Hispanics Must Make Banking & Financial Planning Part of Their American Dream
According to a recent Nielsen's report, The State of the Hispanic Consumer: The Hispanic Market Imperative,Latinobuying power will have grown 50%between 2010 and 2015, reaching an incredible $1.5 trillion. To put this in perspective, the report notes that if U.S. Hispanics were a standalone country, their market buying power would be one of the top twenty economies in the world.
No wonder that more than half of Hispanics expect to improve their financial situation over the next year, while little over a third of all Americans can say the same. Yet though Hispanics represent 52 million consumers in this country and the majority of population growth,when it comes to financial planning, or even every day banking and insurance needs, we as a group are still in the minority. It doesn’t help that the median age of Latinos is 28 years old – an age when most people are still looking at 30 as the distant future.
In their pursuit of the American Dream, Hispanics are failing to protect it.Yes, we may feel confident that we will improve our financial situation over the next year.But what about the following year?And the year after that?Are we doing all we can to preserve our surging buying power?Are we protecting ourselves and our families, investing for the future and planning for retirement?
Chris Mendoza is the Assistant VP of Multicultural Marketing at Mass Mutual, where they havebeen conducting an ongoing set of national research studies on Hispanic families and business owners.
According to their research, even with an improving financial situation, 33% of Hispanics named finances as their #1 stress.As Mr. Mendoza told me:“The main concerns are not dissimilar to everyone else, especially after the financial collapse.They came here for the American Dream and a better life, but it’s disappearing.So what can they do to protect themselves?”
Though their concerns may be the same, the Hispanic experience with banks and insurance is not.There are unique tension points with this market, and education is the key – on both sides – to establishing relationships that matter.To put it in simplest terms, Hispanics need to improve their financial literacy, while financial institutions must become culturally literate.
For banks and other financial firms, that means understanding that conventional banking as we know it may not be part of the traditional Hispanic upbringing.This has led to a general mistrust of banks and, when coupled with a natural skepticism, would account for the $53 billion attributed to “unbanked” Latino households (according to a research arm of the University of Virginia’s Darden School of Business).
Among the solutions: don’t assume all customers have experience managing their money with a bank and provide financial education accordingly, fully explaining the risks and rewards; build trust and credibility by offering culturally-relevant and language-appropriate products and services – and back it up with bilingual/bicultural staff; ensure that your mobile banking services acknowledge and support the growing numbers of Hispanics connecting to the web via mobile devices; and establishbranch office locations to better serve Hispanic communities.
Along with the latter, it’s also important to show genuine concern for the community – for example, by active involvement in Hispanic issues and sponsorship of local events. And don’t overlook other opportunities, such as reaching out to Hispanic business owners, or Hispanic High Net Worth Individuals (HHNWI), only one-third of whom have a financial plan or plan for retirement.
There are similar tension points related to insurance, making Hispanics the group most underserved by the industry.Because insurance is not mandatory or necessarily needed in most Latin American countries, its important role in U.S. society is not widely understood or accepted.It may even be perceived as a waste of money; the “live for today” mentality of the culture translates into “you can live without insurance” and contradicts the value in planning for life’s unpredictable events.With their unique backgrounds and motivations, Hispanics cannot be lumped with the mainstream on this issue and must be addressed on their own terms.
The solutions here are not unlike those for other financial institutions: understanding Hispanic insurance buying patterns, or lack thereof,and tailoring messages and marketing efforts around Hispanic cultural beliefs and care for the community; providing culturally-specific education that clearly explains insurance terminology, how it works and why it’s important to the U.S. Hispanic community; developing websites and online tools, as well as products and services,specifically designed for Hispanic small business owners and individuals; and addressing the plight of the uninsured with a comprehensive approach to helping Hispanics acquire and maintain insurance coverage through a caring partner relationship.
Whatever the industry, all of this can be achieved with the appropriate training and certification that focuses on effectively leveraging Latinos in the workplace and communicating and marketing brands in an authentic way that resonates with Hispanic consumers.
As Chris Mendoza of Mass Mutual explained it: “Skepticism can be allayed by a professional who understands the Hispanic market and challenges of the Latino community.They want strong relationships that are like extensions of family,someone who understands what’s keeping them up at night and will take care of thoseneeds. Education, a savvy agent, and a strong brand can help close the financial gap and protect their American Dream.”
The research at Mass Mutual revealed a key lesson: One size does not fit all.What works in one part of the country may not work in another. Do you have an individualized approach to reach the Hispanic community on a market-to-market basis? Do you have a cultural marketing strategy that includes local marketing, education and recruiting field work?Do you have relevant financial products and services for Hispanic consumers with distribution in place to reach these markets?
Learn more at www.CenterforHispanicLeadership.com or follow us on Twitter @HispanicTalent
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