A Planner’s Guide to Serving the Affluent Diverse Gen XY Household

Journal of Financial Planning: March 2019



Keith Beverly, CFA, CFP®, is managing partner and CIO of GRID 202 Partners, which helps impact-oriented accredited investors and institutions achieve financial returns aligned with their principles and mission. He is also the founder of moXY Financial, a network of multi-credentialed advisers committed to financial literacy and racial diversity in financial planning.

After not publishing race/ethnicity data for more than a decade, last May, CFP Board released the racial composition of CFP® certificants.1It was a welcome, if not belated, shift and an important first step as CFP Board—and hopefully the profession—takes honest inventory of where we stand on racial diversity. The release followed CFP Board’s WIN Initiative launched several years ago and preceded its inaugural Diversity Summit held last October. There is a strong business imperative for improving gender diversity, given women are projected to control $22 trillion of wealth by 2020.2The wealth of affluent households of color—particularly Black and Latinx households—pales in comparison.

Total wealth among Black and Latinx households is about one-tenth and one-eighth of the wealth of white households, respectively.3 And by one estimate, median Black and Latinx wealth is projected to drop to $0 by 2053.4 For good reason, much of the attention given to the wealth gap focuses on the average household or those from communities of color who are most vulnerable and continue to face considerable obstacles to accessing opportunities. While finding financial solutions and ways to serve this demographic are critical, my professional experience the past several years has centered on an often overlooked and fast-growing segment—the diverse affluent Gen XY household.

For simplicity, we can classify this group as those who meet the criteria for accredited households—single households with income over $200k, married households with income in excess of $300k, and/or net worth in excess of $1 million (excluding their personal residence).

The majority of my Gen XY clients of color fall in this category. As they approach the height of the accumulation phase of their professions, they find their financial situation becoming more complex. In addition to managing demanding careers, they have to balance college savings with retirement planning and maximizing pre-tax contributions with saving for a large down payment on their dream home. They are at a stage in life where they see the value of engaging an adviser who can bring together these disparate and often competing objectives into a cohesive, actionable plan. Advisers willing to invest the time to cultivate relationships with this market can build loyal client bases and increasingly profitable relationships.

Know Your Audience

Affluent diverse Gen XY households fall into two categories: first-generation affluent (FGA) and legacy affluent (LA). I define FGA households as the first generation to be accredited investors, and LA households as the children of accredited investor households.

Diverse households have fought structural obstacles that have led to pernicious financial barriers to building wealth. These barriers range from redlining5 to predatory and discriminatory lending practices to lack of access to venture capital funding to unequal pay.6 As a result of the pervasiveness and duration of these challenges, much of the wealth in diverse communities is relatively new—increasing the likelihood of an adviser encountering an FGA rather than a LA household.

First-generation affluent households. FGA households were typically raised in middle-income households where one or both parents worked in the public sector as educators, federal/state employees, etc. Such jobs became more accessible to households of color in the 1960s and 1970s. The individuals from these households are more likely than their LA counterparts to have substantial student loan debt and be less knowledgeable regarding their personal financial decisions. While they met the stringent requirements to gain acceptance to highly selective (and expensive) universities, their family income was too high to qualify for significant aid but their parents lacked the financial resources to offset the cost of college materially.7

Such juxtapositions are characteristic of FGA households. On the one hand, they have attained the credentials, degrees, and training that lead to financial security, yet on the other, their ascent is marked by greater obligations—both voluntary and involuntary—that hinder their ability to accumulate wealth at the same rate as many of their white or even LA peers.

Legacy affluent households. Many LA households of color, particularly in the African American community, were raised in households where one or both parents were medical professionals—physicians or dentists. Because medical professions are less subjective than business or law, such fields were viewed as a more probable path to economic stability. For instance, the National Medical Association, the oldest professional association for African Americans, was founded in 1895, while the National Black MBA Association, the largest professional association for African Americans in business, was not founded until 1970.

The relatively recent participation in the private sector and historical barriers to capital access for Black and Latinx entrepreneurs explains a significant portion of the wealth disparity we still observe today. Additionally, LA households tend to have less debt than their FGA peers and are generally on better financial footing. I have also observed many of these households to have a relationship with their parent’s financial adviser and be more savvy regarding their finances.

Five Characteristics of Diverse Affluent Gen XY Households

Below are five common characteristics I see when working with diverse affluent Gen XY households—both LA and FGA. It is incumbent upon planners who serve this market to not only identify these traits but incorporate them into the planning process—from data collection to plan implementation.

Increasingly savvy. Gen XY households are bombarded with a steady stream of financial information from a host of sources. It is more common to come across a prospective client who has read several books or numerous articles about financial topics than someone who has not conducted any research. I have fielded questions ranging from best online budgeting tools to access to alternative investments. In many instances, an informed consumer makes for a better client. In other cases, the adviser must invest heavily in educating the client about incorrect or misguided information she may have learned.

Racism still exists. Despite the tangible progress made by households of color in all spheres of society, racism continues to plague us. Advisers who work with diverse XY households must be sensitive to the psychological, professional, and financial implications racism plays in the lives of these households. Manifestations can include higher general stress levels, greater frequency and longer duration of unemployment, and rising through corporate hierarchies at a slower rate often due to conscious and unconscious bias. Status and wealth have never proven to be panaceas for institutional racism.

Trust barriers. Unfortunately, the profession has repeatedly inflicted financial harm on diverse households. Advisers, especially white advisers, can build trust by referencing past abuses when explaining their services. For example, an adviser who adheres to the fiduciary standard can explain that while mortgage brokers who systematically sold inappropriate loans to households of color did not place the client’s interest ahead of their own; advisers with a fiduciary obligation are legally required to do so.

Family obligations. Unequal wealth dispersion among Black and Latinx households often leads to the affluent households delaying their personal goals or pursuing them in suboptimal ways. The Gini coefficient,8 a measure of wealth dispersion, is higher among Black (.51) and Latinx (.46) households than white (.44) households. A higher Gini coefficient implies greater income inequality within the subject group.

The FGA households, in particular, are highly visible within their families as they are often the first doctor or MBA or dentist in the family. The relatively high concentration of wealth among affluent Black and Latinx households, coupled with a sense of obligation to family members who helped them overcome obstacles, often leads to significant family subsidies.

Advisers should consider advising clients on strategies that balance personal objectives with family needs. For example, shifting family conversations to long-term goals often illustrates the importance of having those with more financial resources reach financial stability as quickly as possible to be better positioned to assist family members when needed.

Charitably inclined. It is common for high incomes generated by diverse affluent households and reasonable lifestyles to belie accumulated wealth. While often having higher debt loads than white affluent households explains some of the wealth shortfall, charitable giving explains a considerable portion as well. For example, Black households give about 40 percent more (13 percent versus 9 percent) as a percentage of income to their place of worship than white households.9 In my experience, it is quite common to see many households give above the 10 percent of gross income many consider an acceptable standard for tithing.

I recommend inquiring about past and projected charitable giving when meeting with a prospective diverse affluent Gen XY client. There are often planning opportunities to help families better structure their giving program to improve efficiency and impact.

Market Opportunity

Annually, the top 20 MBA programs and law schools each produce approximately 2,000 graduates of color, which equates to 40,000 individuals who will graduate with six-figure salaries over the next 10 years. In addition, approximately 2,000 African American, Latinx, and Native Americans graduate from medical school annually.10 For perspective, there are less than 3,000 Black and Latinx CFP® professionals of all ages across the U.S., according to CFP Board.

Many affluent diverse households will seek the counsel of a trusted adviser to help them along their financial journey. Given their commitment to education and high standards, one would expect they will prefer to engage an adviser who has matched their dedication to professional excellence. Advisers who cultivate genuine relationships with this segment in a manner that acknowledges historical mistreatment will find ample opportunities to grow with professionals entering the prime of their wealth-building years.



  1. Access the full research report at centerforfinancialplanning.org/initiatives/2018-diversity-summit/racial-and-ethnic-diversity-research​.
  2. See “Women of Wealth: Why Does the Financial Services Industry Still Not Hear Them?” by Heather R. Ettinger and Eileen M. O’Connor from the Family Wealth Advisors Council at familywealthadvisorscouncil.com/wp-content/uploads/FWAC-WomenOfWealth-2012.pdf.
  3. See “How Wealth Inequality has Changed in the U.S. Since the Great Recession, by Race, Ethnicity and Income,” by Rakesh Kochhar and Anthony Cilluffo from the Pew Research Center at pewresearch.org/fact-tank/2017/11/01/how-wealth-inequality-has-changed-in-the-u-s-since-the-great-recession-by-race-ethnicity-and-income.
  4. See “The Road to Zero Wealth: How the Racial Wealth Divide Is Hollowing Out America’s Middle Class,” by Dedrick Asante-Muhammad, Chuck Collins, Josh Hoxie, and Emanuel Nieves from Prosperity Now and the Institute for Policy Studies at prosperitynow.org/files/PDFs/road_to_zero_wealth.pdf.
  5. Redlining is the “practice of denying a creditworthy applicant a loan for housing in a certain neighborhood even though the applicant may otherwise be eligible for the loan.” See federalreserve.gov/boarddocs/supmanual/cch/fair_lend_fhact.pdf.
  6. See the following articles: “The Case for Reparations,” by Ta-Nehisi Coates in The Atlantic (theatlantic.com); “One of the Biggest Challenges of Getting Funding for Minority-Owned Business,” by Lydia Dishman in Fast Company (fastcompany.com); and “New Campaign Raises Awareness of the Pay Gap for Black Women,” by Marianne Schnall in Forbes (forbes.com).
  7. Based on the personal experience of the author working with this demographic.
  8. See “Income Gini Ratio for Households by Race of Householder, Black Alone or in Combination,” from the Federal Reserve Bank of St. Louis at fred.stlouisfed.org/series/GINIBAOICH.
  9. ​See “Diversity in Giving: The Changing Landscape of American Philanthropy,” a research paper produced by Blackbaud (blackbaud.com).
  10. See “Best Business Schools,” and “Best Law Schools,” in U.S. News & World Report; 2018 graduate data from the Association of American Medical Colleges (aamc.org​); and demographic figures from the American Dental Education Association, available through The National Academies of Sciences, Engineering, and Medicine (nationalacademies.org​).


4 Tips for Serving the Affluent Diverse Gen XY Household

The following four tips can help you better serve and build trust in affluent diverse Gen XY households:

Understand the client’s money personality. Financial matters are often a taboo subject in diverse households, regardless of educational attainment. Advisers will be well-served to unpack the various layers of values and beliefs that have shaped the client’s relationship with money.

Address aversion to debt. I have noticed a strong aversion to debt that often originates from parents and/or older family members being victimized by predatory/inappropriate products. Those experiences were passed down to Gen XY, leading to suboptimal resource allocation. For example, I have encountered clients who aggressively paid down mortgage debt at an effective interest rate below 2 percent despite having less than six months of emergency savings. In such cases, though a sharp reversal of the current path may be warranted, advisers should understand the context and consider “middle-ground” recommendations that gradually move the client to the optimal recommendation.

Incorporate the effects of institutional racism in financial planning recommendations. In many cases, it is prudent to tilt more conservative when dealing with affluent diverse households. For example, although general unemployment lasts about 6.6 months—validating the common advice for emergency reserves to equal six months of living expenses—the figure is 7.95 months for Black unemployed workers, according to the Center for Economic Policy Research. After being laid off by a prominent firm, a client with 20-plus years of Wall Street experience struggled for almost two years to find a role commensurate with his skill set.

Assess the potential for familial obligations to impede financial objectives. I often ask, “Who do you help out in your family and/or extended family?” And, “Have you ever quantified the extent of this assistance?” Like many areas of their financial lives, clients have never thought of quantifying how much aid they provide to family members. Once they quantify the projected amount, advisers can help strategize ways to manage these obligations. In some cases, it may be sensible to speak directly with family members requesting assistance to identify root behavior that could be improved.

Keith Beverly


General Financial Planning Principles