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Employer Retirement Plans Could Help Close the Gap Between White and Black Stock Market Participation NEW YORK, July 19 /PRNewswire-FirstCall/ -- For African-Americans, who have historically lagged Whites in stock market participation, employer- sponsored retirement plans have the potential to be an effective entree into the world of investing, according to the 8th Annual Ariel-Schwab Black Investor Survey. The survey finds that African-Americans who are saving primarily for retirement are almost twice as likely to be stock investors as those who are saving for other reasons, such as to pay for education. Whites, however, are equally likely to be investors regardless of their saving and investment goals. The percentage of higher income Blacks (households earning over $50,000 annually) who own stocks or mutual funds continues to lag behind higher income Whites, with 65% of Blacks vs. 80% of Whites invested in the market. Black investing has fluctuated over the years from a low of 57% in 1998 to a high of 74% in 2002; the corresponding figures for Whites have remained statistically flat, hovering around 80%. Carla A. Foster, a vice president with Charles Schwab Corporation, believes that one way to continue to narrow the investment gap between Blacks and Whites is through employer-sponsored retirement plans. "We know that retirement planning is a gateway to investing for many individuals, but we learned that it is truly the key driver for African-Americans." Retirement plans: leveling the playing field In previous years, the Ariel-Schwab Black Investor Survey has shown differences between Blacks and Whites in their investing habits and attitudes, such as a greater distrust of the stock market by Blacks and a greater familiarity with the market by Whites. However, this year's survey shows that among those who participate in 401(k)s and other employer-sponsored retirement plans, African-Americans and Whites have some striking similarities. The responsibility that plan participants take in making investing decisions is one example: similar percentages of Blacks and Whites seek help from advisors (36% of Blacks vs. 39% of Whites) or manage their own retirement portfolios (39% vs. 41%). Additionally, 25% of Blacks and 21% of Whites initially choose their retirement investments, but rarely if ever make changes to their portfolio. Ariel Capital Management President Mellody Hobson said, "A lot of us in the African-American community didn't grow up talking about the stock market around the dinner table, but now we are talking about it around the water cooler." Employers are key to increasing retirement savings Still, there are challenges to relying on employer sponsored retirement plans to close the gap in stock market participation, the survey found. Fewer Blacks than Whites overall (45% vs. 60%) consider retirement their most important goal for saving. Blacks who are investing regularly in retirement accounts contribute an average of $65 per month less than Whites ($210 vs. $275). Additionally, significantly more Black plan participants than White participants have withdrawn money from their accounts prior to retirement (36% vs. 24%); in fact, after controlling for age, income, and other demographic variables, Blacks are 72% more likely to have withdrawn money early from a plan. This year's survey also suggests, however, that employers can play a key role in helping Blacks save more for retirement. The survey found that all else being equal, Blacks who have help from a financial advisor contribute more money on a monthly basis to their retirement plans than do those who go it alone. Additionally, Blacks showed a stronger preference for receiving information on their retirement plans through one-on-one meetings with benefits advisors (49% for Blacks versus 42% for Whites) or in seminars (27% versus 16%.) Fewer Blacks than Whites want information through e-mail (Blacks 28% vs. Whites 37%) or the web (Blacks 28% vs. Whites 34%). Hobson said, "If we can raise the comfort level through more personalized service and stronger communications, we will see a leveling of the playing field." Furthermore, the survey shows Blacks are particularly receptive to information about and help with retirement investing provided by their employers. Among both Blacks and Whites with employer-sponsored retirement plans, three out of four consider automatic payroll deductions to be "very valuable" features of their plans. But significantly more Blacks than Whites (63% vs. 53%) view "communications and tools provided by your employer" and "the ability to invest in company stock" (53% Blacks vs. 40% White) to be "very valuable." "The financial services industry and employers are really partners in the effort to educate investors," said Foster. "People turn to their companies for information and they naturally believe their employer will not only support them as they work but will also provide them with a solid foundation for a secure retirement." Blacks think home ownership before stock ownership Foster also said that lower levels of home ownership among Blacks than among Whites (77% for Blacks versus 90% for Whites) partly explains why fewer Blacks invest in stocks. "If you're saving for a more immediate need -- like a down payment -- it's harder to set aside money for a long-term goal," she noted. The preference of Blacks for real estate investments continues, though it is down considerably from last year when record-low interest rates and the volatile stock market drove more people to invest in real estate. This year, 54% of Blacks versus 39% of Whites view real estate as the "best investment overall," ahead of stocks, bonds, mutual funds and insurance. Last year, 61% of Blacks and 51% of Whites chose real estate as the best investment. In another finding, 61% of Blacks and 55% of Whites view home improvement as a better investment than the stock market; two years ago the corresponding figure was 76% for Blacks and 64% for Whites. "After the Bear market, everyone shifted their preference to real estate, but the bloom is off the rose," said Hobson. "Still, many high-income Blacks -- like their grandparents -- still want to invest in something they can see and touch." The random sample survey of 500 Black and 500 White households earning over $50,000 annually is the eighth for Ariel-Schwab. It was conducted by telephone between March 18 and April 8, 2005 by Argosy Research. The margin of error is approximately 4.5%. Ariel Capital Management, LLC and The Charles Schwab Corporation are separate entities, but co-sponsor the "Black Investor Survey." Ariel Capital Management, LLC is a Chicago-based institutional money management firm and mutual fund company with more than $21 billion in assets under management. Ariel serves individual investors through its no-load Ariel Mutual Funds and manages separate accounts for institutional clients. Ariel's web site is http://www.arielmutualfunds.com/. The Charles Schwab Corporation (NYSE:SCH), through Charles Schwab & Co., Inc. (Member SIPC/NYSE), U.S. Trust Corporation, CyberTrader, Inc. (Member SIPC/NASD) and its other operating subsidiaries, is one of the nation's largest financial services firms serving investors through offices, regional client telephone service centers and automated telephonic and online channels. The Charles Schwab, U.S. Trust and CyberTrader Web sites can be reached at http://www.schwab.com/, http://www.ustrust.com/ and http://www.cybertrader.com/, respectively. (0705-8433) To download the 2004 Black Investor Survey, log on to http://www.arielmutualfunds.com/ or http://www.aboutschwab.com/. DATASOURCE: Charles Schwab CONTACT: Renee E. Warren or Stella Brown, both of Noelle-Elaine Media, Inc., +1-646-424-9750 Web site: http://www.schwab.com/

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