For those in a minority, it can be difficult for your voice to be heard and your views to carry weight. Even if the majority group listens, it is not easy for its members to stop seeing the world as they do and start seeing it through your eyes.

This is always the problem when the predominantly white financial advice profession tries to tackle the lack of ethnic diversity within its ranks and client base.

It sets up diversity, equity and inclusion (DE&I) committees and says its doors are open to everybody. Yet the same kinds of people tend to walk through. Why is that?

Legacy issues

It was not until the Race Relations Act 1965 that legislation made some forms of racism an offence. Even in the more progressive 1960s, certain businesses were refusing to serve people or overcharging them based on the colour of their skin.

Cultural values towards credit play a significant role in how individuals navigate the financial system

Black and ethnic-minority families have not had the same access to products and services that others have taken for granted, which has had repercussions.

“People of colour historically have not had the opportunity to build wealth over the generations, so the financial system hasn’t been designed for them,” says Tynah Matembe, founder of MoneyMatiX Financial Education and host of the ‘Grow Your Money’ podcast.

“Systems that are discriminatory should be named and shamed, while affordable and innovative banking and financial services should be promoted.”

Not surprisingly, research still highlights disparities between the finances of black and ethnic minorities and those of their white counterparts.

Earlier this year, Scottish Widows reported 14% of black women and 15% of Asian women were opting out of pensions, compared to 5% of white women. Reasons given by black and Asian women included a lack of trust, affordability and preferring to save money in other ways.

Belvedere Wealth Management senior partner Emmanuel Asuquo — who appears on TV as a financial expert for Channel 4 — suggests cultural reasons may also play a part.

It could be that black and Asian families have followed traditional gender roles — where men were breadwinners and women the homemakers — for longer than white families. But this is changing, with black and Asian women now more likely to work.

We need to make a concerted effort to diversify how we push products out, making them truly inclusive

“Only now are they realising that one income isn’t enough,” says Asuquo. “I think the pension situation will change over time.”

The Scottish Widows research also found that black and Asian women were more likely than white women to have multiple jobs, which probably indicates those jobs were low paid.

A cultural lens

Different cultural values are not always easy to navigate. Credit plays a big part in UK financial services, where people routinely borrow money to buy houses or cars, start businesses and so on. But credit can be tricky for some black and Asian people to understand due to cultural differences, which can lead to them being ‘locked out’ of financial services.

It sounds simplistic, but a lot of the problem stems from a lack of representation in the workforce. We need inclusive policies and recruitment practices

“Advisers would do well to consider how cultural values towards credit play a significant role in how individuals navigate the financial system,” says Matembe.

“For many people from cash-based economies or backgrounds, where credit is viewed with suspicion, the concept of using debt strategically can be quite foreign and even intimidating.”

Asuquo, whose parents came from Nigeria, says that, when people in Nigeria want to buy a house, they purchase the land and employ builders to build on it.

“It’s the same in the Caribbean — people don’t take out mortgages,” he says. “But, when they come to the UK, nobody tells them how it works. So, they either learn by their mistakes or assume they can’t do it and focus on buying land at home.”

Often, they end up with a home they plan to retire to, but never do as they develop ties in the UK.

When people see others from similar backgrounds using credit responsibly and successfully to build wealth, it can help shift perceptions

“If you feel you belong, you can set down roots,” observes Asuquo.

“You’d be happy to buy a house and open an Isa.”

Matembe agrees that the issue is not just about access to credit — which can be difficult for minorities to obtain. It is also about reshaping mindsets and educating people on how to use credit responsibly “with a cultural lens”.

She says: “For many, the avoidance of debt is rooted in a desire for financial security, and changing these ingrained values requires a thoughtful approach. Tailored financial education programmes that consider cultural contexts and historical disadvantages will help bridge the knowledge gap.”

Matembe suggests combining this with examples of lived experiences and success stories from within the community.

For many people from cash-based economies or backgrounds, the concept of using debt strategically can be quite foreign and even intimidating

“When people see others from similar backgrounds using credit responsibly and successfully to build wealth — whether through homeownership, education or entrepreneurship — it can help shift perceptions,” she says.

A representative profession

A recent study from Mannheim Business School in Germany, looking at gender stereotypes in financial advertisements, briefly touched on ethnicity. It found that 74% of the main figures in the ads were white, with ethnic minorities more likely to be shown in low-status, low-expertise positions.

Although ads are not real life, they shape people’s thinking about financial services. As Asuquo says, “Seeing is believing.”

He adds: “If I go on a website and I don’t see people who look like me, I’m going to think this is not for me.”

Even if an adviser’s client base is predominantly white men, their website can depict a more diverse range of people to show that the adviser is welcoming and inclusive, suggests Asuquo.

Systems that are discriminatory should be named and shamed, while affordable and innovative banking and financial services should be promoted

Others agree with his views.

Equilibrium Financial Planning head of best practice Sarah Hammond says: “A diverse workforce can help to build trust and ensure products and services are designed with a broader range of needs in mind.”

As a black woman working in fintech, Whitney Simon, head of DE&I consulting at technology PR and communications firm Missive, concurs.

“To make financial services more inclusive, we need to create access for black and ethnic-minority professionals in product development and the organisations themselves,” she says.

“It sounds simplistic, but a lot of the problem stems from a lack of representation in the workforce. We need inclusive policies and recruitment practices.”

Simon also points out there can be inherent bias in systems, with financial products seeming to be tested by the same groups.

People of colour historically have not had the opportunity to build wealth over the generations, so the financial system hasn’t been designed for them

“We need to make a concerted effort to diversify how we push products out, making them truly inclusive,” she says.

“The more diverse voices we have in the room, the more inclusive our products and services will be. It’s not rocket science, but it does require intentional effort and commitment.”

This is echoed by Matembe.

“More people of colour are needed in decision-making roles to ensure diverse perspectives are included in policy and product development,” she says.

Concrete action

Raising awareness of the need for ethnic diversity in financial services is all very well but commentators want to see concrete action.

The more diverse voices we have in the room, the more inclusive our products and services will be

“It is essential for the government to appoint a financial inclusion expert to lead the strategy and to advise on and develop policies with a focus on the needs of people of colour,” says Matembe.

“However, it’s not solely the government’s responsibility. Financial institutions, regulatory bodies and community organisations must collaborate to drive meaningful progress.”

This article featured in the September 2024 edition of Money Marketing. 

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