Closing the racial wealth gap

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. 

And with the days of the door-to-door insurance agent long gone, to some extent the close relationships formed with the community have been lost.

But Ms Field explains there are practical things advisers can do.

The more immediate would be to run free advice sessions (similar to pro-bono advice given by lawyers), perhaps at a local Citizens Advice Bureau. 

The second, longer-term action is to ensure that personal finance is taught in school. 

Ms Field says: “Knowledge is power, and we can provide better financial education through schools across all ethnic and income groups. 

“It won’t solve the problem by itself but it should go some way to helping to close the wealth gap.”

Those from households with lower incomes are less likely to seek, and less likely to believe they can afford, financial advice.--Liz Field

Mr Connell adds: “Some advisers who have a wider approach to segmentation will look at potential clients in terms of their attitude to financial planning - whether they come to the adviser for a one-off transaction and are not interested in financial planning, or are people who do have a fit with the kinds of services an adviser offers.

“Advisers tell us although those clients are not the wealthiest clients from day one, they will commercially be very rewarding clients to have because they are connected to what they are doing.

“Being relevant to every part of the community is, in the long-run, important for an advice firm.”

People buy people

Of course, a lot of this relates to visibility – people buy people, after all.

But if the industry has a perception of being the remit of wealthy, middle-class Caucasian baby boomers, how can young Black women, for example, be comfortable with seeking out advice? 

Selina Flavius, who set up financial coaching company Black Girl Finance to help women gain confidence around talking about money and understand how to save and build wealth, says: “When I speak to a lot of women about whether [they have ever spoken] to a financial adviser, a lot of them say no, and it may go back to not seeing their parents do that. 

“Also, when you do research on financial advisers, they tend to be Caucasian and male. That’s absolutely fine, but for some people, speaking to someone that looks like them makes it seem more accessible. For others it does not matter.”