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Many Women of Color Use Social Media, Peers for Investment Advice

June 2, 2021

This article was published in the Wall Street Journal.

Many women of color are turning to social media and their peers for investment know-how instead of hiring financial advisers.

Individual investors are increasingly seeking free financial advice on platforms including TikTok, Twitter and YouTube. For women of color, nearly half say they are likely to turn to social media for financial guidance compared with 18% of white women, according to a study released in April by investment-management firm Capital Group.

The reasons for turning to their peers range from wanting free advice to a desire to manage their own portfolios, rather than outsourcing it to an adviser.

Adri Saul, who is Latina, started investing in the stock market in April 2020 after she joined the HerMoney Facebook group. Ms. Saul, who is in her 30s, was attracted to the group that was founded by personal finance author Jean Chatzky to help women with their personal finances, partly because she said it was easy to get answers to money questions and it is a nonjudgmental place to learn about investing.

While she appreciates the quality of information she has seen in the group’s posts, she still does her own research. Ms. Saul now has about $5,000 invested in various stocks such as Twilio Inc. and DocuSign Inc. with an online broker.

“Some women may feel there’s a lack of cultural understanding by certain financial advisers and may not feel seen,” said Ramona Ortega, founder of My Money My Future Inc., a fintech firm which in part aims to teach Black women and Latinas about investing and building wealth.

A December survey from J.P. Morgan Wealth Management found—when starting to invest—78% of affluent Black women and Latinas used self-directed educational resources, including online educational resources, apps or TV shows, compared with 47% of affluent white women.

Donye Taylor started investing about two summers ago after a friend recommended she open a Roth IRA with an online broker. Investing in stocks and bonds was largely new to Ms. Taylor, a 26-year-old consultant and co-founder of a digital marketing company.

The California resident was raised by her aunt and uncle who encouraged her to save as much as possible but didn’t teach her about investing. Then about a year ago, another one of her friends suggested she also open an account on the brokerage platform Public.com, which she hadn’t heard of before.

“I naturally trust what another Black woman says,” said Ms. Taylor, referring to the friend who told her about Public.com. Ms. Taylor now has five figures invested in various stocks such as Tesla Inc. and Roku Inc. She is happy managing her own portfolio and doesn’t see the need to hire an adviser.

Like Ms. Taylor, many women of color want an active role in managing their money. Fifty-five percent of women of color like to be involved in the day-to-day management of their finances compared with 40% of white women, according to a study in 2020 by Cerulli Associates and Phoenix Marketing International.

If you are the first generation to have money to invest but aren’t familiar with the role of an adviser, you may be hesitant to sign on, said Ms. Ortega of My Money My Future.

Monée Williams has been approached by financial advisers in the past, but didn’t see a point in hiring one when she thought she could learn many of the basics of investing online free from her peers.

“It just doesn’t seem worth it,” said Ms. Williams, who self-manges roughly $120,000 in an online brokerage account.

Ms. Williams started to learn about investing when she joined the Facebook group The Stocks and Stilettos Society about a year ago. The 40-year-old marketer from Atlanta enjoyed the free content, liked that the group was founded by another Black woman and appreciated the chance to occasionally socialize online with some of the women she met in the group.

For example, she recently hosted a vision board party with some of the women whom she met in the group, where they each set and shared their goals, such as saving for a post-pandemic vacation.

Still, some women use caution when accepting tips from peers or online personal finance groups. That is a good thing, said Ms. Ortega.

“You’re likely not going to learn the fundamentals of personal finance and investing from someone else’s social media post,” she said. “But it can be a great place to start to get the basics.”

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