Wealth starts with a vision and a plan the whole family can engage in. The earlier you start thinking about building a legacy, the better. In this two-part series, we break down the nuances of building generational wealth, financial planning and addressing the racial wealth gap in Bermuda.

What is generational wealth?

Generational wealth is any type of asset that a family pass down to their children and grandchildren. From investment accounts to real estate, cash and even life insurance, generational wealth is typically viewed through a monetary lens; however, anything from education to good financial habits should be considered generational wealth as well.

In today’s financial climate, building generational wealth is more important than ever. There are many benefits to creating legacies in the form of financial education, tuition assistance, business acumen and funding family milestones such as education and weddings.

Generational wealth in Bermuda

The most common assets passed down in Bermudian families are real estate, businesses, cash, investment portfolios and retirement savings. Historically, real estate ownership and legacy businesses have had the biggest overall, positive impact on the wealth of families in Bermuda. Other strong assets are investment portfolios and life insurance, as these influxes of money can be left to further grow wealth.

Outside factors such as inflation impact wealth building and can diminish the purchasing power of an asset. This is particularly topical because inflation has reached historical highs and volatility in the markets has increased significantly. This coupled with the financial impacts of Covid-19 on individual and family financial wellbeing has caused many to be more intentional in setting firm strategies for long-term recovery and sustainability of their assets. Lost jobs and untimely deaths have impeded some families’ ability to build wealth owing to the loss of income or the unexpected loss of a wage earner within the family because wealth allows households to weather financial emergencies. However, families who had already accumulated savings invested, and had life insurance, tended to fare better than those in lower socio-economic positions or those who were unprepared.

Addressing the racial wealth gap in the community

Racial issues make up a large part of Bermuda’s complicated history and the long arm of racial discrimination continues to affect families in our community today. Modern Bermuda is a unique space of collaboration and forward-thinking, having made substantial progress towards equality. Yet people erroneously assume that the wealth gap is a product of a bygone era. Accumulating generational wealth has always been, and continues to be, challenging for many members of Bermuda’s Black community.

When reflecting on the issues Black families face today, we can look to Bermuda’s history and its relatively recent past of slavery, discrimination and oppressive laws. For years, many Black people faced significant challenges in acquiring bank loans for home construction, often being required to reach near completion — having covered the greatest building expenses themselves — before approvals would be considered. This unfair practice effectively hindered them from owning property, while they also suffered unequal access to employment opportunities, and fought for equity in income and benefits. In fact, many in the Black community would argue that through systemic racism, they continue to grapple with financial inequality.

This also highlights the loss of critical, generational knowledge on how to invest and what to invest in. There are fundamental benefits of saving and leveraging life insurance as an asset and the inability to effectively pass on that financial knowledge has resulted in later generations playing catch-up while other parts of the community continue to flourish.

What programmes or recourse exist for Black Bermudians?

While we are seeing positive trends in wealth growth in Black communities, such as greater homeownership, increased entrepreneurship, increased investable assets and the utilisation of trust agreements to manage wealth, our main concern is that education and awareness is still lacking within the communities for which they were created.

Want to get started on building your wealth? There are many resources available, including courses in financial literacy at Bermuda College, financial adviser services, banking and legal services for wills and trusts, and private companies’ product offerings in the financial industry. And, of course, we are here to assist and answer any questions.

In Part 2, you will find out how to grow wealth if you are starting from scratch, how to prevent mismanaging money and what experts are recommending for your financial wellbeing.

• Angela J. Joell, is the Investment and Client Education Manager at the Argus Group. She joined in June 2016 after more than 30 years in the banking industry. Her parallel career in adult education has her delivering workshops in professional and personal development on Pension Legislation, Market updates and pension products and services

• Melvin Nusum is the Head of Client Management at the Argus Group where he provides employee benefit and insurance solutions. He has worked within the financial services industry for more than 13 years, including HSBC, Wells Fargo and New York Life, helping individuals secure their financial future and support corporations in improving their cash and investment portfolios

• The content in this article is for informational purposes only and is not intended to be a substitute for professional financial or investment advice

.