November 19, 2020

An entrepreneur’s approach to closing the racial wealth gap

Calvin Williams Jr., founder of Freeman Capital, believes that building racial equity starts with individual financial planning

Entrepreneur Calvin Williams, Jr. believes that building generational wealth for people of color is the key to closing the racial wealth gap in the next 50 years. Photo courtesy of Calvin Williams, jr.

How do you solve the racial wealth gap? For Calvin Williams Jr., he’s tackling the problem by helping one person at a time.

Williams says he was always surrounded by technology and finance, even at a very young age—buying his first stock at the age of 13. While still a teenager, he was recruited to build computer programs for the Department of Defense. Later he founded and sold his own web design business.

But despite that impressive resume, when the 36-year-old entrepreneur tried to find a wealth manager for himself, he found that “because I’d never made a million bucks, [they] wouldn’t even talk to me.”

That experience led Williams to launch his own financial planning company, Freeman Capital, for individuals who don’t have the resources to access traditional financial advisers. The North Carolina-based startup focuses on building generational wealth for people of color in an effort to eventually close the racial wealth gap.

Williams’ idea has paid off: Freeman Capital is a semifinalist for the 2020 Startup of the Year. We spoke with Williams about his goals for the business, as well as his thoughts about what other businesses and individuals can do to put a dent in the racial wealth gap. This Q&A has been edited for length and clarity.

What inspired you to start Freeman Capital? What was the journey to create this start-up?

The actual idea was, how do I help people build wealth? That was the biggest idea. Then I sat down and said, who really needs the most help? And that was people of color, and in particular Black people. Then I thought, how can I, on a national level, build something that’s personalized for every person’s needs, that’s unique and still gives them a way to get to the next major steps to build wealth?

We started off by diversifying people’s portfolios from outside of the stock market, into the currency market and the futures market. It was a very niche type of investment strategy. But the problem was our customers wanted to give us their whole life savings. So, that is what led us to go and create Freeman Capital as it works now, which is providing one-on-one advice and scale to close the racial wealth gap in less than 50 years.

Can you tell me a little bit about the ins and outs of Freeman Capital?

The thing that was really surprising to us, and even still now whenever it happens is we really built this for millennials and folks who are in that age range, but we have a lot of folks who are about to enter retirement, who are signing up with us because they have never worked with a financial planner before.

Yes, we are targeting to help Black wealth grow and build, but we help out customers from any walk of life. We have white, Latinx, and Asian customers. We want to help people out in general. So I want them to feel comfortable and welcome to use our service. Even if you aren’t Black, because we want to help your money grow.

Congratulations on being a nominee for 2020 Startup of the Year! As you move from startup to a more established business, what are your goals for expansion?

What we’ve always done is try to listen very closely to our customers. We did that in 2020, and then that led us to find insurance partners to help our customers out. One of the reasons why there is a wealth gap is because of how much wealth a family has when one generation passes [it] on to the next. The average white family passes on more than $150,000 in terms of one generation to the next, and the average Black family has under $40,000 to pass on.

Well, one way to close that gap is with insurance. Our customers had insurance gaps. That led us to find partners that can solve those gaps, to give them the insurance they need. Just by solving the insurance gap, and then combined with the financial planning, we have a plan that is very tactical that will help us get there in less than 50 years.

There’s been several headlines with big corporations like Citi investing significant money in closing the racial wealth gap with billions of dollars. Obviously, it’s a leap in the right direction, but it’s not just a question of throwing money at the problem. What should these big institutions keep in mind?

Solving the racial wealth gap: You can solve it a number of ways, depending on where you sit. For us, we are starting from the bottom up, with folks who are making between $50k-200k, by working with them one-on-one. But folks at the level you just mentioned, they have access to systems and people in power that can change systemic rules. That is another major lever to pull. We have to deal with the problems that are coming in terms of prejudice with lending or banking. We offer advice to say here’s how you can get around it and still get where you want to be.

For these larger institutions, rather than just investing a million dollars, changing their policies would be a major way to solve the problem along with lobbying the federal government. From that level, they have so much more influence. They can craft policy at their corporation, or they can join groups like the Billion Dollar Roundtable, which is a group that’s been around for at least 10 years. They are firms who have pledged to spend more money with Black-owned suppliers. They can take such huge moves that can change systems and rules and policies. That can be much more than just an investment. These folks have access to some of the most powerful people in the world. They could reach out and say, let’s change our policies, all of these banks. That type of change would be even bigger than a billion dollars. This is not just a Black problem, this is an American problem.

For the organizations that haven’t previously invested in solutions for the racial wealth gap, if they’re interested, where should they start?

I would say that depending on the size of the organization, I would start within and contact their employees who are from that community. Because often those communities will have more insight on how that company can make a change and benefit than anyone else.

It’s really going to come down to companies realizing that you can’t just do a marketing strategy and think that it’s going to work long-term because the consumers are getting smarter. They are asking what is the gender makeup of the leadership team? What’s the racial makeup? If people want to make these types of changes to help work on the racial wealth gap, step one is [to] do an inventory in-house and determine what changes can be made to business units and to leadership to help have a more inclusive perspective. Then, when you bring that in, you will as a by-product get results, because you’re having people at that table who have that perspective.

What should an average person do to help solve the racial wealth gap when they might not personally hold power within an organization?

This is a great question. To me, the beauty of America is that because every person can choose where and how to spend their own money, they can literally make an impact. If you want to make a difference, find a Black-owned business that is providing a great product and make a purchase. If you look at any business you are buying from, how many of them are owned by a person of color or a Black person? If you can increase that number, then that’s how you make a difference. Because the reality is that in this country, our underpinning is economics. If you can help a business grow in any way through investment, being a customer, or by referring them to someone else, you are literally putting money into their pockets and into closing the racial wealth gap. That’s my number one recommendation.

Caitlin Fairchild

Caitlin Fairchild is the Deputy Editor of The Renewal Project.