Not every racial inequality can be explained by discrimination – as it also relates to class, poverty and educational underachievement. But although Runnymede Trust’s report says tackling it is unlikely to succeed without wider structural changes to the economy, there are actions businesses can take.
These include: policies such as targets (from hiring to progression to senior management to board level); the ‘Rooney rule’, which applies to interview panels in the US National Football League; and incentivising existing senior managers (by tying their own progression or wage rises to their performance on progressing ethnic minority staff).
Bridging the savings advice gap
Even with the disparity in pay there is also the question of savings strategies and outreach to clients in Black and other ethnic minority communities. How do you reach people with much-needed advice and financial guidance?
Liz Field, chief executive of Pimfa, says the “most obvious thing” for financial advisers to do is to provide advice services to those on lower incomes.
“How to reach them, however, is often the biggest problem,” she adds.
Ms Field says: “Those from households with lower incomes are less likely to seek, and less likely to believe they can afford, financial advice. But we know that those that do receive financial advice make better decisions and benefit financially from receiving advice.
“So it matters in the sense that understanding the ethnicity wealth gap means as an industry we’re better able to serve customers that could otherwise go ignored.”
Between 2014-16 Caucasian British households held the most wealth (£282,000), closely followed by Indian groups (£266,000), according to ONS data.
Pakistani households held £127,000, while Black Caribbean households possessed average wealth of £89,000. Saying that, regional and age distribution of different ethnic groups can also affect wealth, while some of the groups’ data sample size is too small, skewing some of the results.
Mr Connell says the industry needs to think about the needs of different groups to avoid unintentionally excluding people.
He adds: “The different ways in which we design processes, products and services, we naturally think of ourselves and people like us and it is [difficult] for one group of people to imagine their way into the lives of people who have different lives, whether it is because of ethnicity, gender, disability or caring responsibilities.”
Following the Retail Distribution Review the number of lower earners seeking any financial advice has plummeted and the advice gap has widened - a situation many have warned will worsen if regulatory fees continue to rise at current rate.
Questions appear on the last page of this article.