September 14, 2010

The Colors of Money

In a series of postings, I'll be looking at all the different minorities out there--large, small, ethnic, racial and religious.

We are all aware of the great diversity that is a hallmark of the United States and of the many minorities that make up this nation. But ask an investment advisor like Darleen Gilmore, of Austin Wealth Specialists in Austin, Tex., about whether advisors are reaching out to these people and she’ll tell you, quite candidly, “No.”

Sure, advisors know that there are scores of minorities out there, and that they, like anyone else, need financial planning advice. But when it comes to looking for new clients, advisors are still going for the norm, Gilmore says, covering the middle ground, the terrain with which they are most familiar and can count on. They’re leaving the minorities to “someone else” because they don’t really know who they are and how they work.

That’s where this blog comes in.  In a series of postings, I’ll be looking at all the different minorities out there—large, small, ethnic, racial and religious. Women, the middle class, gays and lesbians, Generation Y, to name but a few, in an attempt to understand what they’re all about. Each one is unique; each one has different needs and goals, social and cultural peculiarities. I’ll be focusing on those, hoping to gain better insight into the different communities and thereby give advisors a better sense of their money management goals and needs.

Because there is money everywhere, and that’s the most important point, since, as Gary Rozier, vice president at Ariel Investments in Chicago points out, advisors typically go to where they can generate the most amount of money. They’re running a business, after all, not a charity. But uncovering new sources of money, finding clients with financial goals and needs in uncharted territories, means understanding the workings of different communities, he says.

Why is it, for instance, that so many minorities are under invested? In the case of African-Americans, “we didn’t grow up talking about the stock market at the dinner table,” he says. “Advisors need to understand that kind of thing. There’s a whole education process that needs to be undertaken.”

While the cash thresholds at which advisors typically accept new clients are high for many people (and not just minorities), there are still many out there who can meet them, Gilmore says. Think Indian doctors and IT professionals. African-American entrepreneurs. Second and third generation Latinos and Latinas (Hispanics, we know, are the fastest growing sub-segment of the population) with corporate jobs. Artists and musicians.

“In the past, most of the wealth was owned by the mainstream population, but we are seeing a change in the way the wealth is distributed,” Rozier says. “Advisors need to become aware of that and understand it.”

This summer, I spent a month in India, where I am originally from, interviewing various finance professionals, all of whom told me that financial inclusion—ensuring that more and more Indians are able to avail themselves of financial planning advice and find access financial products—is a universal goal to which they are all committed.

That goal is a valid one here in the U.S., too, and can become a reality if a greater number of advisors reach out to a greater number of people. Different kinds of people.

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