Racial and gender preferences when hiring a financial planner: an experimental design on diversity in financial planning

Abstract

Using an experimental design, a series of cumulative logistic regression models were employed on a sample of Black and White MTurk respondents to investigate the association among race, gender, and five different Likert-type dependent variables related to working with a financial planner. These variables included (a) the likelihood to hire a financial planner; (b) the likelihood to take a financial planner’s advice; (c) the likelihood to trust a financial planner; (d) consumers’ perceptions of financial planner competence; and (e) consumers’ perceptions of similarity between themselves and a financial planner. The hypotheses were guided by the similarity-attraction paradigm and prior literature. Respondents were randomly assigned to a hypothetical planner who was a Black female, a Black male, a White female, or White male and were asked to rate the planners on the aforementioned dependent variables. The planners’ race was indicated by his or her name and gender was conveyed by name as well as with pronouns used in the hypothetical financial planning scenarios. Dyads in which the races of the consumer and the financial planner were similar (e.g., the same) were expected to have higher ratings for each of the five dependent variables. Likewise, dyads in which the gender of the consumer and the financial planner were similar (e.g., the same) were expected to have higher rating for each of the five dependent variables. Results from this study revealed that, generally, consumers do not have racially biased preferences when evaluating whether they would hire, take advice from, or trust financial planners. White consumers perceived that Black planners were more competent than White planners, which was not expected. As hypothesized, Black consumers perceived themselves more similar to Black planners than White planners and White consumers perceived that they were more similar to White planners than Black planners. As it relates to gender, consumers were found to have some biases but not particularly in relation to similarity as hypothesized. All consumers were more likely to hire, take advice from, and trust female financial planners than male financial planners. In addition, consumers perceived that female planners were more similar to them than male planners. There were no gender biases on the perception of competence. In addition, female planners were more likely to take advice, trust and hire financial planners. However, they were less likely than males to see themselves as similar to the financial planner. When race and gender were separately analyzed with the dependent variable, likelihood to hire a financial planner and several covariates, married consumers were more likely to hire a financial planner than single consumers. Consumers in lower investable asset categories were more likely to hire a financial planner than those in the highest investable asset category. There was a slight decrease in the likelihood to hire a financial planner as individuals aged in the gender analysis. Results from this study provide a starting point for understanding the association between race and consumers’ preferences when hiring a financial planner and other related variables. In addition, this study builds upon the studies conducted on gender and consumers’ preferences in financial planning. The results should be of interest to financial planning firms and organizations, financial planners, financial planning academic programs and students, and researchers.