This was hardly my idea of weeknight entertainment and, considering my overall income and assets, managing my “wealth” is something of an absurdity. But the prospect of a free meal overcame my hesitation as I joined a group of about fifty people crowded into the restaurant’s basement banquet room. These people, mostly white, middle-aged, and older, did not represent Washington’s
1 percent. The meal was free! Nonetheless, our hosts had targeted them as people of sufficient wealth who might be receptive to paying a financial advisor to manage it for them. Their names, probably generated from publicly available investor mailing lists, were unimportant, but their identities in one important sense were literally golden.

I couldn’t help but feel queasy about the whole affair, given the cultural context. Only twenty-four hours earlier, I was glued to the television, taking in both the peaceful protests and the violent riots in Baltimore following the funeral of Freddie Gray, a young African-American man who died there after suffering a severed spine while in police custody. I was uneasy not only because our gathering enjoyed the perks of privilege by comparison to the people of inner-city Baltimore, but even more because the seminar leader’s polished sales pitch, which surely he had given dozens of times before, proceeded without acknowledging the events happening barely fifty miles away. Instead, for two hours he invited us to live in a bubble of hope, insulated from the world, where we might ponder the wonderful possibilities of our wealth, if only we would follow his rules for ensuring a prosperous retirement. His talk admitted no connection between our condition of relative wealth and the conditions of abject poverty of those I saw passionately protesting on television. I felt indignant: What could this man possibly have to teach me, particularly as my mind and heart were focused on those justice seekers rather than on his PowerPoint presentation?

In retrospect, however, I can discern some ways that his “principles” may help to illuminate the events in Baltimore and the social conditions that give rise to them. The seminar was in large part a course of instruction in how “risk” relates to “volatility” in making financial investments. We were told that markets are volatile. They are very sensitive to changes in the world, such as the rise and fall of global interest rates, fluctuating profit margins in various sectors of the economy, and abrupt fluctuations in supply and demand caused by shifting consumer preferences as well as by war, politics, or natural disaster. These changes create variances in returns on investments; the greater the variance, the greater the risk. The seminar leader explained that older investors (like us) with larger assets (unlike me) tend to be risk-averse, and he warned that we are apt to make exactly the wrong decisions about our portfolios: we buy when our wealth is increasing and prices are rising and sell when our wealth is decreasing and prices are falling. A wise advisor will avoid this mistake by making offsetting investments so as to help a client’s overall portfolio hew as closely to the “average” as possible. For our hosts, volatility—not the love of money!—is the root of all evil, since it tends to introduce emotion into the investment equation, which almost always prompts people to make rash decisions they will regret.

So much for Economics 101. What does this have to do with Baltimore? As I thought about what I was hearing, it occurred to me that our host’s upbeat financial maxims have a darker and more sorrowful meaning for those not fortunate enough to enjoy a free steak and salmon meal. Indeed, it doesn’t take much stretching of the imagination to recognize how concepts such as risk and volatility are real factors affecting the daily experience of black lives plagued by poverty, violence, and injustice in cities like Baltimore. Here are a few of these maxims.

 “You want to be able to outlive your money.” In the investment world, affluent retirees want to be able to withdraw money from their portfolios at a pace that ensures it doesn’t run out before they do. But during the riots in the Sandtown-Winchester neighborhood of Baltimore, worried mothers and fathers were telling reporters, “We want our children to outlive us.” Perhaps the most striking image caught by a camera during the riots was an angry Toya Graham “losing it,” as she subsequently put it, when she encountered her sixteen-year-old son among the looters. She slapped and hit the boy in a furor and forced him to go home with her. Many praised her unbridled outrage while others condemned her resort to violence, but it was clear that her rage was really a response of sheer horror to what might have befallen her son. In that moment, Graham was neither a model parent nor an icon of fierceness; she was simply showing, in the most visceral way possible, the fear welling up in so many African-American parents that their children, particularly their sons, will not live to adulthood.

“Diversify, because you can’t predict what will happen to a particular investment.” There is no foolproof financial plan, we were told, because no advisor can predict which class of investment will do well. Because of volatility, the best way to reduce risk is to divide one’s portfolio among a variety of asset classes. Can poor people reduce their risk as easily? One of the raps made against poor people is that they do a bad job at managing their time and money. They fail to save for a rainy day or make provisions for a better future. Everyone should be able to put a little something aside, right? This glib advice ignores the volatility most poor people live with daily. A missed bus or flat tire may cost you a job interview, a day’s wage, or the job itself; paying a hospital bill or fixing a broken refrigerator can put you behind in the rent; a chance encounter with street violence can end your life. Living in poverty is a debilitating reminder of how unpredictable life can be. Unlike the investor’s portfolio, one’s choices are limited, and often all of them are bad.

“Rely on trends that develop over a long span of years, not returns over the past twelve months.” Our financial guru showed us four sample investment portfolios based on data gathered over a forty-year period. Each demonstrated that returns from a diversified set of asset classes improve over time, albeit in different ways and at differing rates. Retirees may want to choose a “safe” portfolio whose returns stay close to the current averages, but our host argued counterintuitively that a more risky portfolio—where profits and losses have a greater range of variance—better guarantees that one’s money will last through the long retirement which he said most well-to-do retirees can expect.

Looking back on decades of urban experience will not give Baltimore residents the same optimistic expectations. The violence that followed Freddie Gray’s death is a reminder of the 1968 riots in Baltimore following the assassination of Martin Luther King, Jr. even as the roots of the city’s poverty and segregation go back more than a century. Baltimore has for some time been pursuing policies that made the events of late April all the more likely.

A Brookings Institution survey of Baltimore schoolchildren over a thirty-year period has detailed the effects of poverty, race, and economic inequality on their future outcomes (Alexander 2014). For instance, only 4 percent of poorer children have graduated from college, compared to 45 percent of higher-income children. And while drug use is not a marker of inequality—wealthier whites actually reported higher usage rates—acquiring a police record for drug usage was far more detrimental to blacks in the city. Other Brookings research demonstrates that while conditions in Baltimore are typical of other urban areas, they are by no means the worst in the country, and in some ways are better (Berube and McDearman 2015). Unlike long-range analysis of the stock and bond markets, assessing the data on Baltimore and other cities makes one despair for the future.

It is unlikely that the rules of wealth management that work for the affluent retirees in Washington will give comfort to Baltimore’s urban poor. Risk and volatility look very different from the opposite ends of the economic spectrum, after all. In trying to come up with solutions to urban poverty and violence, it is all too easy to offer additional maxims that, while politically useful, fail to produce lasting change. For instance, it may be true that we need to maintain a long-term perspective and not be deterred by short-term setbacks, but these encouraging words are apt to prevent us from acting with urgency and lead us to ignore the anguish of those living in intolerable conditions.

Likewise, politicians and pundits may declare that all Americans are “assets” worthy of investment. And few will deny that persons of color are treated differently in our systems of justice and policing, and that economic inequality is widening with opportunities narrowing for the poor. Yet, too often raising these issues in public debate comes under attack. Jobs programs and higher minimum wages are condemned as “economy killers.” Declaring that “Black Lives Matter” gets you labeled as a race baiter. Lives that are most vulnerable to social volatility are deemed too risky, too dangerous to our own well-being.

Yes, public-policy think tanks like Brookings can help us define problems and plan public strategies. But as ordinary citizens we also can help provide a path to a better future by beginning to redefine what we mean by “integrated wealth management.” Indeed, we need to recognize the fact of our increasing societal segregation, broaden our understanding of what “wealth” entails, and overcome our tendency to see the poor as “problems” to be managed rather than as people to be engaged. Besides devising investment methods to let our money outlive us, might we not also reflect on how these might become tools to achieve the well-being of all? Rather than funding ever-more exotic foreign travel for ourselves and continually calculating ways to increase our standard of living, might we risk traveling across town where families are in distress to learn from them how best to help at-risk communities?

In an oblique way my dinner host did touch on these questions when he brought up the topic of estate planning. He said a good financial advisor knows how to use IRS rules to maximize spousal benefits, structure bequests and trusts for children and grandchildren, and make tax-advantaged gifts to alma maters and charities. This is all well and good, but it is pretty thin gruel. We must require more of ourselves if we want to improve the lives of others. Instead of trying to forget Baltimore’s troubles, let us remember—and feel—the fears of Toya Graham. As we finish our steak and salmon let us come up with strategies to fulfill the promise of the city’s young people. We may not join the 1 percent, but the dream of the good life is within our grasp, if we are willing to redefine what that means beyond our own personal comfort. In a society where the roots of racism, poverty, and inequality run deep, the maxims of the personal financial adviser can do little to achieve a just society. Indeed, they may raise barriers against it. We need to rethink what it takes to improve the lives of others. Wealth management needs to be more than a financial practice. It needs to be a human practice, one that risks seeking successful outcomes for the Freddie Grays of our world.  A

David Lott is a religious book editor and a graduate of St. Olaf College and Luther Seminary. He lives in Washington, DC, where he does freelance editing and writing.

Works Cited

Alexander, Karl. “The Roots of Poverty Are Many and Deep.” The Brookings Institution, Oct. 29, 2014. http://www.brookings.edu/blogs/social-mobility-memos/posts/2014/10/29-long-shadow-poverty-mobility-alexander.

Berube, Alan and Brad McDearman. “Good Fortune, Dire Poverty, and Inequality in Baltimore: An American Story.” The Brookings Institution, May 11, 2015. http://www.brookings.edu/blogs/the-avenue/posts/2015/05/11-poverty-inequality-baltimore-berube-mcdearman?utm_campaign=Brookings+Brief.