The population of Asian Americans is doubling in the next 25 years and there aren’t enough financial advisors lined up to serve them, according to a new study.
Some 73 percent of Asians are first-generation immigrants, according to Prudential’s 2016 Asian American Financial Experience released August 25 during a press luncheon at the Asia Society in New York City.
“Newer immigrants only want to work with Asian advisors because they can relate but second- or third-generation Asians may be Americanized and don’t have the same level of lack of trust that new immigrants have, which comes from new concepts they don’t understand,” said Hurong Lou, manager of financial services with Prudential Advisors.
The study further found that of 11 million Asian Americans ages 25 to 70, only one in five work with financial advisors.
“We will have to grow the number of financial advisors in the industry to help serve this customer base,” said Sri Reddy, senior vice president and head of full service investments with Prudential Retirement.
Reddy, Lou and Smriti Sinha of Prudential Individual Life Insurance spoke on a panel that was moderated by Bloomberg Television’s Betty Liu.
“The feedback we’ve gathered shows that there’s a need for a nuanced, culturally acute roadmap to help Asian Americans realize their financial goals in a more culturally and financially diverse community,” Reddy said.
The biggest surprise of the study, Reddy told Advisor News, is the amount of Asian Americans providing financial support for relatives both younger and older.
Some 20 percent of Asian Americans offer financial assistance to their relatives compared to only 6 percent of the general population.
“There’s a lot less money available for the individual whose doing the earning so advisors need to determine how long the client has to work and how long the money must last,” Reddy said.
Lou oversees advisors of all races, training some to work within the Asian American community.
“My job is to make sure that we introduce them to a certain marketplace,” said Lou who works in Prudential’s Marlton, N.J. regional office.
One of the challenges is the tendency for advisors to lump all Asian Americans together regardless of language or country of origin.
For example, Chinese Americans tend to have higher incomes, higher asset levels and greater equity in their homes while Indian Americans are more likely than other Asian Americans to describe themselves as savers. Japanese Americans believe they would be able to sustain their household longer than other Asian Americans in the event of a loss of income.
“Embrace the cultural differences,” Lou told Advisor News. “Chinese are different from Indian Americans and they are different from Korean Americas and so on. You cannot use a standard to gage every client.”
Juliette Fairley is a business and finance journalist who has written four personal finance books for John Wiley & Sons and has written for major news organizations, such as The New York Times and The Wall Street Journal. She is a member of the American Society of Journalists and the New York Financial Writers Association and a graduate of Columbia University's Graduate School of Journalism. Juliette can be reached at [email protected]
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