From the February 2010 issue of Investment Advisor • Subscribe!

A Self-Imposed Barrier for Advisors Serving South Asian Clients

There are just two issues that advisors who are interested in serving clients from the South Asian diaspora need to understand: Family and community. They form the bedrock of South Asian life, in the U.S. or any part of the world, and an advisor who can understand their paramount importance to the South Asian life will have no problem gaining clients in the space.

Yet many advisors are still leery of approaching this group. There's little doubt that one of the most professionally successful immigrant communities in the U.S. is of great interest to advisors, says Rita Cheng, an advisor in Bethesda, Maryland, affiliated with Ameriprise Financial Services, but the general feeling is still one of "I don't really get these people, I'll let someone else handle them," she says.

This, though, is a self-imposed barrier, says Bhupesh Shah, president of ethnicomm inc., a consulting firm providing marketing, sales, and Web strategy services to small- and medium-sized businesses, and advisors need to recognize that. "While there may be a few first-generation South Asians who seek financial advice from professionals who speak the same language, overall, the preference is to deal with someone who understands the cultural nuances that may affect their investment goals," Shah says.

While South Asians, like any other ethnic community, need to manage their assets and require the planning help needed to pass those assets to the next generation, one thing that has not changed is that they stick to core values, traditions, and culture, says Hemant Singh, principal partner with New York-based K.S. Capital Management and a registered representative of Lincoln Financial Securities Corp. Advisors who seek out these clients must have the background to appreciate their culture, but also the sensitivity to understand the whys and the why nots that are incomprehensible to a non-Asian, he says.

The first step in that process is understanding what exactly South Asia is. Cheng believes that many advisors still do not even know where the region is on the world map. Understanding that South Asia consists of several different countries--India, Pakistan, Sri Lanka, Bangladesh, Nepal, Bhutan, and The Maldives--where there are many different ethnicities, languages, and religions, is fundamental in making sure that advisors can relate properly to their clients and can guide them toward the kind of investment choices suited to their particular background, she says.

Overall, though, South Asians do share a similar cultural heritage and, due to their colonial past, a comfort transacting business in English, Shah says. For all South Asians, regardless of their ethnic, religious, or linguistic backgrounds, family supersedes individual interests. "Family can range from a couple to an extended or multigenerational family, which may include in-laws and grandparents," he says. "It is not uncommon for parents to live with their child, or for a single working professional to support their parents or relatives either in America or back home."

These are the sorts of cultural peculiarities that advisors need to get a handle on if they are to succeed within the South Asian space, says Subha Barry, former managing director and head of diversity and inclusion at Merrill Lynch, who now teaches a course at Columbia University's School of International and Public Affairs.

Education a Top Priority

Advisors must understand that their children's education is a top priority for South Asians, as is planning for their children's weddings and taking care of relatives and parents back in the old country.

Indeed, it is almost a given for South Asian parents that they will make personal sacrifices in order to send their children to a private school and pay for their undergraduate and even their post-graduate education, before they think of buying a second home or taking fancy vacations, Barry says. "They will save for their daughter's wedding and for their parents' healthcare even at the cost of foregoing extras for themselves."

South Asian clients need to feel that their mindset is understood. Moreover, "advisors need to get very familiar with the community and feel comfortable speaking candidly about the unique planning and long-term financial goals and needs, so that their prospects can easily relate to them, without feeling judged or different," Barry says.

According to the 2000 census, there are around two million South Asians living in the U.S. The South Asian population has the highest median household income in America of any minority group, Shah says, and an estimated annual buying power of over $20 billion.

Advisors have been making inroads into the South Asian space, but according to Barry, their efforts are still "a work in progress." Many advisors either don't know how to approach the South Asian community, or are communicating with this segment using the same strategies they would use in their conventional marketing, Shah says.

Reaching out to South Asians isn't as simple as replacing a Caucasian person with a South Asian in an advertisement. Advisors need to invest resources in understanding the South Asian culture and building relationships within that community, Shah says. They need to support initiatives that foster family and community values, get to know different cultural and professional groups at the local level and attend their meetings, thereby gaining trust.

The good news is that once advisors gain the trust of a South Asian client, they can be assured of enduring loyalty and word-of-mouth references to others, Cheng says. "The easy part for advisors is that this is also the kind of community where saving for long-term goals such as education is ingrained into the culture," she says. "You don't need to teach them or make the sales pitch; it's already there."

Regular Investment Advisor contributor Savita Iyer-Ahrestani can be reached at
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