How Advisors Reach Asian-Americans
If financial advisors and financial services companies want to navigate business opportunities successfully in the Asian-American market, they must consider differences between generations and among ethnic groups within the market, say people familiar with this segment of the population. They must also understand the importance that Asian-Americans place on factors such as trust, business ownership, education and savings.
Trust is very important to Asian-Americans, says Susan Cooper, an executive vice president of the New York metro branch of AXA, New York. “Once they trust you, they really trust you.”
Explaining different products and tax advantages associated with each of them is also important, since this is an issue that concerns some clients, says Hyunyku “Ben” Her, a financial consultant with the Fort Lee office of AXA Advisors.
Advisors should recognize that the first and second generations of Asian-Americans are very different, according to Henry Park, a financial consultant with AXA Advisors, Fort Lee, N.J. Park, who works largely with the Korean community, says the first generation has worked hard to establish a business and often is willing to take risks and retain control in matters such as estate planning.
Their children often are professionals such as lawyers or doctors, Park adds, but sometimes they continue the businesses their parents have established.
Life insurance is very important to Asian-Americans, says Phil Salis, vice president with Metropolitan Life Insurance Company, New York. He says multicultural MetLife representatives, who comprise 25% of the companys reps, produce 36% of MetLifes insurance business. Among this multicultural segment, there is a heavy representation by Chinese advisors, he continues.
In order to satisfy this need for life insurance effectively, there needs to be a “heavy educational aspect” to the product, Salis says. “There needs to be education and not just selling.”
The Asian community can be reached through print and television advertising as well as through sponsorship of Chinese New Years celebrations or other events, such as the Hong Kong dragon boat races in which MetLife participates, he adds. This 2-day event draws over 30,000 attendees, he says.
The Internet is another way to reach prospective clients, he adds, and in the next 6-12 months, MetLife intends to launch a multicultural Web site in various languages.
Ning Zhang, president of the Coalition of Asian-Pacific Americans, New York, says corporate sponsorship is an effective way to reach out to Asian-Americans. For instance, he notes that many companies participate in the Asian-American Heritage Festival in New York each May. This is a better approach, he says, than joining Asian organizations solely to market and sell products.
Noting that integrity is important to this market, Zhang says this community does their own research and if an insurance agent tries to sell a product that is not suited to them, then trust is lost. It is better to sell a product that they need right now and sell them additional products later on as needed, he says.
“Common courtesy works well,” he adds. “A hard sell doesnt.”
High on the list of issues that are important to Asian immigrants is the ability to protect their families, says Saul Gitlin, executive vice president-strategic marketing services with Kang & Lee, New York. In Asia, these immigrants had family that provided a safety net but often they do not have that here, he explains. And while there still might be an emotional safety net with friends and relatives, help may not readily be available if needed, he adds. Consequently, life insurance is an important product, Gitlin says.
Educating a potential life insurance buyer can depend on his or her country of origin, he continues. For instance, in companies that have more of a capitalist tradition, there may be greater familiarity with the product and thus, more comfort with purchasing life insurance.
Gitlin notes, however, that whatever the ethnic background, because of the recent arrival of many immigrants, companies cannot take for granted what those immigrants know and dont know in terms of brand awareness and product understanding.
“They may not know the names, the jingles or be able to quote the tag lines that someone born and raised here would know,” he says.
Gitlin stresses the importance of the producer in providing information to clients. Since these are very entrepreneurial communities, most have their own network of agents. But, if an existing agency is near an Asian enclave, then it would be effective to bring staff on board that speak the language and can reach out to that community, he says.
Haidi Huang, an agent for Prudential in Industry City, Calif., with a client base that is largely Chinese, says her clients maintain ties to their roots on the Chinese mainland, Hong Kong and Taiwan. Many have businesses and other assets in their homeland that they retain but also need to protect their families in their new country. “The bottom line is protection,” she adds.
Family, according to Huang, can comprise 3 to 4 generations. Parents take care of grandchildren and when parents need help, they are taken care of, she says.
Saving is also important to this community, she continues, and because it is important, they like permanent life insurance and often larger life insurance policies, Huang explains.
They dont like liabilities, she adds, and many pay off their mortgages in 15 years or less.
Once a client is a citizen or has a green card, if they are in the U.S. for more than 183 days, then estate tax issues could arise, she says, so advisors need to discuss estate planning.
Retirement is also an area with which advisors can help Chinese immigrants, she continues. In China, retirement plans are just starting to be offered for business owners, Huang notes.
Miny Ying, executive vice president and co-founder of PacWest Financial Management, San Marino, Calif., says there are many immigrants arriving from Taiwan and China and, in fact, her business has tripled in the last 18 months.
Reaching this “huge” market requires education in investment areas such as the stock and bond markets, according to Ying. For instance, she explains, in China, Hong Kong and Singapore, investing in the stock market is thought of as more akin to gambling than taking a long-term stake in the market.
And, when these people do invest, they often invest aggressively, Ying adds. She says she had a client who had $2.5 million invested in one company. She persuaded this client to diversify and later on, the stock he had held lost 60% of its value.
Her clients also favor real estate and direct investments like a business, she says.
Ying says that as many as half of her clients still have relatives in their homeland, making estate planning an important issue.
Service and lower fees are important to her clients, Ying says, so she provides them with her cell phone number so they can always reach her.
Clients are not interested in paying planning fees, she says. “They dont want to pay $5,000 for a plan.” They want to pay for tangible things, so they are more willing to pay commissions on actual products, Ying explains.
“They want to know What can you do for me?” she continues.
Still another concern, Ying says, is liquidity, with her clients wanting to maintain 18-24 months liquidity.
Ying says she adds new business by doing a good job and getting referrals, not by advertising. “Thats my business model. I just want to do a good job and get referrals.”
K.C. Lam, a financial advisor with Financial Planning Group of Memphis in Memphis, Tenn., says his clients concerns are savings, education and retirement.
They are always concerned about higher education, he says, since many do not have a good education. Thus, there is a great interest in 529 plans, he continues.
Most have good saving habits and, in addition, have houses that are paid for, says Lam. Typically, Asians will carry 10- to 15-year mortgages, he says. Between 28-30% of his clients are Asian, he says, but they represent half of the premium and investments of all the clients he represents.
There is not a lot of interest in disability insurance, he explains, since clients figure that even if they were to be disabled for a prolonged period, the spouse would step in and take care of the business.
Liquidity is an issue for his clients, and typically, they want 6-24 months in emergency funds, he adds.
The issue of liquidity, according to one individual interviewed who declined to comment for attribution, is tied to the importance of cash in making business investments. “They believe in cash.”
Eve Kaplan, a fee-only financial planner with Kaplan Financial Advisors, Berkeley Heights, N.J., says cultural differences manifest themselves between her Chinese and Japanese clients. Both groups tend to be embarrassed when they have to seek financial advice, and a financial planner has to take that into consideration when working with them, she says.
But Chinese clients are more upfront about money and will openly discuss earnings and rent, she says, while Japanese clients, on the other hand, are more reticent and take more time in the relationship to develop trust.
How an advisor works with a client also depends on the generation, she continues. Second and third generation Asians are very Americanized and often their business accounts for a large portion of their wealth, Kaplan says. Since much of their wealth is embedded in their business, valuation can be more difficult than if their assets were in mutual funds where public information is available, she says. Valuing the business, passing it on to the next generation and doing so in a tax efficient way become very important, Kaplan adds.
Ted Freight of Creative Financial Design, Lansing, Mich., says his Asian clientele is largely Vietnamese and Chinese. He says his son and a Vietnamese friend of his son both joined his business after college. His sons friend was a refugee following the Vietnam War and had to flee to this country. When reaching out to Vietnamese clients, his sons friend was invaluable in understanding the sensibilities of the Vietnamese culture.
For instance, among immigrants from the Mung region of Vietnam, selling life insurance is a delicate matter, Freight says, because it can be misinterpreted to suggest that you wish the potential buyers dead. His sons friend had to approach the issue delicately to avoid such misunderstandings, Freight explains.
The Hong Kong dragon boat races, which are held annually near a large Asian-American enclave in New York, draw over 30,000 attendees. Insurers have found the event an effective way to reach this market.
Reproduced from National Underwriter Edition, November 4, 2004. Copyright 2004 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.