Get out of the closet and tell the world you're a life insurance agent!
By Cyril Tuohy
Financial advisors looking to reach Hispanics and seeking to sell to Latino consumers need to understand that this market is driven by trust.
The more consistent and patient advisors are when dealing with Latino clients, the more likely they will find success in a market that is ready for advice, according to experts and a new survey of Latino buying trends.
“They just want somebody you can trust,” said George Castineiras, senior vice president of Total Retirement Solutions for Prudential Retirement.
The explosive growth in the Hispanic population means it’s important for advisors to shed the myths that you can only reach Hispanics by speaking Spanish.
There were 53 million Hispanics as of July 1, 2012, making up 17 percent of the population, according to U.S. Census data estimates. That number is projected to grow to 128.8 million by 2060, when it will constitute 31 percent of the population.
Alexandra Galindez, vice president of multicultural marketing for Prudential, said advisors need to understand that many Hispanics simply haven’t been exposed to financial terms like debt, equity, return on assets and cash flows.
Many have come to the U.S. from other countries to build new lives for themselves. Many are concerned with not taking on debt and with paying off loans first before investing, since they’ve seen their assets taken away by nationalization programs back in their home countries.
Hispanics don’t grasp that the best household management manages debt and investing at the same time. If advisors can explain and expose Hispanic prospects to these concepts, advisors will find a willing audience.
“I think the first thing that people say when it comes to the Hispanic community is if you don't speak Spanish, don't even go there, which is one of the reasons why I was so excited to see that it's not just about language, it's really about true understanding because the exposure just hasn't been there,” Galindez said.
She spoke at a webinar in conjunction with the release of the 2014 Hispanic American Financial Experience research study on the financial habits of Latinos. The results are based on responses from 1,023 people.
Given the growth projection of Hispanics, the opportunities for advisors are huge, but only if they are willing to put in the time, the experts said.
Hispanic respondents are only half as likely as the general population (27 percent versus 55 percent) to have been contacted by a financial advisor, the survey found. Hispanics are also half as likely as the general population (15 percent versus 30 percent) to have a professional financial advisor, the survey also found.
Even among households with relatively high incomes of more than $75,000 a year, Hispanics receive less contact from advisors than the general population, yet are equally likely to work with an advisor if contacted, the Prudential survey also found.
When it comes to financial advice, Hispanics rely first on family, second on a financial advisor and third on a local bank, the survey found, so advisors are already in good standing as a source of trust, even if they place a distant second.
Galindez said that advisors need to approach the Hispanic market not by dropping a phalanx of new products and services in their laps, but by folding long-term investment concepts into what Hispanic households are familiar with and do every day.
Anna Cabral, unit chief for strategic communications in the External Relations Division of the Inter-American Development Bank, said the way to reach Hispanics yields better results when advisors and insurers invest in organizations that reach deep into Latino communities.
“We shouldn't rely on Latinos to reach out to Latinos,” Cabral said. “The thing that's clear is that any of us can develop a relationship with a member of a different community as long as we have a better understanding of what their desires are, what their priorities are and how to build that relationship with trust.”
Galindez said insurers and advisors should remain committed to educating and communicating with the Hispanic market. “We kind of dip in and then we dip out, and the sustained commitment to the education is really the differentiator there,” she said.
Attracting more Hispanic advisors into the industry will help, but it’s a process that Prudential has built through referrals.
“We do a lot to really empower advisors that we already have to tap into their network and bring others on so it's just a constant education and I can't say the word commitment enough – just doing it consistently and in a sustained way,” she said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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