To build your practice for tomorrow, you should be tapping into the country’s growing multicultural populace today. According to December 2012 projections by the U.S. Census Bureau, minorities, now 37 percent of the population, are projected to comprise 57 percent of the population in 2060. That increased diversity encompasses more than just ethnicity and race, however. Rita Cheng, CFP, right, financial advisor with Ameriprise Financial Services, Inc. in Bethesda, Md., points to multiple diversity factors that advisors need to recognize in senior clients. These factors can include adults with disabilities, immigrant elders and LGBTs (lesbian, gay, bisexual and transgender). There is additional diversity within each category as well. “There are many different cultural and ethnic groups, considerable diversity within each of these groups, as well as many other factors that affect each person’s identity,” Cheng noted via email. “Similarly, a person may have a bicultural or multicultural heritage.”

See: Multicultural markets: Positioned for growth

Why it matters

There’s a business reason for understanding these trends. A recent Wall Street Journal article reported that in 2012, upscale Latinos—defined by the cited study as those with annual incomes between $50,000 and $100,000—accounted for 29 percent, or 15 million, of the U.S. Hispanic population. That figure is expected to double by 2050, according to AHAA, a marketing organization specializing in Hispanics.

Cheng cites statistics that Asian Americans have a median household income of $67,000, 32 percent higher than the overall U.S. median. But only 18 percent of Asian Americans work with a financial advisor, creating an untapped market.

Prudential’s “LGBT Financial Experience 2012-2013 Research Study” reports that median LGBT household income is $61,500 versus $50,000 for the average American household. LGBT households supporting a child reported a median income of $71,100.

Another Prudential study, the “2013 African American Financial Experience,” found that the African-American community is a growing economic force fueled by an increasingly powerful middle class. Key findings: Approximately four in 10 surveyed have an annual household income of $75,000 or more, and nearly 25 percent earn six figures. About one-third (35 percent) of African Americans surveyed have $50,000 or more in financial assets, including savings, investments and employer-sponsored retirement accounts.

So how can you start attracting a more diverse clientele? We asked several successful advisors for their insights.

1. Understand the complexities

Ken Waltzer, MD, CFA, CFP, right, president of Kenfield Capital Strategies in West Los Angeles, Calif., estimates that 25 percent to 30 percent of his clients are in the lesbian, gay, bisexual and transgender (LGBT) community. Advisors considering this market need knowledge in several areas, he suggests. For example, the laws affecting gay partnerships are evolving rapidly. The Defense of Marriage Act has been overturned and more states are allowing same-sex marriage. The ability to marry is causing gay clients to reexamine their status and determine if the benefits of marriage are worth the downsides. Adoption of children by same-sex couples is another area that requires expertise, and Waltzer has developed a specialty in working with couples that want to have children through surrogates. Medical issues, specifically HIV and AIDS, can arise more frequently than with non-LGBTs.

Non-gay advisors also need to determine their comfort level in working with LGBT clients, Waltzer cautions. Before launching a marketing effort, he suggests getting to know gay people as friends. “Talk to them about their lifestyles, about their views on life, politics and religion and stuff like that and also their views on money,” he says. “You know, get to know gay people in that way and make a decision, Is this the market I really want to go after? Am I going to feel completely comfortable, not only working with gay people but talking to them about things that may be very foreign to me?”

2. Adapt your communications

Tom Paz, right, associate vice-president, investments with Raymond James and Associates in Coral Gables, Fla., is as likely to meet with a Hispanic client as he is with a transplanted New Yorker. Paz was born in the U.S. to Cuban parents who immigrated to the country in the early 1960s. His clients include a mix of ethnicities and races: Hispanic, Indian, Asian, African American and non-Hispanic whites.

There are several challenges to working with such a broad range of clients. For example, New Yorkers often like to focus immediately on main points and results. It takes more time to develop trusting relationships with Cuban clients who tend to be more emotional. And although they all speak Spanish, a Cuban’s accent and jargon can differ significantly from a Peruvian’s or a Spaniard’s. Groups also vary in their communications preferences, says Paz.

While language can be a barrier, Paz believes that advisors who attempt to learn their clients’ native language have an advantage. “They (clients) love the fact that someone is actually trying to make the effort to communicate to them in their language,” he says. “The advice I’d give to anyone, whether they’re Hispanic or not, is just make the effort if you’re going to try to crack that market. You know, be yourself, be very genuine and they’re going to see your honesty over time.”

3. Talk to the heart

Marcus Henderson, right, president and CEO of Henderson Financial Group and Million Dollar Round Table member in Nashville, Tenn., has roughly 360 clients. During his first 10 years in business, Henderson, who is African American, worked primarily with African-American physicians, dentists and clergy. He still works mostly with minorities but the mix has changed, he says. “We have clients that are Korean, that are from South Africa, (and) we have a very large contingency from India,” he says. “I’m starting to realize that now as our practice grows, we kind of look like the United Nations.”

Research has shown that ethnic and racial groups often differ in their investment risk tolerance, their trust of financial advisors, and other important attitudes. Henderson acknowledges those differences but believes they’re surmountable. “If they have chosen to come to the United States of America, they end up having to adapt to the way the United States of America works and what happens at the end of the day, money is the answer,” he says. “I’m not saying it’s end-all, be-all but in order to take care of your family and in order to educate your children, in order to do all the things that you want to do, the needs become the same.”

Henderson identifies those needs by what he calls talking to the heart, an approach that he’s found cuts across interpersonal differences. “If you talk to the heart, the heart knows the heart,” he maintains. “I don’t care what background you have, where you’re from, if you talk to someone’s heart, they read that. And, on the other side, if you don’t talk to their heart and you talk to their ethnicity, you talk to their color, you talk to where they’re from, that doesn’t resonate.”

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