Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
By Cyril Tuohy
Behind the glittering facades of life insurance companies ensconced in corporate offices lies a wickedly competitive industry, with carriers jockeying for media attention in a way that might even make a grizzled Hollywood press agent proud.
On Jan. 22, when Prudential Financial unleashed its 2014 Hispanic American Financial Experience Study, MassMutual saw fit to send out its own media release announcing what its year-old survey – the State of the American Family Study – found regarding Hispanics.
The headline in the Prudential release announcing the survey results is how Hispanic Americans face “distinct challenges” to achieving long-term financial goals. The Prudential survey was conducted in October and November.
The MassMutual headline promoting the Latino angle of its study underscored the importance of education and planning for Hispanic Americans looking to attain the American dream. The MassMutual survey was conducted in February.
Both surveys were based on results from households earning more than $25,000 annually and came to similar conclusions.
Hispanic-Americans prefer paying off debt before turning their attention to traditional investing, the surveys found. Educating children is of paramount importance to Hispanics; children, in effect, are their investment, the surveys also found.
And both companies shrewdly reminded everyone what they were doing to help this market.
“We’re working harder to inform Hispanics about resources available that can help them put concrete financial plans in place and to adequately address their current and future needs,” Chris Mendoza, vice president of multicultural market development at MassMutual, said in a news release.
Prudential was perhaps a little less self-promoting but drove home the point nevertheless. Come to us, The Rock, for the information you need to build your wealth and secure your future, was the implied message.
“One major question raised by the study is whether Hispanic Americans would plan for their retirement differently if they had access to information that could help them generate the knowledge they need to make investment decisions to secure their own and their family’s futures,” George Castineiras, senior vice president of Total Retirement Solutions at Prudential Retirement, said in a statement.
Financial experts and surveys are unanimous on this point: the more information available, the better the long-term financial decision.
The financial stakes for life insurance giants like Prudential and MassMutual, each of whom have been in business for more than 100 years, are huge and will help them secure their survival for the next century.
Growth projections of Hispanic Americans outstrip all other demographic categories. As of July 1, 2012, there were 53 million Hispanics, or 17 percent of the U.S. population, according to U.S. Census data. The number is projected to grow to 128 million by 2060, when Hispanics will make up 31 percent of the population, data show.
Beyond the numbers, the Hispanic market is particularly suited to life insurance as Hispanic buyers appreciate protection. Nearly 50 percent of Hispanics said they are very concerned or extremely concerned about dying unexpectedly, compared to less than 33 percent of the rest of the population, according to LIMRA research published in September.
Living in extended families only makes this market even more attractive than it already is. “Their strong emphasis on family makes them a natural market for life insurance,” said Nilufer Ahmed, senior research director for LIMRA Insurance Research.
Already an underinsured segment, Hispanics represent billions of dollars in future life and retirement income for the Prudentials and MassMutuals. Over the next few years, insurance giants will serve as case studies in what to emphasize – and what to avoid – when approaching Hispanic Americans for life and retirement products.
Distribution will play a critical role, so important perhaps that whichever carrier has the best-developed network of agents and financial advisors is most likely to gain a competitive edge. Hispanic buyers are itching for the right advice, said Anna Cabral, unit chief for strategic communications in the External Relations Division of the Inter-American Development Bank.
“Latinos are saying yes, we are eager for the information,” Cabral said, during a webinar announcing Prudential’s survey results. “We’ve not been reached because somebody hasn't knocked on the door and said ‘I'm interested in helping you.’ But if you did knock on the door, they are eager to take up your advice and counsel and make good of it.”
The advisors who listens and adjusts to where Hispanic families are in their financial lifecycle is going to win this coming battle hands down, the Hispanic market experts said. Prudential, MassMutual, MetLife, New York Life or Allianz Life better pray that that advisor is one of theirs.
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 email@example.com.
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