Knowing What Affluent Hispanic Clients Value
Many people underestimate the wealth of the Hispanic market and how quickly that wealth is growing, says Roberto Orci, founding partner, M3 Alliance Consulting, Los Angeles.
Research done in 1998 by J.D. Power and Associates, Westlake Village, Calif., shows that household financial assets among Hispanics in the U.S. totaled $750 billion. That figure is projected to grow to $2,500 billion by 2010, Orci says.
About 31% of Hispanic households earn $50,000 or more; about 13% earn $75,000 or more; and about 6% earn $100,000 or more, he says.
“Theyre not just doing well, their wealth is growing much more quickly than the rest of the population,” Orci says.
Moreover, the high-net-worth Hispanic client is educated, assertive and unafraid to tell her financial advisor what she thinks of her service, says Luis Barrionuevo.
She also expects her advisor to know something about her culture, says the managing director for MetLifes Plantation, Fla., office. So, it is imperative for advisors who want to penetrate this market first to understand it.
In south Florida, there are three distinct groups that make up the majority of the affluent Hispanic community, according to Barrionuevo. They are Colombians, Cubans and Venezuelans.
The affluent Colombian client in south Florida is a relatively recent arrival, he says.
“Venezuelans are newer on the scene of the Hispanic business community,” he says. “They are very interested in owning small businesses.
“The Cuban population is an established one. They have a long history in the area and own a lot of businesses,” Barrionuevo adds.
Acquiring wealth through real estate or other entrepreneurial activity such as business ownership, rather than through ownership of financial products, is typical of this segment because this is how they earned money in their home country, Orci says.
In fact, affluent Hispanics in the United States own fewer financial products than the general population not because they are not interested in them, but because they are simply unaware of them, he says.
“Most people dont get rich in their home countries in the stock market; rather, they earn wealth from what theyve built,” Orci says. “When they come here, they dont think of the typical financial products, they build wealth by being entrepreneurial.”
Its important to understand such nuances because it helps build credibility, says Ed Morales, vice president, diversity recruiting, Prudential, Newark, N.J. And credibility is imperative in this market, he adds.
In order to build credibility, a planner must show he not only understands the community, but also that he is interested in it for more than just business contacts.
“Giving back to the community through Hispanic organizations and doing things for the community at large is critical for credibility and for acceptance,” Morales says.
In fact, many companies mistakenly assume their image in the perception of the Hispanic market is the same as that of the general population, Orci says.
“You have to understand how they relate to your brand and structure your communication based on that,” he says.