Whether you’re eyeing the latest model car or an outfit that is beyond your budget, experts say it’s important to think about how decisions will impact the next generation.
Cecil Burrowes, Senior Vice President of Diverse Customer Segment Mass Market Strategy with Wells Fargo, spoke with the Washington Informer about building generational wealth and how financial decisions made today can have an impact on generations to come. He added that protecting assets can contribute to reducing the racial wealth gap.
“Understanding that when we talk about generational wealth, wealth meets a myriad of qualifications. When we mention wealth, people disqualify themselves. Wealth can be your check-to-check living. Wealth can be the savings you have in your piggy bank,” Burrowes said adding that people need to eliminate fear when having conversations about wealth. “We think it’s something that doesn’t necessarily speak to us.”
Burrowes said, he wants people to realize that a portion of their income and assets can take care of daily expenses, but how can they make the disposable income work for them.
“Individuals making ends meet still have disposable income and have to figure out how it moves to the next level,” he said. “What is the thing that you can get to work for you and your legacy?”
“The challenge is that when we lose a generation, each new generation starts at zero,” he said. “Without the proper education and the awareness of tools that are available to individuals to overcome that, we keep falling in that consistent trap over and over again.”
Burrowes said Wells Fargo is making changes to ensure everyone has access to the resources available to them.
“I think we have to be intentional. With intentional focus, we can ultimately help more customers from a wealth transfer perspective,” he said.
In addition to educating families on transferring wealth, earlier this year, Wells Fargo committed $210 million to advancing racial equity in homeownership. The initiative includes the creation of a Special Purpose Credit Program to help refinance the mortgages of minority homeowners with a Wells Fargo Mortgage. The purpose is to lower mortgage rates and reduce costs of refinancing, according to a press release from the bank.
In an effort to broaden community outreach, Wells Fargo will also expand its partnerships with the National Urban League and Unidos US. The company will provide homebuying readiness and counseling, and work to eliminate systemic obstacles that prevent many Black and Hispanic customers from becoming homeowners.
The company will also use $60 million to fund partnerships to implement plans to address the root causes of homeownership gaps through the “Wealth Opportunities Restored through Homeownership” (WORTH) grants. The program is expected to support 40,000 homeowners of color in eight markets through 2025.
“Homeownership is a key pillar of the American dream. It represents a means of intergenerational wealth,” Burrowes said.
Wells Fargo has long been a leader in the housing finance industry. Between 2017 and 2021, Wells Fargo has helped more than 425,000 Black and Hispanic families achieve their homeownership goals with $110 billion in financing, according to the press release.
But with that, Burrowes said the company has recognized that not everyone has access to all of their resources. Once homeownership is achieved, the company wants to ensure it’s sustainable, and that customers have the tools and resources they need to transfer their wealth.
“As we’re looking at our day-to-day engagement in activity, what type of plan do we have in place to make sure what we’ve built during our lifetime doesn’t get lost when we go to the next plane, whatever that next plane may be for you. Do you have a plan to ensure a proper handoff when that occurs?
When making the plan, Burrowes said, the first step is having conversations with other family members. Those can be difficult conversations, but they are important in the planning process. Once those conversations have occurred, depending on your needs, you can use self-service tools, or contact an estate attorney to help define how to move forward.
Most importantly, consumers need to complete the process. Many people start the planning but fail to complete it for a number of reasons, Burrowes said, adding that some hesitate with the price of final planning.
“There is a cost associated with planning, but it far outweighs the probate costs,” he said.