As the fastest growing and by some measures wealthiest minority, Asian-Americans would seem the choicest target for any number of product marketers. And the financial services business is no exception.
Many of the biggest names in life insurance–New York Life, Prudential, AIG and Transamerica–all have unique strategies aimed at capturing the group the U.S. Census Bureau in its 2000 study said has the fastest growth rate of any racial group in the nation, with a 49% spike in the last decade of the 20th century.
AIG and Transamerica stress their ties with Asia going back as far as the end of World War I.
Rick Niu, AIG vice president, multicultural marketing, notes his company was actually founded in China in 1919. “A global brand with deep roots in Asia resonates well with Asian-Americans,” Niu says. “Today the company operates through AIA, Nanshan, Philam Life, Tata AIG and other household brand names across Asia.”
Bill Tate, senior vice president and chief marketing officer for Transamerica Occidental Life Insurance Company and Transamerica Insurance and Investment Group, says his company first opened its door in Shanghai in 1933 and in Hong Kong in 1947. “We’ve served communities in the U.S. and Asia for many years through several general agencies that are owned and operated by Asian-Americans,” Tate says.
But proud traditions only can go so far in satisfying the financial needs of a group who place great stock in both education and business ownership.
According to Census 2000, Asians have one of the strongest rates of business ownership, managing more than 800,000 enterprises nationwide that generate $302 billion in annual sales.
And Asians also have the highest level of educational attainment of all groups in the U.S. with 44% holding at least a bachelor’s degree.
So, what does this means when it comes to the purchase of protection and investment products?
Born and raised in Beijing, Niu got a firsthand look at Asian cultural attitudes when it comes to saving and investing, while his MBA from Columbia helps translate that understanding into success on the financial services playing fields.
“While viewed traditionally as risk-averse, cost-sensitive and in favor of guarantees in any purchase, Asians are developing more risk-taking attitudes as the world becomes more global,” Niu says.
Thus, Asian life insurance companies that used to focus on simple endowment policies now have started sophisticated investment-linked products similar to their Western counterparts.
And the same could be said for their relatives who have settled in the U.S., with traditional cash-value whole life policies and fixed annuities no longer the staples they once were in the Asian-American portfolio.
“Over the years, as they have become wealthier and more integrated into mainstream America, they have become more receptive to other mainstream choices, such as return-of-premium life, universal life and equity-index products,” Niu says.
And not only less risk-averse but more selective as one focus group conducted by AIG American General showed. Chinese Americans in California taking part in that study typically compared a minimum of three life insurance carrier/product choices before making a decision.
“This has led to the rapid development of independent distribution targeted at Asian-Americans,” Niu says.
Tate says Transamerica focuses on term and universal life insurance. “With the financial objectives identified by this population, life insurance is an ideal solution. It can provide for families and business continuation, help fund a college education, and the cash value component of universal life insurance is as attractive as a built-in savings vehicle,” Tate says.
How you reach this segment is critical.
Tate quotes a LIMRA study noting that 80% of Chinese Americans who own life insurance purchased it through a life insurance producer. “Face-to-face interaction and personal relationships are highly valued and overwhelmingly preferred,” Tate says. “Whether they are independent agencies or institutional groups, it is the personal relationship that producers create with clients that make the programs successful.”
But even with increasing assimilation, cultural sensitivity remains a critical component in marketing to generations of Asians-Americans. Niu says that although Asian-Americans through the decades gradually treat English like their own language in a mainstream lifestyle, “their heritage is well-kept and their pursuit of the American dream never changes and you must respect that.
“Sometimes only sales representatives from the same culture can relate to that really well because they themselves have gone through the same experience in America,” says Niu, who quoted a Filipino producer of his acquaintance on this topic.
He told Niu: “My customers and I are from the same village back home. I know why they laugh and I know why they cry.”
And thus, multicultural marketing can be seen to involve so much more than providing marketing materials in different languages, he says.
New York Life Vice President Jane Conti says financial services marketers should understand the various sub-segments that make up the Asian population and their sub-segments in America. “These tightly knit sub-segments have established strong resource networks based on shared language, values, interests, concerns and activities,” Conti says.
Companies that exhibit an interest and actively participate in the life of their communities will gain an upper hand when it comes to winning their trust and business, she adds.
Chinese today account for about 20% of all Asian-Americans and have been one of the first markets that insurers focus on in this country. Although the Vietnamese market is small relative to some of the other Asian sub-segments, it is an important market for insurers to focus on because it is the fastest growing Asian segment, Conti says.
Due to high socio-economics, the U.S. Asian Indian market is another Asian sub-segment on which major insurers have focused their cultural marketing efforts. “Marketers agree that advertising to Asian Indian-Americans is best executed in English with cultural cues woven in seamlessly,” Conti says.
Saul Gitlin, executive vice president for New York-based Kang & Lee advertising agency, says that while many industries such as travel and leisure and personal computers have ignored the Asian-American market, that certainly cannot be said of financial services.
And the reason is as simple as Willie Sutton’s reply when asked why he robbed banks: It’s where the money is.
Highest Median Income
“Asians have the highest median income of any group–almost $10,000 more than Caucasians,” Gitlin says. “So, they are not just the most affluent among multicultural groups, they are among the most affluent of all segments of the population.”
Chinese Americans also represent one of the fastest growing sectors of high-net- worth investors (at least $500,000 in investable assets) in the country, Gitlin says.
“So, what the insurance companies have learned is that Asians are taking larger policies and they will stay longer with a company,” Gitlin says.
First-time life insurance buyers in the Asian-American community will more likely buy whole life immediately, rather than starting out with term.
“By virtue of these key demographic variables, the financial services industry has been scrambling to really get this right. They can be held up as one of the best examples in the category that is doing the right thing,” he says.
Companies do not need to have any formal Asian-American outreach program for their producers to start their own.
Massachusetts Mutual financial advisor Yin Long, who is based in Bridgewater, N.J., spends her days and nights going to events of local Asian-American organizations where she will either be a featured speaker or just mingle with a card handy.
She finds generalizations about marketing to Asian-Americans problematic, and sometimes sees no reason why she should handle a walk-in if he is Asian.
College education and retirement funding have proved to be her most popular seminar topics.
Having spent her life in China throughout undergraduate school, Long is fluent in Chinese. But she finds that clients, even if they speak halting English, would prefer their presentations in English. “After all, we don’t have any prospectuses in Chinese.”