With the George Floyd murder trial now underway, I’ve recently reflected on how the financial services industry responded to the death, which reawakened the Black Lives Matter movement and conversations about inequalities that persist in society.
My initial emotion was frustration. Why did it take the death of a black man on the other side of the Atlantic Ocean for the inequality along the lines of ethnicity that runs through everything involving money to gain mainstream attention?
The financial industry rightly shines a light on gender inequality, but ethnicity wealth inequality is the glaringly obvious outstanding item that desperately needs a turn in the spotlight.
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The latest Office for National Statistics (ONS) figures on household wealth by ethnicity in Great Britain (published in November 2020) revealed a wealth chasm – not gap – in the period between April 2016 to March 2018.
Almost across the board, people of colour are worse off than their white counterparts, but one of the standout findings is the ethnicity pension disparity. The median private pension value was £80,000 for white British groups but less than a meagre £5,000 for Bangladeshi, Black African, Chinese and any other minority ethnic groups.
The ONS said that disparities in employment rates and earnings will contribute to the ethnicity pensions gap, but also points to a pensions knowledge gap and the likelihood of participating in available schemes being lower among some minority ethnic groups.
The Covid-19 pandemic is making this situation worse. In October, the Financial Conduct Authority (FCA) released a survey, which revealed that the economic effect of Covid-19 had disproportionately affected the income of those in Black, Asian and minority ethnic (Bame) communities. The issue is not explored in great detail in the City watchdog’s survey, but the results were published during Black History Month, which aims to challenge inequalities in all areas, including finance.
Lack of research is an ongoing motif when it comes to exploring how attitudes and experiences among Bame communities might affect their access to, and use of, financial services.
Historically, many black Britons distrusted the financial industry. The Windrush generation set up the first credit unions in Britain in the 1960s in the response to the discrimination they faced by the high-street banks that often charged them higher interest rates or requested higher deposits for loans to buy houses and flats.
Times have (thankfully) changed, but the residual impact of historic inequality can still be seen today. I still know aunties (a title to signal respect towards an older woman in African and Asian communities) who save and borrow money through ‘pardners’ – an informal funding arrangement typically among family and friends practised in black communities – rather than through a conventional financial organisation.
Sadly, there is no silver-bullet solution to address wealth inequality faced by some minority ethnic communities, but it is important for members of Bame communities to get their voices heard.
Interesting research by the Money and Pension Service published in November last year found that those in the UK who identify as Bame are also more likely to be worried about their current money situation, with nearly half (45 per cent) admitting they are worried in comparison to the national average of one in three (35 per cent). Some 40 per cent wish they could be more comfortable talking to friends and family about money.
Perhaps this discomfort extends to completing surveys about money. Exploring the differences in the expectations and reality of retirement among the different communities was a key objective during the planning of interactive investor’s Great British Retirement Survey 2020 – which took place long before George Floyd’s death. However, in a survey that attracted over 12,000 respondents, there simply wasn’t a big enough sample from Bame communities to draw meaningful and fair conclusions.
Interactive investor recently launched the third annual Great British Retirement Survey, and we are urging people from all communities to take part to make it the most inclusive survey yet.
It is vital for us ethnic minorities to get our voices heard to allow the financial services industry, which is still very much pale and male, to develop a greater understanding of the very real differences in economic outcomes for different groups in society.
The industry must also proactively endeavour to understand how the system plays a role in producing unequal economic outcomes, how it directly contributes to wealth inequality along ethnic lines and establish what needs to be done for a more inclusive financial system – a key enabler in reducing poverty and boosting prosperity.
The ethnic wealth inequality gap was generations in the making and is likely to take generations to close. Faster change relies on the industry understanding the unique challenges of different groups in society and actively addressing them, not applying a ‘one size fits all’ approach, because it doesn’t.
We want as many people as possible, from all corners of the country and all walks of life, to take part in our Great British Retirement Survey.
To participate, visit: Interactive Investor