Study looks at motivators, challenges of affluent Asian Americans

A recent report by Merrill Wealth Management is shedding light on the unique motivators, priorities and challenges faced by affluent Asian American and Pacific Islanders (AAPI) in the U.S.

While the AAPI community accounts for 7% of the U.S. population, it represents 10% of the country’s affluent population. Some of the highlights of the report, Diverse Viewpoints: Exploring Wealth in the AAPI Community, include:

• Nearly 80% of AAPI respondents ranked family as one of the most important aspects of their lives.
• Compared to the general affluent population, members of this community are twice as likely to feel financially responsible to assist aging parents, and three times more likely to financially support family members abroad.
• 50% more AAPI respondents prioritized paying for their children’s education than the general affluent population.
• This community is also 25% more likely than the general affluent population to say inheritance and passing down wealth are part of their financial plan.
• Members of the AAPI community are twice as likely to have started a business as the general affluent population (27% vs. 13%).

Serving affluent AAPI

“As financial advisors, it's important to understand the cultural nuances of the communities we serve,” said Stephen Kagawa, founder of The Pacific Bridge Companies and member of MDRT.

“Every community has its own unique values and priorities, and it's our job to tailor our approach accordingly. This is particularly true for the AAPI community, which has its own set of motivations, financial habits and goals that advisors aiming their consultative expertise at should be aware of.”

The recent survey findings by Merrill reflect the importance of family to the AAPI community, Kagawa added. They feel responsible for their aging parents and extended family members, and they’re more likely to financially support family members abroad.

Advisors helping this community should be prepared to incorporate this into their financial plans. Cross-border concerns and understanding can be of sincere value, too, he added.

Education highly valued

Education is also highly valued, Kagawa said. Planning and paying for a child’s education are highly prioritized when compared to the general affluent population. Additionally, inheritance and planning for the sharing of wealth are generally considered essential within their financial plans.

Many AAPI members also feel unprepared for unexpected expenses and emergencies, Kagawa added. “So,” he said, “recommending emergency fund creation and providing insurance options that ensure financial protection in the event of unforeseen circumstances offer added comfort.”

The survey findings also highlight the entrepreneurial spirit among AAPI members, added Kagawa. While this is more prevalent among older generations, there’s still potential for business succession planning among younger generations. As a result, he said,“ advisors should take a comprehensive approach to financial planning that considers both personal and business goals.”

“By recognizing and respecting the unique needs and circumstances of our clients, we can better serve them and help them achieve their financial goals,” Kagawa added. “Taking a culturally sensitive approach can help build strong relationships with our AAPI clients to help them reach and exceed their goals.”
The study was conducted by Ipsos, which did multiple waves of research from 2019 to 2022 and employed a variety of research methodologies. It started out by interviewing Merrill stakeholders who serve and represent the diverse communities covered within this report. In parallel, it synthesized and reviewed publications and academic research on the topics of diversity, wealth and inclusion in the financial services and beyond.

Additional findings

Other notable findings of the study include:

• Among younger generations and those born in the U.S., entrepreneurism is less common. Affluent AAPI between the ages of 20-54 are half as likely to aspire to start their own business compared to the general affluent population their same age.
• Only 54% of affluent AAPI respondents feel prepared for unexpected expenses and emergencies, compared to 61% of the general affluent population.
• 72% say it is important to be debt-free, compared to 65% of the general affluent population.
• 42% prefer to learn about managing finances on their own vs. 32% of the general affluent population.

The research was conducted from April to May 2022.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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