Black investors are most likely to rely on journals and periodicals for financial information compared with other sources, yet financial inclusion remains slim, according to a report from City Hive.
Published this month, the Ethnicity Investment Gap: Closing the gap for equality report surveyed 160 people, of which 73% were women and 50% described themselves as an ethnicity other than white.
Among the findings were that while white and Asian respondents relied on family and friends for financial information, Black respondents were most likely to consult specialist journals, followed by IFAs, and were most engaged and proactive about their financial futures.
Despite this, Black and ethnic minority respondents were found to be underrepresented in financial information – for example, in online journals and dedicated finance material, advertising and stock imagery.
“Unfortunately, the lack of diversity in company leadership is clear in the way products are designed and marketed,” one respondent is quoted as saying.
The report also found a lack of inclusion when consulting IFAs. It said: “Our research indicated that the available advice is not as inclusive as it could be, in terms of the way that advice is offered and tailored. Generally, it is based on a narrow audience of known profiles. For those outside of the target audience, advice is workable but not appealing and potentially will be inaccurate due to failing to tailor risk/return profiles, life circumstances and key factors that affect long-term life planning.”
For example, it pointed to community-based savings schemes as crucial to those surveyed, but rarely acknowledged by the wider market.
Appearing in different guises in discussions with respondents, these schemes typically requires regular contributions to a central pot over a period, with a fixed date for withdrawal of a lump sum.
The report said: “This acts as either a no-interest loan or a regular saving vehicle, depending on where in the rotation you are. Some lean on a common practice of an ‘elder’ or trusted community leader to provide security.”
Finally, the report cited a lack of role models as creating less inclusivity in the forums in which people seek financial information.
“Our conclusions from almost every conversation led to the importance of role models, whether it be to showcase the role of different financial instruments or to demonstrate good financial behaviours that were relevant to people at different stages of their lives,” it said.
“Advertising, product targeting and communication rarely do this well,” it added.
The report found strong demand across the board for more relatable role models that can demonstrate positive financial behaviours with realistic trajectories.