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Asian-Americans: an essential life insurance marketing demographic

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If you’re aiming to expand your presence in certain markets, you could do worse than to direct the lion’s share of your attention to an often overlooked group: Asian-Americans.

Estimated at nearly 20 million, this broad and culturally diverse community — one embracing populations from more than 40 countries and who speak dozens of languages — is impressive by almost any measure.

Just name one benchmark: Household income? Financial assets? Home ownership? Children sent off to college? Asian-Americans surpass (sometimes by a wide margin) statistics for the general U.S. population.

Related: African-Americans place greater value on life insurance

To boot, their numbers and financial clout are growing. That translates into more dollars available to spend on protection products, solutions that Asian-Americans have not, despite a mounting need, adopted as widely as their U.S. peers.

These are among the findings of a 2016 survey by Prudential Financial, “Asian-American Financial Experience.” The focus of an August 25 media briefing hosted by Prudential at the Asia Society in New York City, the study delves into financial challenges the community shares with the larger U.S. population, from funding a secure retirement to managing expenses. Conducted by Harris poll in June, the survey authors polled 2,597 Americans (ages 25-70), about 2,100 of whom self-identify as Asian-Americans.

Agents and advisors looking to serve this community, the survey’s authors stress, would do well to take a tailored, culturally attuned approach to prospecting, planning engagements and client servicing.

“Our survey results show that the need to for a nuanced, culturally acute roadmap to helping Asian-Americans realize their financial goals has never been greater,” the report states. “Companies that take the time to understand and connect with them will be among those best positioned to serve them.”

Best positioned, to be sure, if the connecting happens at the appropriate level, for the Asian-American community is hardly monolithic. The major subgroups — Chinese-, Japanese-, Philipino-, Indian-, Vietnamese- and Korean-Americans have “unique cultural experiences, traditions and histories” the report notes, that influence their financial preparedness, needs and outlook.

Related: How to sell insurance to women

Cultural differences

Chinese-Americans, for example, tend to have “higher-than-average” education and asset levels, occupy more professional positions, are “self-described savers,” possess greater knowledge of “debt management and investing” and “own a greater diversity of financial products,” than their survey peers. Pilipino-Americans, in contrast, are more likely than their counterparts to carry higher credit card debt, be employed in “a mix of manual and professional careers,” and plan to work in retirement to supplement income.

The differences extend to financial savviness and access to information. Despite their comparative affluence, Chinese-Americans tend to not leverage the services of insurance and financial service professionals as much as other Asian-Americans.

Related: Women, minorities, millennials face unique retirement savings challenges

“Chinese-Americans don’t get a lot of exposure to the information and solutions we offer,” says Hurong Lou, a Prudential advisor and panelist. “In contrast, Korean- and Indian-Americans get a lot more education about investments, insurance and managing risk. For different subgroups, the levels of financial information and education vary.”

More striking than the differences are the commonalities among the groups polled. These shared characteristics — a greater propensity to save for one’s golden years, invest in children’s college education and prepare for financial emergencies — sets Asian-Americans apart from the general population. Consider these survey findings:

    • Twenty-two percent of Asian-American parents surveyed say providing college tuition for their children is “highly important” to them, versus 14 percent of parents in the general population.

    • Twenty-five percent say taking care of family members is a priority, versus 15 percent of the general population.

    • Buying a home also is a top goal for 24 percent of Asian-Americans, versus 17 percent of the general population.

    • Asian-Americans surveyed have a median personal income of $62,000 and median household income of $87,000, versus $42,000 and $62,000, respectively, for the general population.

    • Asian-Americans estimate the value of their household financial assets, excluding their primary residence or a business, at $445,600, on average, compared with $385,500 for the general population. Seventeen percent of Asian-Americans — about one in every six — have at least $500,000 of equity in their homes, compared with 8 percent of the general population.

Differences relative to the general population extend also to financial support and caring for family members. As the report notes:

    • Fully a third of Asian-Americans identify themselves as caregivers for another person — typically a spouse, parent, other relative or special-needs child — compared with 21 percent of the general population surveyed.

    • Seventy percent of Asian-American caregivers say they pay some of the living expenses of the person they’re helping, including 31 percent who pay all those costs. By contrast, 57 percent of caregivers in the general population shoulder some of the living expenses of the person they’re helping, including 28 percent who pay all the costs.

    • Thirteen percent of Asian-Americans have parents or grandparents living with them, compared with 8 percent of the general population. And 20 percent of Asian-Americans provide financial assistance to relatives, versus only 6 percent of the general population.

“What is most striking to me is that Asian-Americans, as a group, provide more financial support to relatives by almost a three-fold multiple of the general population — that’s staggering,” said Srinivas Reddy, a panelist and senior vice president and head of full service investments, Prudential Retirement, at the media briefing. “That says a lot about this demographic segment and their financial priorities.” 

(Srinivas is pictured here, to the right of Prudential’s Smriti Sinha. Photo credit: Vladimir Gitt, Prudential Financial. Click on image to enlarge.) 

Added Smriti Sinha, vice president of strategy initiation and development for Prudential individual life insurance: “My personal family experience dovetails with that of the larger [Asian-American] population. Actions do reflect our priorities. The community is doing its best to make sure that the extended family is supported and cared for.”

Related: A holistic approach to reaching African-American consumers

Doing without financial assistance

Asian-Americans often are not cognizant of solutions and advice that might put their own finances on better footing. The report observes that fewer than 1 in 5 Asian-Americans (18 percent) work with a financial professional, compared with 26 percent of the general population.

Why the lower rate? Survey participants cite high fees, insufficient assets and a preference to “do it on my own” as reasons for sidestepping advisors. More so than the general population, Asian-Americans also responded that they “have never found someone I can trust.”

Related: 4 things you should probably be doing to reach Latinos

The Prudential panelists differed as to the factors underpinning this lack of trust. Moderator Betty Liu, an anchor at Bloomberg Television, cited age as a factor: Older Asian-Americans, she suggested, may be less inclined than digitally-savvy and more culturally assimilated millennials to engaging the services of a financial professional. (Liu is pictured below, first from right. Photo credit: Vladimir Gitt, Prudential Financial. Click on image to enlarge.)

Prudential’s Hurong Lou disagreed, arguing that cultural differences — more pronounced among first-generation immigrants than second- or third-generation Asian-Americans —account for the trust gap. As they become more Americanized, he said, they “let their guard down” making them more approachable.

The personal experiences of Lou (pictured here, first from left) align with the survey findings. Those who work with a financial professional are more likely to have been born in the U.S. (23 percent vs. 16 percent who were not) and to speak English (20 percent, versus 7 percent who do not).

Sinha cited still other factors, including Asian-Americans’ “risk appetite,” “access to financial information” and insurers’ varying levels of success in solving for the community’s financial needs through their “channel of choice.” For the millennial set, that means making online interactions more engaging and streamlined. Older Asian-Americans may, in contrast, prefer the personal touch, engaging with advisors through friends, family members or community organizations.

Prudential’s Lou did the last for one Filipino couple — and the effort paid off handsomely. Affluent doctors, the husband and wife were hesitant at first to work with Lou and his team, believing they could manage assets on their own.

But, said Lou, they “liked us enough” to ask the advisor team to join a Filipino-American association where they were active. Within two months, the couple had fully embraced the Prudential agents — so much so that they organized a party for the team’s benefit and recommended Lou & Co. to friends and family invited to attend.

The fact that Lou, a Chinese-American, was of a different ethnic background proved not to be a deterrent to establishing a trusting professional relationship with the couple. Sinha, responding to a question from Bloomberg’s Liu as to whether advisors need to “look like” the community they serve, echoed the point.

“I think this gets back to authenticity — connecting in a meaningful way with our clients and prospects,” said Sinha. “It can’t just be marketing spiel. True engagement happens over time.”

Related: Survey finds increased financial preparedness among Hispanics

Lacking financial protection

More quality time with the community needs to happen, particularly when the topics of discussion are insurance and annuities. Though a greater percentage of Asian-Americans own stocks than does the general population (29 percent vs. 23 percent), they lag in ownership of protection products.

Related: A study in contrasts: financial outlook of boomers vs. Gen Xers

Fewer than 3 in 10 (28 percent) of Asian-Americans have purchased life insurance outside of work, as compared to 33 percent of the general population. Their adoption rates are similarly lower for:

    • Life insurance purchased outside a place of employment (27 percent vs. 30 percent)

    • Health insurance purchased outside a place of employment (15 percent vs. 19 percent)

    • Fixed and variable annuity ownership (6 percent vs. 9 percent); and

    • Disability income insurance purchased outside a place of employment (5 percent vs. 8 percent)

“For a community that cares so much about family members, the Asian-Americans population is, oddly, the least penetrated in terms of life insurance and protection solutions,” said Reddy. “That’s why it’s so essential to educate and build awareness about our products within the community.”

That community is rapidly growing. According to U.S. Census data, the Asian-American population increased to 6.6 percent in 2014 from 4.5 percent in 2000. Much of the rise is being fueled by first-generation immigrants who now account for a large majority (73 percent) of the demographic group’s nearly 20 million citizens, a number that’s expected to double by 2050.

As their ranks have increased, so has their buying power: up a whopping 180 percent between 2010 and 2014. The life insurance and financial services industry is betting that, in the years ahead, more of their disposable dollars will be allocated to protection products.

“The median net worth of Asian-Americans today is about $100,000 more than that of the general population,” said Prudential’s Reddy. “Given their unmet protection needs, they represent a huge market opportunity for our industry.”

See the charts beginning on next page for additional highlights from Prudential Financial’s “Asian-American Financial Experience” survey.

Related: Survey: Gender gap remains in retirement planning

By a substantial margin, Asian American households tend to be concentrated in the East and the West, where wages (along with living expenses) tend to be higher than they are in the Midwest or the South. (Click on chart to enlarge.)

A higher percentage of Asian-Americans than non-Asian-Americans rate several family-related financial goals as very important: having enough life insurance to protect loved ones, helping to take care of parents or other family members, and buying a home and providing college tuition for children. (Click on chart to enlarge.)

Though they’re more likely than the general population to own individual stocks, Asian-Americans lag in ownership of some protection products, including life insurance, disability income insurance, fixed/variable annuities and health insurance. (Click on chart to enlarge.)

Not only do Asian-Americans consult a higher number of resources than the general population (5.8 average resources versus 4.1), they also demonstrate a higher propensity to consume information from fewer traditional sources, such as clubs, social media and faithbased resources. (Click on chart to enlarge.)

As this chart shows, Asian-Americans outstrip the general population in education levels, but mirror the broader U.S. public in terms of household composition and marital status. (Click on chart to enlarge.)