The largest ethnic group in America is also furthest behind in saving for retirement . Hispanic workers born outside of the United States have the lowest retirement plan participation rate of all other workers . Sixty-nine percent of Latino working-age households do not own assets in a retirement account, compared to 37 percent of white households .
As the U.S. Hispanic population continues to grow — Hispanics are expected to account for 75 percent of the nation’s workforce growth in the next decade  — so does the size of the opportunity for financial professionals, whether you are trying to work one-on-one with an individual or are helping employer prospects and clients meet the retirement needs of their employees.
But how do you bridge the cultural divide that may be preventing U.S. Hispanics from saving effectively for retirement? It isn’t as simple as translating materials to Spanish or speaking the language yourself.
Creating a culturally-appropriate education and enrollment experience
In research groups and live enrollment meetings, we found that simply translating materials to Spanish without considering overall cultural views falls short in encouraging U.S. Hispanic workers to save for retirement.
Retirement plans and Individual Retirement Accounts (IRAs) are not universally appealing to all groups. These may very well represent concepts depending on the level of acculturation of the workforce.
Our research found a need to go beyond accommodating language needs — translating materials to Spanish — to a more meaningful approach addressing the cultural underpinnings that may still influence how U.S. Hispanics think about their financial futures.
Levels of cultural influence
Understanding how to reach foreign-born U.S. Hispanic workers is complex. Retirement planning means different things within the Hispanic culture, depending on how adapted a group is to the U.S.
Success depends on understanding the level of acculturation — the degree to which a foreign-born Hispanic worker has adopted American cultural practices and the English language. Any given U.S. Hispanic workforce might represent the range of these levels of acculturation .
- Unacculturated: The 26 percent of Hispanic adults who are foreign-born and remain Spanish-dominant in language and culture. Eight out of 10 in this group use only Spanish at home or use it more than English. They have preserved their own culture, only gradually adopting elements of a second culture.
- Partially acculturated: About 63 percent of Hispanic adults. About half consider themselves to be Spanish-dominant and about one-third are bilingual. They have adopted a new culture while gradually losing some elements of their original culture.
- Mostly acculturated: Eleven-percent of U.S. Hispanic adults are in this segment and the vast majority (95 percent) of them was born in the United States. Most (71 percent) primarily use English, with 22 percent being bilingual.
While U.S.-born Hispanic workers have lower plan participation than white workers, so do many other minority groups. It is the low rate of participation among unacculturated foreign-born Hispanics that markedly lowers the overall participation rate for Hispanics. This is true across all age groups and income brackets .
How culture blocks savings among U.S. Hispanics
U.S. Hispanics born in other countries represent some 22 subcultures. Understanding the cultural factors that drive how some U.S. Hispanics prepare for retirement is the first step to overcoming barriers to saving. Here are some of the most common cultural influences:
- Lack of exposure to the concept of retirement: Although Hispanics tend to save in other ways for other reasons, many who have immigrated are not used to saving money for the future. The U.S. Hispanic population has had little exposure to modern-day concepts of retirement, such as 401(k) plans.
- Family matters: Among U.S. Hispanics, the attitude toward financial planning and retirement is consistent: family takes care of family. There is not a reliance on financial institutions or employers for help. In the Hispanic culture, family support is the primary driver of retirement readiness. The young take care of the old. Those with jobs take care of those without.
- Absence of financial literacy but not financial discipline: Many unacculturated U.S. Hispanics are unfamiliar with key financial concepts, in part because they generally are not working with a financial institution. While they may not appreciate the value that investing in stocks, bonds or mutual funds can have on their long-term savings goals, they are accustomed to budgeting. It is not uncommon for many to send a portion of earnings back to family in their native country. Those who do use investments, generally do so very conservatively.
- Distrust of politicians and institutions: Unacculturated Hispanics tend to harbor a distrust of politicians and institutions, including regulatory and financial institutions. There may be a concern that in case of emergency, they wouldn’t be able to access their savings or in the case of a national emergency, the money might be subject to government confiscation.
- Distrust of employers: There may also be a distrust of whether the money they contribute to a retirement plan might not be distributed as promised.
- Plans to retire in their native country: Moving back to the homeland may be the end retirement planning goal for some foreign-born workers. Another is to share retirement savings with family members back home. In both cases, workers may be worried about how they would access the assets in a retirement account if they die or move to another country. Unless these worries are addressed, other appealing features of a retirement plan will fall on deaf ears.
Five key concepts to bridge the cultural divide
It is clear that language alone isn’t enough to bridge the cultural divide. Our research found it requires a program of education tailored to address cultural attitudes and beliefs in order to encourage Hispanic workers to take action.
We’ve developed five key concepts to help increase engagement and meet the specific needs of Hispanic workers.
- Think “bicultural” not “bilingual” Bicultural is much broader than using a different language. It means navigating seamlessly between Hispanic and non-Hispanic cultures. It means incorporating a cultural sensitivity into all communications.
For example, using the concept that family takes care of family can help introduce workers to the idea that an employer-sponsored retirement plan can be used to help take care of family after retirement.
- Transcreate, don’t translate – Don’t translate word-for-word. Instead recreate messages in a way that retains financial meaning while incorporating cultural relevance.
Educational materials that are translated into Spanish, without taking into account the underlying meaning, lack the proper context for full comprehension by a Spanish-speaking audience.
For example, the tag line at my company is “We’ll give you an edge.” Translated word-for-word, that is not reassuring or meaningful. So we translated it to read “Te damos la ventaja,” which comes closer to conveying the intended message, “We give you the advantage.”
- Keep it simple — This is important to good communication for any group but especially so when relaying new financial or savings concepts to U.S. Hispanics early in the acculturation process. They want to be sure they are not getting into something they may not fully understand. Using culturally relevant stories and example also helps, along with a conversational format.
- Adjust to the mindset — It is essential to understand the economic, social and psychological forces that shape the mindset of U.S. Hispanic workers. For example, U.S. Hispanics tend to be more fiscally conservative. Those new to the U.S. are not using financial institutions because they do not fully understand the rules regulating them. The same is true with employer-sponsored plans. If they don’t understand how they work, they are likely not to participate. Saving cash under the mattress may seem safer. Take this into consideration to provide information that is relevant.
- Incorporate the right levels of culture and language — If you are working with an employee base, conduct a detailed analyses of your clients’ Hispanic workforce— language preference, acculturation stages, etc. That way you can tailor the enrollment and education experience to the acculturation needs of the clients’ specific Hispanic workforce.
Put into practice
We used these concepts to develop a Hispanic Market education program that we tested at a number of companies between July 2012 and December 2013. Our pilot found that when exposed to the new biculturally relevant educational approach, many Hispanic workers took favorable savings actions on the spot. We also found that once U.S. Hispanic workers start to participate in a company plan, they tend to embrace saving as a long-term goal.
Among the companies using the program, enrollment and deferral rates across all companies in the pilot increased an average of 42 percent over rates before the program . The results were positive across industries:
- Food industry company — In the first month of the pilot program, 80 percent of meeting attendees enrolled or increased their deferrals, despite communication challenges between the plan sponsor and employees, as well as other logistical challenges. Over the next two months, an additional 29 percent of the employees exposed to the program took favorable action, such as enrolling in the plan or increasing their deferrals.
- Agricultural company — Forty percent of employees who had never enrolled, did, after engaging with a bicultural employee benefit specialist.
If you are looking to expand your client base and set your practice apart, consider adapting your service model to meet the needs of the U.S. Hispanic population. Having the ability to fine-tune your approach and educational offerings to specific Hispanic audiences can greatly enhance how you serve existing clients.
It can also differentiate your practice when presenting retirement solutions to prospective clients with Hispanic workforces. You can also apply culturally effective standards of engagement when you work one-on-one with U.S. Hispanics.
The U.S. Hispanic population is only going to increase. Taking a bicultural approach can get you in on the ground floor of this exploding opportunity.
 U.S. Census, 2010
 Employee Benefit Research Institute. Current Population Survey, March 2009.
 National Institute of Retirement Security: Race and Insecurity in the United States, December 2013
 Ipsos. U.S. Diversity Markets Report, 2012.
 Employee Benefit Research Institute. EBRI Issue Brief: Retirement Plan Participation: Race/Ethnicity Difference—an Update, November 2009.
 July 2012 through December 2013