Want to ‘annihilate the racial wealth gap’? Make it easier for Black Americans to invest in stocks, says the founder of a new ETF

‘For our culture to get more resources, we have to start looking at it from a macro layer. One place to start is the stock market; this is the place where wealth is preserved. Wealth is generated on a daily basis.’

Last Updated: April 21, 2022 at 9:11 a.m. ETFirst Published: April 20, 2022 at 2:45 p.m. ET

Re-posted.

Anthony Buchanan started Let Bob LLC, a Black-owned fintech startup, and the Let Bob exchange traded fund to spread an ownership culture in his community

‘For us to build as a community, money has to start circulating so that our wealth can grow alongside non-Black communities,’ says Let Bob LLC founder Anthony Buchanan.

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The Value Gap is a MarketWatch Q&A series with business leaders, academics, authors, policymakers and activists on reducing racial and social inequalities.

Anthony Buchanan knows from experience how intimidating and frustrating it is to start investing without trusted sources or role models who share his culture.

That’s how he came to found Let Bob LLC, a Black-owned fintech startup, in 2017.

Buchanan’s mission is two-fold: to make investing more inclusive and accessible for Black Americans and other marginalized communities, and to get greater Black representation into the financial industry. The goal is to “annihilate the racial wealth gap in America,” he says.

A software developer by education, Buchanan teamed up with Black financial advisers and other wealthy Black investors, including Houston Texans player A.J. Cann, to create a financial-technology firm with an initial goal to get more Black Americans involved in stock-market investing.

Buchanan’s actively managed, artificial-intelligence-powered exchange traded fund, the AdvisorShares Let Bob AI Powered Momentum ETF LETB, -1.63%, was launched in conjunction with AdvisorShares this year with $20 million in seed money. A robo-advisory platform is set to debut later this year.

The wealth gap between white and Black American families is massive. The typical white family has about eight times the wealth of the typical Black family — $188,200 versus $24,100, according to Federal Reserve data from 2019. That disparity has its roots in 400 years of institutional and systemic racism, academics say, and spans all facets of life.

Buchanan also is the founder and CEO of AppSolutions LLC, a software- and application-development consulting practice, in Birmingham, Ala. He lives in McCalla, Ala., with his wife and two children.

MarketWatch spoke with Buchanan via Zoom and email about his exchange traded fund, his experiences in the financial industry and his aim to increase Black ownership of businesses. This conversation has been condensed and edited for clarity:

MarketWatch: Let Bob — what’s behind the name?

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Buchanan: Let Bob has a double meaning. First, B-O-B stands for “Black-owned business.” And the second meaning is a wink to the finance and technology industries, where Bob is a common name. I felt that it would be familiar, trustworthy and identifiable. Bob works on your behalf. I developed it to remove the worry often associated with investing — “Let Bob do it!”

MarketWatch: The Let Bob ETF is an actively managed, AI-powered fund. What makes the ETF different from the passively managed, large-cap ETFs such as SPDR S&P 500 ETF SPY, -1.22%, which is the U.S. benchmark, or the Invesco QQQ ETF QQQ, -0.72%, which tracks the most well-known technology companies? And would it have been possible to create an ETF around Black-owned companies?

Buchanan: Our ETF is actively managed, and this means we can actively alter our holdings and position sizes on demand, with a focus on small-, mid- and large-cap companies. Why not use this approach to create an ETF of Black-owned companies only? The short answer is there are not enough Black-owned publicly traded companies. Of the more than 5,000 companies in the market, we are only aware of 12 that are Black-owned, which limits the AI capability and introduces greater risks.

‘For our culture to get more resources, we have to start looking at it from a macro layer. One place to start is the stock market; this is the place where wealth is preserved. Wealth is generated on a daily basis.’

MarketWatch: You created the algorithm that powers the Let Bob ETF. And you mentioned that the experience of trying to license the technology gave you insight into the business of investing. Can you expand on that?

Buchanan: I was working very closely with financial advisers and that’s how I saw the real disparities. We were a vendor of TD Ameritrade and a vendor of Charles Schwab. I could see the relationships, the processes necessary to perform all the trading; they were all non-Black companies benefiting from these activities.

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