Racial Concordance in the Market for Financial Advice

Christopher P Clifford, William Gerken and Tian Qiu

The Review of Corporate Finance Studies, 2023, vol. 12, issue 4, 906-938

Abstract: We examine the role of race and racial concordance between financial advisors and their local community. We document significant differences in stock market participation based on community racial composition, as well as differences in the characteristics of communities served by minority advisors. Notably, minority advisors are more likely to serve racially concordant communities, which tend to be poorer. We find that racial concordance has only a modest relation with local stock market participation. However, while minority advisors are more likely to leave the industry, this relation is mitigated among advisors located in more concordant communities. (JEL G20, G50, D14, J15)

Date: 2023
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