Because Your Money Means More

During Black History Month, the team at Wahed is spotlighting the racial wealth divide in America. Research shows that Black college graduates in the U.S. owe an average of $25,000 more in student loan debt than white college graduates. Previous studies have also found that Black and Hispanic family heads have debt-to-asset ratios 50% higher than white family heads.

These figures highlight the need for more inclusive investing options and financial literacy education targeted towards African Americans and other minority groups. We recently sat down with Jameel Aalim-Johnson, President of the Prince George’s County Muslim Council and a Vice President in the Office of Government Relations at Nasdaq, an African-American Muslim and Wahed client, to dive deeper into these issues.

Thanks for joining us, Jameel. Could you first give us a bit more about you? 

Well, I’m 58 years old, and I’ve been in government and finance most of my life. I was born and raised in New York City. Before joining Nasdaq, I served as Chief of Staff for U.S. Congressman Gregory W. Meeks (D-NY), a member of the House Financial Services Committee and the Foreign Affairs Committee. The Financial Services Committee has jurisdiction over the capital markets. I’m also the former Executive Director of the Rockaway Development and Revitalization Corporation, a non-profit that promotes the revitalization of the Rockaways (Queens, NY) economic base and neighbourhoods,

You’ve certainly taken an exciting career path. Have you always been interested in the finance space, both professionally and personally?

Yes. As a matter of fact, I went to undergraduate school and earned a Bachelor’s Degree in economics from the University of Virginia and I was looking to go into the financial services world when I graduated. I had an opportunity to work for a Wall Street bank, but around the same time, I received an offer to work for a congressman who had just won his first congressional race. 

It was one of those forks in the road situations in life. Although I’d been looking for a Wall Street job the entire time before and since graduation, I believed I could support the community by taking the congressional job, so I took that route. 

Eventually, I joined what they call a local development corporation where I ran a program that helped attract businesses and helped small businesses grow. This development corporation was in a community where jobs were needed. I did that for five years in one organization in Jamaica, Queens, and then I did five years at the Rockaway Development and Revitalization Corporation. During that time, I earned my MBA in International Finance.

Given you had this calling to give back to the community and help local members climb the economic ladder, wondering if you had people in your life that got you on a financial path?

I was always taught as a kid to work hard and save, but my path towards financial and economic matters began in undergraduate school. I originally went into school looking to go into computer science. That was my initial interest. I was speaking with a counselor and looking at alternative majors. We talked about various possibilities, and she mentioned economics. I said, “economics?” I had always had finance on my mind and thought I might try that. I took my first class and thought, “I find this interesting.” That piqued my interest more and more as I was pursuing my degree.

After graduating when you were applying to Wall Street as a minority, do you feel like at that time you were getting an equal opportunity as a candidate?

No. I think it was tough at that time. I can give you a couple of stories that still stick with me today. I had an interview scheduled with a large downtown investment firm and I wanted to get some background on the company (before the internet and I’m showing my age) prior to my interview. I called up a local office of theirs, and they were going to give me an annual report to review. When I arrived at the local office, the receptionist introduced me to a younger white employee who took me back to his office and asked, “where’d you go to school?” I said I went to the University of Virginia.

He got excited and said, “The University of Virginia!” that’s where our manager went. He excitedly takes me into the manager’s office who is on the phone at the time, so the younger guy slips him a note telling him I just graduated from the manager’s alma mater. The manager looks at the note, looks up at me, and nods a little bit. When he got off the phone, he did not show me any enthusiasm as fellow alumni.

I also remember having an interview with an FX trading company. There was a woman in human resources who liked me as a candidate. She said she would set me up with a job in one of three divisions. She said the manager had the final say, but she was adamant that if she recommended me, they would hire me. She arranged three interviews for me, all with white male managers. None of them hired me. Listen, you never really know why, and you don’t want to be the person saying, “They didn’t hire me because I was black.” But certainly, I took away that she was telling me, “If I tell them to hire you, they will,” and none of them hired me after her recommendation.

Over the last few decades, there have been some changes, but how do you think diversity and inclusion practices can be improved today?

It’s not enough to be supportive of diversity and inclusion. Companies have to make it a goal of the organization, and then they have to commit the resources necessary to get it done. They need to be more diverse in their recruiting efforts. People don’t like the term ‘affirmative action,’ but it does have to be a conscious effort on the part of the company. For instance, Nasdaq has leaned into diversity under the current CEO because she’s made this a priority. She has prioritized becoming a more diverse organization which includes diversifying our product offerings to serve more audiences. 

We’ve had record years and record quarters, so diversity has not hurt the organization. It has benefited us and made those like myself feel like I have a more prominent voice as an employee. I believe caring about your workplace matters in performance, and this change has increased my enthusiasm for working for Nasdaq.

Turning from inclusive practices for hiring to inclusive practices with financial services, how do we improve access to financial products to minorities and underserved communities?

New technologies can assist in opening the door to investing for minority groups, but they need to know how to utilize them. We need to foster financial literacy and education. I’ve worked with several organizations trying to do just that. Some financial literacy training is formal and others are informal. We discuss issues like building generational wealth and sharing information on what some people put forth as best practices. Today, I’m a volunteer at a nonprofit organization called the Prince George’s County Muslim Council. It’s predominantly a political and civic organization but also has an affiliated Foundation. The foundation is more about economic development, job opportunities and the like. So, one of the things that we have done is worked with others on a financial literacy seminar that drew upwards of 100 or so people before the pandemic. 

These folks learn basic financial literacy: budgeting, saving and debt reduction. And just this past October, we teamed up with Wahed to do a webinar featuring Joe Bradford, a finance scholar, about the products that are available to help you save money and engage in long-term investing in a way that works best for you. Many of the people attending were looking to build wealth for themselves and their children, but they also wanted to do it in a way that meets their values.

What are your thoughts on ESG and what the ‘S’ means for minorities when it comes to investing in companies with whom they share similar beliefs?

I think one of the things that you’re finding throughout the financial markets is that investors are saying, “I want to see what you’re doing in the ESG space.” Companies are beginning to say, “Okay, let’s try to make sure that we are meeting this demand, and regulators are saying, “Let’s get better ESG disclosures.”

For instance, Nasdaq put forth a proposal last year for its listed companies to begin disclosing their board demographics. This year, companies will need to disclose the demographic makeup of their boards. Ultimately, most boards will need to disclose that they have at least one woman and one person from an unrepresented group or submit reasons why they haven’t met that standard. Although this comes into compliance for the first time this year, it is exciting that some companies started reporting using the matrix that Nasdaq had proposed.

Back to financial literacy education, is teaching about debt and credit a vital part of that conversation?

Without question. In work I’ve done with the Greenwood Project, which is out of Chicago, I’ve spoken with students and one of the things I’ve focused on is the issue of debt. The purpose of debt is not to buy consumable goods. Debt should only be used to purchase assets that appreciate.

Or, from a business point of view, it’s for getting assets that can generate income to pay off that debt, plus more. You don’t want to use debt to go on vacation or for a holiday, or to buy clothes, or even for dinner. I’ve made all these mistakes in the past.

You end up paying for the same meal three or four years after you’ve eaten it. So, people need to focus on minimizing debt. For myself, I made that a focus alongside having a good education and a good job. Like many others, I also started saving for my kids’ college when they were born and choose a Shariah-compliant option when it became available.

That helped me pay for my kids’ education, so student loans did not burden them. They started their professional careers debt-free. I’ve made it clear to them that when they get their credit cards, only use what you can pay off within the grace period.

Outside of financial literacy, are there other ways to address the wealth divide?

The most important thing, particularly when you talk about the wealth gap between African Americans and whites, Muslims, or other minority groups, people need to understand is that it has taken hundreds of years of federal, state, and local policy to create this wealth gap. We’re talking from 1619 until today if you include the PPP loans where Treasury told banks to give it to their best customers. That skewed the distribution of funds to a disproportionate amount of large business owners and the majority of minority businesses were left out. 

So we are trying to overcome hundreds of years of a policy backed by U.S. law to keep minorities, blacks in particular, from having an equal financial footing. We must understand that ‘we’ as minorities are not responsible for that wealth gap. However, we have a responsibility to ourselves and to future generations to take as many steps to close it as possible. So, part of that comes with understanding how you build wealth and that there are multiple steps as we have discussed here. It’s the importance of financial education; it’s seeking higher-paying positions; it’s the saving, paying yourself first, as they say. It’s understanding where to put your money into long-term appreciating assets and not wasting a lot on depreciating assets.

It’s also looking for opportunities to buy and sell from each other within minority communities. It might mean a 10-minute drive versus online checkout, but you’re paying it forward. The dollar floats within the community for a much more extended period. 

With Gen Z and millennial minorities, is it hard for them to take that long-term view when you have things like cryptocurrency and moments like the GameStop stock frenzy?

It’s essential to explain that you need to look at investing as a long-term exercise if you want to build wealth. There may be some things you can jump into, but also be careful about fads even though certain investments that may start as a fad may end up becoming long-term. However, sometimes people jump into investments only because others are doing it rather than looking at the merits. From an ethical investing or Shariah-compliant point of view, there should be concerns about investing in vehicles whose changing value is only speculative as opposed to productive assets that benefit the whole economy.

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