A new study by researchers at the University of Georgia and Kansas State University, finds a major racial disparity in the use of financial planning services.
As one might expect, a major reason for the racial difference is that the fact that Black households tend to have lower income levels and lower net worth than White households. The data showed that when differences in income and wealth were accounted for, Blacks were actually more willing than Whites to access financial planning services. But the study also found that lower levels of education, a lower willingness to take financial risk, and a shorter horizon for planning for the future contribute to the racial differences in the use of financial planning services.
Kenneth J. White, an assistant professor in the department of financial planning, housing, and consumer economics at the University of Georgia and lead author of the study, stated that “I believe our findings suggest that Black households understand there is value in financial planning and they’re more likely to use financial planners than other households, but they just have these barriers to entry.”
Among those barriers, Dr. White said, is the low number of Black financial planners in the industry and low levels of trust among Black households for financial institutions.
The full study, “Financial Planner Use Among Black and Hispanic Households,” was published in the Journal of Financial Planning. It may be viewed here.