Even as a youngster, James R. Veal liked math and science. So when he went to college, he majored in engineering. But as with so many young people finding their way in the world, a chance encounter changed his career plans. While in college, a friend introduced him to a stockbroker. Soon after, he realized how a career in finance could give him the chance to help people and build a profitable business, and so he promptly switched his major to business and finance.
"I liked it because it dealt with people," he says. "I'm people oriented. And the idea of helping people financially as well as looking at this business as an entrepreneur, it felt better than being an engineer in a laboratory."
So, 15 years ago, Veal started as a "rookie broker" at a small investment banking firm on Wall Street. He then went on to work as a financial consultant with a major bank as well as a number of independent broker-dealers.
Three years ago, he decided to strike out on his own and opened his own independent financial planning and investment firm in his native Philadelphia, JRV Wealth Management Group, LLC.
Today, he manages roughly $10 million in assets for his clients, 85 percent of whom are African-Americans. Predominately, his clients are boomers, seniors and senior African-American women.
Outside the business, Veal volunteers his time to teach courses on financial literacy at Temple University and at a local church.
As part of its ongoing diversity series, Senior Market Advisor spoke to Veal about the challenges African-Americans face in retirement and how the industry and other advisors can reach this community.
SMA: What are some of the notable risks African-American's face in retirement?
James R. Veal: There are serious challenges for most people in their retirement, but the African-American community and other ethnic groups face a larger challenge because of the lack of financial planning in the early stages of their employment. Much of their worries, I believe, will be centered around the possibility of outliving their savings.
I see about five risks. Number one is the expectancy of living longer. A lot of people are going to be living 20 or 30 years in retirement. Number two is the rising cost of health care. People are living much longer so those costs are going to increase.
The third one I see is inflation. Nobody can see it or smell it but it's what we call in this industry the "silent killer." You'll feel it in your wallet so it's eroding your purchasing power.
Number four, close to 70 percent of African- American households are run by single parents. So there's no dual income.
Number five is the high level of consumption in our community. Target Market News (a trade publication focused on marketing to African-American consumers) said that African-American consumers spent $836 billion in 2010. That's equivalent to being the sixteenth largest country in the world in gross domestic product.
So there's a lot of spending but no saving.
A lot of people in the community still believe that the government and their employers are going to take care of them in their retirement but that's not so.
They have to immediately start saving and investing much more, and paying down debt and living below their means. So in a nutshell they've got to save more and spend less.
SMA: What are some of the strategies they can employ to overcome those risks?
Veal: I think the best strategy right now is participating in their 401(k)s and 403(b)s and other retirement plans. By participating in their employer plans at least they have the chance of taking advantage of the pre-tax contributions, matching contributions from the company, professionally managed plans and the possibility of an adequate nest egg for retirement. I think that strategy is working in the community because there's a severe lack of access to financial advisors.
