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Financial Planning > Behavioral Finance

Asian-Americans No. 1 Immigrant Group, but Tough Crowd for Advisors

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Asian-Americans have surpassed Hispanics as the largest immigrant group in the U.S., and their affluence and high levels of income make them a coveted, though challenging, target market for financial advisors.

A comprehensive new study (titled “The Rise of Asian Americans”) by Pew Research shows Asian-Americans represent 36% of new arrivals to the U.S. from 2000 to 2010, overtaking Americans of Hispanic origin, who make up 31% of the nation’s immigrant population.

The nearly 6% of the population (18.2 million Americans) of Asian origin have diverse backgrounds, with most coming from China, the Phillipines and India, but with significant streams from Vietnam, Korea, Japan and other countries.

Despite these disparate origins, the Pew survey found that Asians in general place a very high value on marriage, parenting, education and work, all of which are associated with wealth. And indeed, the median annual household of Asian-Americans is $66,000, far higher than the U.S. average of $49,800, and all the more of an accomplishment given that the vast majority of Asian-Americans are first-generation immigrants; (74% of Asian-American adults are foreign-born).

This relative affluence, together with the fact that Asian-Americans, perhaps because of their immigrant status, are underserved by financial advisors (less than two-thirds of affluent Asian-Americans use advisors, according to research by Tiburon Strategic Advisors), should, in theory, yield a potentially significant market advantage to advisors who understand this population.

Eve Kaplan, a fee-only certified financial planner in Berkeley Heights, N.J., knows more about Asian-Americans than most, and cautions there are profound cultural barriers against attracting them as clients.

Kaplan, who says she spent something like half her life immersed in Asian culture, through work, travel and study, says the first critical thing to know is that the term Asian-American “is an almost impossibly broad category. Indian-Americans are completely different from Chinese Americans.”

While Asian-Americans may have overtaken Hispanic Americans, Kaplan says the latter group, who are mainly Catholic and Spanish-speaking despite their many differences, “probably have more in common than Asian-Americans, who are all over the place culturally.”

Kaplan, who speaks Japanese fluently, some Malay and some Chinese, says a key barrier to providing financial advice to Asian-Americans is a sense of embarrassment for those who are not doing well financially. “It’s easier to seek counsel from a church or a friend and not air their dirty laundry with a professional,” she says.

Self-reliance is a critical value in South Asia, she adds. “I’ve had a number of Indian clients. A lot of Asian immigrants may lean on each other for loans and getting businesses started and may not feel they need professional input.”

Kaplan says her state of New Jersey is home to the largest Indian-American community in the United States, and that even wealthy Indians may not be prime candidates for financial planning.

“They do tend to be more do-it-yourself types and not into the idea of paying significant amounts of cash regardless of their net worth or their income. It’s just culturally the way they are,” Kaplan says.

Speaking the language may not avail advisors either, says Kaplan, who earlier in her career was working on a PhD in Japanese history.

“If I were hard-pressed I could do financial planning with my clients in Japanese. The truth is, it’s not a language issue. And there are Asian professionals out there. It will take more time [for Asian immigrants] to acclimate to the idea of planning and seeking input [from professionals],” Kaplan says.


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