From the August 2007 issue of Boomer Market Advisor • Subscribe!

Take advantage of our multicultural economy

Advisors shouldn't need to be told that minority markets are growing; the news comes from everywhere: television, print, online. If an advisor is ever in doubt as to how much an emerging market can contribute to his practice, he should visit the Web site of the Selig Center for Economic Growth, Headquartered at the Terry College of Business at the University of Georgia, the Selig Center compiles statistics about buying and spending power no advisor should be without. We talked the Center's director, Dr. Jeffrey Humphreys, about the work they do.

BMA: Is corporate America keeping up with emerging markets?

JH: A lot of financial institutions are moving this way, in particular with respect to the Hispanic market and the Asian consumer market. Part of the migration I'm seeing with some of the financial institutions toward Hispanic consumers reflects, to some extent, some of the 2000 census results, which are sort of a wake up call to America. I think a lot of companies realized they were sort of behind when it came to tapping the potential in that market. Rapidly, they began to shift their marketing resources away from mass market advertising and mass market product design and mass market communications toward a niche or diversity market. I call it the multi-cultural economy.

BMA: You talked about the Hispanic population being the surprise of the 2000 census. Is there another market like that?

JH: There was a lot of growth in the Native American consumer market as well. But it is a small market, so even if it grows rapidly, it still doesn't make a lot of sense for companies to devote more resources to it. Also, I suspect that a lot of that growth in Native Americans may be due to a greater tendency to self-identify as Native Americans. I think that to some extent the growth in that market is sort of a sense of cultural identity. But that's not bad because that's exactly what marketers want to know. Marketers want to know what people think of themselves.

BMA: If there is a market outside the Hispanic market that is going to explode 10 years from now, what would that be?

JH: There is another one. If there is another opportunity that may be underestimated, I think it is the Asian market. That is one attractive market in terms of the growth rate, and the income caps are extremely high, the growth rate is extremely high. The educational level is quite high. Financial products typically are luxury goods. You buy more of them as you go, especially as your income goes up. Interestingly enough, it is a market that surprisingly is not invested very heavily in home ownership. I think there is a lot of potential for the future of Asians to move out of rental housing into home ownership. That will be providing opportunities for financial institutions. Quite frankly, I make that exact same statement from the Hispanic market. There is going to be a big opportunity there for the financial services industry to help Hispanics move into their own homes over the next decade. I think that is going to be one of the new big areas of growth for the financial services industry with respect to both the Hispanic market and the Asian market.

BMA: What kind of growth will the Hispanic and Asian markets offer?

JH: If you are after the biggest market, the baby boomers are where it is. That's the sweet spot. But if it is the fast-paced growth, where there's a little less competition and the margins are going to be a little higher, I would tend to focus on the Hispanic market or even the Asian market.

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