Research Question:
There is no doubt COVID-19 continues to have widespread economic concerns, especially in the United States where there has been constant political debate about when and how much economic assistance the U.S government should give to its citizens. The economic difficulties experienced by many has demonstrated the significance and importance of financial literacy and financial preparedness. As a result, individuals like myself, have turned to educating themselves on techniques and strategies to invest through a brokerage firm. Before starting to invest, one will look through the various brokerage firms and their services offered. These services are carefully advertised through deliberately chosen images of people and words by marketing teams. With that being said, I am interested in seeing if brokerage firms demonstrate racial and ethnic bias on their online websites through their portrayals of individuals.
With this in mind, my research question is, what is the effect of racial and ethnic bias on the online marketing techniques of brokerage firms? My question’s independent variable is bias, which can be in the form of stereotypes and assumptions made about populations and consumers. Stereotypes and assumptions made about a group indicate bias in marketing as it can change how a company, in this case brokerage firms, advertise a product to the public, a specific race, or ethnic group. Meanwhile, my question’s dependent variable is how online brokerage firms market their services to different racial and ethnic groups through images used. Lastly, my unit of analysis for my question is brokerage firms’ websites.
Researching racial/ethnic bias and implicit stereotypes/assumptions in brokerage firms’ websites is important as more people are turning to investing and teaching themselves financial literacy during this time of economic uncertainty. Looking for racial/ethnic bias in these firms’ images will perhaps showcase whether they are being inclusive and considerate of other racial/ethnic groups participating in the stock market.
Introduction & Background:
A brokerage firm can be thought of as a “middleman” that facilitates transactions between buyers and sellers in the stock market (Hayes 2020). Thus, brokerage firms also ease social interaction, enhance economic activity, and facilitate political progress (Stovel and Lynette 2012). Currently, people have the option to choose between traditional and online brokerages, where each can offer their own set of advantages depending on the individual. For example, if an individual would like to manage their own portfolio to avoid fees and would like the convenience of doing so from their phone, they would lean towards an online brokerage (Oetzel 2004).
People who participate in the stock market buy and sell shares of publicly traded companies (Chen 2020). In the United States these securities are held in the leading stock exchanges, such as, the New York Stock Exchange (NYSE), Nasdaq, and the Chicago Board Options Exchange (CBOE) (Chen 2020). Apart from trading stocks individuals can also trade exchange trade funds (ETFs) and bonds.
Deciding what to invest in, what strategy to use strategy, and what risk level an individual will take can vary among individuals as various factors influence a person’s portfolio, that is a collection of financial investments (Tardi 2021). One of the main things that can directly influence if an individual even has financial investments is their level of financial literacy, which can vary by age, gender, and income level (Garg and Singh 2018). Typically, young adults, women, and those with lower income levels have lower financial literacy, which in turn inhibits their ability to manage the risk and diversification of a financial portfolio (Garg and Singh 2018; Stevenson and Plath 2006). Meanwhile, older adults, men, and those with greater income levels have higher financial literacy, which allows them to take advantage of their knowledge and resources to create wealth (Garg and Singh 2018).
The second factor influencing investments, strategy, and risk level among individuals is their current goals and whether they plan to invest towards retirement, or even early retirement. Having retirement in mind will typically lead investors to take a simple and low risk approach with their investments as they, ideally, have the time to make their earnings compound, that is the process where earnings of assets are reinvested to create more earnings over time (Chen 2021). Individuals considering retirement will also consider personal factors, such as, their current job and their satisfaction, financial satisfaction, and mental/physical illness in order to calculate how much they need to be saving and investing in order to retire comfortably (Topa, Depolo and Alcover 2018). Meanwhile, those who do not have retirement in mind and plan to only invest for a short time, will aim to make earnings in a brief period by implementing a more complex and high-risk approach, such as day trading (Kuepper 2021).
Lastly, when it comes to specifically choosing stocks to invest, individuals consider how well their values and interests match with a company. If an individual finds that they identify with a company’s goals and beliefs, they are more likely to invest in that company as opposed to other companies with similar returns or risk level (Aspara and Tikkanen 2011; Chung 2000). For example, if an investor identifies with Tesla’s goal of changing to sustainable energy, they will be more likely to invest in this company as opposed to similar companies in terms of returns and risk level.
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