Robert “Bob” Wynn and Climb USA: The Long View of Creating Wealth (Part 2 of 2)
Bob Wynn, the founder and CEO of Climb USA, has been promoting wealth development in Madison’s Black community and beyond for over 40 years.
by Jonathan Gramling
Robert “Bob” Wynn, the founder and CEO of Climb USA, a financial literacy and youth investment non-profit located in the Urban League’s Black Business Hub, was almost eased into his passion for promoting investment as a path to wealth development and management. Wynn became a labor lawyer with the UAW after graduating from the University of Michigan Law School in the area of real estate and wills. And over the past 40 years plus, his career has slowly and methodically — almost like wealth development itself — turned in the direction of helping the Black community and others build generational wealth.
While Wynn was primarily engaged in minority business development. He noticed the impact that wealth development had on the people whom he served and became a proponent of investment clubs where a group of people come together, study the stock market and each pay in $25 per month to mutually purchase stock. At one point, Wynn felt he had better formalize his credential, since the knowledge he had picked up was informal.
“As I started talking to more people about investing, I thought that I should verify my assumption that I knew what I should know if I am going to be speaking about investing in the industry,” Wynn observed. “So I ended up taking this Series of three broker licenses tests. And I passed them. At one point, I thought I was going to go into the wealth management field. And when you do that, you’re not supposed to actually be a member of an investment club. So I pulled out in the 1990s and did not want to be a part of a club since I was now a licensed professional.”
Wynn left the WI Dept. of Commerce in the late 1990s to work at the newly formed WI Dept. of Financial Institutions and stayed there until 2004. He furthered his efforts to promote generational investment.
“It was during that process that I established Asset Builders of America because the financial education programs that we were creating under the Dept. of Financial Institutions were growing at such a rate that it became more than what the state wanted to continue to manage,” Wynn said. “Rather than just letting those programs dissipate, the thought was, ‘Let’s create a non-profit that can continue to run and manage some of those programs that required meeting with people in the evenings or on Saturdays. That’s when you are trying to reach the moderate to low-income investor. Your programs have to be after work hours or on weekends. That’s what gave rise to Asset Builders. We have a Power Point presentation and one of the slides shows that the African American population was around 12 percent, but the African American population owned about four percent of the nation’s wealth.”
Asset Builders did a lot of work around wealth development. Asset Builders sponsored the Money Conference and a lot of other programs to generate wealth in the Black and other communities. One of the programmatic areas was investment clubs.
“Climb was initiated as a program under Asset Builders,” Wynn said. “I actually have a report that I can share with you where we promoted the investment club initiative in 2002 when Asset Builders was just getting started. The idea of investment clubs was included in a Chicago Federal Reserve report that was dated February 2002. We were looking to initiate the investment club movement even back then in the early 2000s. But we just never got the momentum that’s needed. Starting a business is not easy. So every investment club is a business. That’s the message that we are trying to get through to the state of Wisconsin, WEDC and others. They are beginning to understand that. It really was an ambitious proposition that we would try to start this proliferation of investment clubs. That meant as a non-profit, we were going to be this ‘chamber of commerce’ just starting investment businesses all over the place. We got about 30 started. Many of them folded and so they didn’t last very long. But there are people today who were part of those initial investment club start-ups. And they thank me because they did learn a lot in that short time as a part of that program.”
In 2019, Asset Builders went through a strategic planning process. In essence, the investment club movement was let go while Asset Builders focused on populations that were more in tune with investment. Wynn wanted to focus still on needy populations and established Climb USA.
“Now, we don’t refer to them as investment clubs because trying to get more people in the policy arena and the thought leadership arena to understand that these are businesses,” Wynn said. “We refer to them as Community-Based Investment Enterprises. Now it has more of an appreciation for other government-sponsored entities such as the Community Development Financial Institutions that many people refer to as CDFIs. That has gotten government-approval status. By Community-Based Investment Enterprises, we are trying to promote the CBIE initiative and see if we can get that to have government status at some point. We don’t have it yet, but WEDC has provided some support to us.”
The Community-Based Investment Enterprises (CBIE) are for-profit business entities that are subject to federal and state tax laws. But they are streamlined and only realize a “profit” when stocks and investments are sold and not while they accrue value.
And the wealth accrual is a slow process. These are not “get rich quick” schemes. There are no “high-risk” investments.
“We are very long-term oriented in the investments that we make,” Wynn said. “You only pay taxes on realized gains. You don’t pay taxes on unrealized gains. There is always a K-1 that has to be filed for each member at the end of the tax year. But it’s very minimal in terms of the impact on the members’ taxes because we’re always very conscious of any sort of sale that we might make in a given stock. The first stock that my family club bought was Microsoft and we still own it. Apple is another one we bought. We did sell a portion of it because Apple split seven for one. And we sold a portion of it and then we’ve had a couple of withdrawals, so there has been some allocation of tax gains. But sometimes they can be offset by selling something at a loss. So we kind of manage the tax outcome that way.”
While it takes a long-term approach, none the less, these entities do accumulate wealth, which translates into its members having more options in life.
“The second case study club is my family club,” Wynn said. “I told my family I can’t be a hypocrite and help the community and my whole family isn’t doing this. We got started and even our children were members. And the parents and some of the relatives would put in money for the children. So they were putting in their requisite $25 per month as well. Our family club has about $240,000 and that is after over $100,000 has been taken out. You add up everything that has been put in and it is no more than $100,000. We put in $100,000 and took out $100,000 and we have a portfolio that’s valued at about $240,000.”
Wynn continues to apply these principles to his own life. When his mom died, he made an investment on behalf of his nephews.
“I have always been fascinated with compounding,” Wynn said. “My mom died in the early 1990s. I told my wife, ‘Let’s just take $1,000 and sock it away for the benefit of our four nephews. We’re going to put it in a 20th Century Growth Fund.’ They were 9-11-years-old. We were going to lock it up longer than the time it would take for them to be in college. We wanted this to be post-college money. We would see what it grew to. We decided to let it mature on June 19th. It was like 2016. When it unlocked, we were able to send a check of $2,700 to each of our four nephews. They said, ‘Wow! Why is Uncle Bob sending us $2,700 each?’ They each did different things with it. I was hoping they would do a project together. It was $1,000 that we put away and absolutely forgot about it for two decades. And then when it matured, it was about $12,000 that we were able to divvy out to the nephews.”
Wynn continues to encourage people to make big-picture, long-term investments. These are not going to make someone rich overnight. That kind of investing makes someone else rich. Wynn is interested in generational wealth development.
“Sometimes wealth gets a bad rap,” Wynn said. “We promote wealth because your range of choices in what you can do in your life is correlated to the amount of wealth that you have. ‘To invest is to take a risk. Not to invest is to take a bigger risk.’ That’s something that I don’t think people totally appreciate. The stock market is at an all-time high. If you’re a part of the investor class, you’re just riding along with the thriving growth in the economy in general. But if you’re not, then you are literally just walking away leaving money on the table. And over a long period of time, that is what non-investors are doing. It’s just like that Apple stock that we bought. I’m sure we didn’t pay more than $5,000 with it. And when it peaked before we sold some, that $5,000 had grown to $55,000. It took 2-3 decades. But we just sat and waited.”
Making and spending money isn’t just about you. It’s about the long-term in terms of the situation — and the economic power — that the people in your family coming after you face. Wealthy families have understood this since the founding of the United States. Bob Wynn and Climb USA hope that you will understand this too.