Knowing What Affluent Hispanic Clients Value

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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.

The Hispanic market is also more responsive than the general market, he says, explaining that if they buy one product from an advisor, theyre more likely than clients in the general population to buy more, so the cost of acquisition is much lower.

Barrionuevo says that to build credibility in the Colombian and Venezuelan markets, a planner should familiarize himself with “the customs from their cultures.”

One strategy is teaming up with someone from the community. One can look for such possible partners at soccer associations, business groups and sporting events, he says.

“Hispanic communities are starting to host tennis tournaments and polo events; they have local Chambers of Commerce and Cuban-American groups,” Barrionuevo says.

Juan Job, corporate vice president, New York Life, New York, says part of understanding the affluent Hispanic client is knowing that they value family.

Many of their financial priorities are driven by, “protecting the family, making sure they have a secure retirement, helping their elders,” Job says.

“Many are business owners, so they also deal with succession planning and a variety of issues that come from having money, not necessarily from being Hispanic.”

Orci feels that although the affluent Hispanic client has needs independent of ethnicity, there are basic shared beliefs that a company should be familiar with in order to be effective with this segment. Hes used his knowledge of common values in advertising financial products to this community.

“If its a savings product, we tie it to the familys well-being, their home, their childrens education,” he says. “Prior to seeing the advertisements, those products probably werent on the radar screen, but the fact that they dont own the products is more of an opportunity than a deterrent.”

Although the affluent Hispanic client is interested in the same products as the general population, “one of the things thats key is realizing were a community that deals with relationships first and foremost,” Job says.

“An agent should grow relationships with individuals,” he says. “We dont market to a community as a whole, we market to individuals. We work with them, assess their goals, objectives, dreams, aspirations and work to solve those needs.”

Morales says recent research by LIMRA International, Windsor, Conn., backs up this perception.

“The affluent or more acculturated Latinos in the U.S. prefer a consultative relationship with a well-trusted person who has a variety of products available to them,” he says.

Barrionuevo agrees that penetration into the market will only occur once relationships have been established.

“You have to be very up-front, very honest, your knowledge has to be up to par,” he says. “You cant smoke screen your way through this.

“The whole face-to-face concept is very important in these markets, at meetings and events, the conversation should be not only about business, but also getting to know each other, personally,” Barrionuevo adds.

Morales says face-to-face meetings are key to both acculturated and newly arrived Hispanics. Also key to both is that the planner display a sense of the Hispanic heritage and tradition.

The affluent Hispanic client is “looking for a financial planner to be very sensitive to the needs of the entire family as opposed to the individual,” he says. This nuance has “got to be internalized.”


Reproduced from National Underwriter Edition, June 9, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.