The founder of Chicago asset manager Ariel Investments has spent the past decade encouraging black investors to save more
Getting African Americans to save for retirement is something McDonald's (MCD) board member John Rogers has been preaching for more than a decade.
Rogers is the founder of Ariel Investments, a Chicago asset management company, and one of the most prominent black investors in America. Cerebral and soft-spoken, Rogers is uniquely qualified to serve on McDonald's board: He has been eating at the hamburger chain at least five times a week for the past 28 years.
His love of McDonald's boils down to consistency. By sticking to Mickey D's predictable menu, Rogers can use his brainpower for other activities, like picking value stocks for his mutual fund or advising Barack Obama on his Presidential campaign. (Rogers is a major Obama supporter, and Obama worked out of Ariel's offices during the Presidential transition.)
Working with McDonald's
At breakfast, Rogers favors biscuits. For years, lunch or dinner was always the same: plain burger, large Diet Coke, and large fries smothered in salt and ketchup, but now Rogers has branched out to chicken strips. For most people, this kind of diet would send cholesterol and weight soaring, but Rogers is a basketball fanatic—he played on the team at Princeton University—and he exercises like a madman.
Shortly after Rogers joined the McDonald's board in 2003, he gave a talk in honor of Martin Luther King Jr.'s birthday to members of McDonald's African American Council, known as the Mac2C. Rogers focused on the plight of black investors and why they don't save more, using data from the annual survey of black investors Ariel conducts in conjunction with Charles Schwab (SCHW). "If people of color retire with less than half the money saved as whites, it's a real crisis for our country," Rogers told the crowd.
Rogers didn't know that Andrés Tapia, chief diversity officer at Hewitt Associates (HEW), the benefits consulting giant, also was present. After the event ended, the two men clicked as they started comparing notes on the issue, along with possible solutions. "It was the first time ever in all my public speeches or private meetings that I ran into someone who not only understood what I was saying, but was also thinking about trying to solve the same problem," Rogers says. It also helped that James Cantalupo, who was McDonald's chairman and chief executive at the time, heard Rogers speak. "We need to think about the economic health of minority employees and vendors," he told Rogers. (Cantalupo died in April 2004 of a heart attack.)
Falling Behind in 401(k)s
Then, at a 2005 board meeting with the McDonald's compensation committee, Rogers asked if the company would be willing to look at the saving patterns of its employees by race. "Sometimes you bring these things up and people nod and say: 'Yeah, yeah.' But with McDonald's it was a real, legitimate 'Aha,' " Rogers says. McDonald's offers employees one of the most generous 401(k) plans: Workers who save 5% of their pay can see the potential company match make that figure swell to 16%.
In addition to McDonald's, Rogers also sits on the board of Exelon (EXC), which operates nuclear plants. With prodding from Rogers, Exelon polled its employees and found that about 15 out of every 100 black employees do not participate in its 401(k) plan, compared with about 10 of every 100 whites. Now the company is looking for ways to fix the problem. "We have to start addressing that now," said Andrea Zopp, Exelon's executive vice-president for human resources. "If African Americans are not investing at the same rate, they will be behind," she says.
Rogers has also taken his stump speech to Princeton, which honored him with Woodrow Wilson Award for public service in February 2008. At an Alumni Day program in conjunction with his award, Rogers—always on message—spoke about retirement and black savings habits. Afterwards, Princeton University President Shirley Tilghman told him she wants to look at retirement plan participation by race at Princeton.
Teaming Up with the Rockefeller Foundation
Meanwhile, Mellody Hobson, who is Ariel's president, sits on the corporate boards of Starbucks (SBUX), Estée Lauder (EL), and DreamWorks. Hobson says she is putting the wheels in motion to examine the retirement savings habits of minorities at those firms. Ariel and Schwab also have teamed up with Hewitt and the Rockefeller Foundation to look at retirement plan participation by race at Fortune 500 companies. So far, 60 companies have opened their retirement account databases, Hewitt's Tapia says. The results, which should be released in the first quarter of 2009, are expected to prod other companies to address the issue of getting minorities to save.
It may sound like overkill, but Ariel's fund managers and analysts are also raising the minority savings issue with the companies they buy for Ariel's portfolios. But so far, not one comes close to the progress made at McDonald's, Rogers says. "Every corporation talks a good game about how much they care about minority employees," Rogers says. "McDonald's is at the forefront in not only talking about the issue, but in making huge, meaningful progress."