Financial service firms that ignore the Asian-American market can be missing a major profit opportunity, experts say. As a group, Asian Americans show an impressive population increase, higher-than-average income and an educational level that represents an exceptional potential for continued strong earnings growth.
Although Asian Americans represent 4% of the total U.S. population, companies like Wells Fargo Bank, Bank of America and New York Life find that this group represents significant sales opportunities. All have developed extensive marketing programs specifically targeted to various Asian audiences.
One reason is that the Asian-American population is growing faster than any other ethnic group in the country. Since 1990, it grew by more than 48%, from 6.9 million to about 10.2 million in 2000. That is five times the general population growth rate.
Moreover, the group is prospering. Among 3.5 million Asian-American/Pacific Islander households, median household income reached $55,121 in 2000, compared to an average of $42,148 for the nation as a whole, U.S. Census Bureau data shows.
More than half of these households earn more than $50,000 annually, while a third earn more than $75,000 and a fifth more than $100,000, according to census data.
Yet it is a young population, with an estimated median age of 31.1 years, more than six years younger than non-Hispanic whites.
Educational levels are high. In 1997, the Census Bureau found, 42% had a bachelors degree, compared to 25% of whites. Nearly one-seventh of doctorates in the U.S. in 1995 were conferred on non-Hispanic Asians and Pacific Islanders (not including foreign students). The group received a third of all engineering doctorates and one fourth of those in the physical sciences and math.
High education levels are reflected in the Asian-American workforce. Census data in 1996 showed 35% of adult males and 31% of adult females among Asian-Americans worked as managers and professionals.
The term Asian-American covers a number of subgroups: 23% Chinese, 18% Filipino, 16% Asian Indian, 11% Vietnamese, 11% Korean, 8% Japanese and 11% other.
Of these, Chinese-Americans and Asian Indians are the wealthiest. The two groups together make up just over 40% of the Asian-American population but earn 46.7% of the income, reports Packaged Facts, a division of Marketresearch.com, New York.
Those of Chinese heritage represent a total annual income of $62.1 billion, estimates Packaged Facts, while Asian Indians earn $51.2 billion.
Asian-American families tend to be larger than the U.S. average. Just over half have four people or more, compared to 34.5% for non-Hispanic white families, the Census Bureau finds.
Datamonitor Inc., a research firm in New York, found in a survey early this year that education is the primary reason for savings among 21% of Asian households, compared to 10% of non-Hispanic whites.
Retirement is the primary financial goal for 20% of Asians, well below the 29% for whites. Part of the reason: The customary extended family among Asians helps support their seniors, notes Brendan Ford, a senior analyst for Datamonitor.
Datamonitor found that Asian-Americans account for only about 2% of all funds invested by U.S. consumers in accumulation-type life insurance products.
In contrast, they account for about 4% of total money held in savings by Americans.
“They are a risk-averse community,” Ford says.