Growing minorities offer opportunities for advisers

Growing minorities offer opportunities for advisers
Research shows different approaches may be necessary to reach these groups
MAR 26, 2015
Research on the financial attitudes of wealthy investors suggests advisers may have significant marketing opportunities among various racial groups. Today, about 17% of the U.S. population is Hispanic, 13% is African-American and 5% is Asian, according to the U.S. Census Bureau. By 2060, those ratios are expected to jump to 29%, 14% and 9%, respectively. Affluent investors from these three groups today are not using financial advisers as much as all other wealthy investors, according to a survey taken last year by Spectrem Group. (More: Marketing through connections) About a quarter of wealthy investors report regularly using an adviser, compared to 8% of Hispanic respondents, 17% of African-Americans and 12% of Asians, the survey found. The most common reasons are cost, concern about the adviser's loyalty and the belief that they can invest at least as well as an adviser. “Advisers need to understand the investor's background and how it might shape their priorities and preferences,” said George Walper Jr., president of Spectrem Group. “It's an important factor for advisers in terms of talking to prospects and existing clients.” The wealthy investors among these three minority groups also are younger than the average affluent investor and are more likely to invest on their own, according to the survey. In what could represent significant opportunity for advisers offering retirement planning, these three groups of wealthy investors are more likely than other affluent investors to look for retirement help in the future. About 16% of Hispanics, 17% of African Americans and 21% of Asian investors said they plan to seek retirement planning help. That's compared to 8% of all other investors, the survey found. (More: Create a marketing calendar to keep your prospect pipeline full) The results also suggest advisers could be doing more to improve the advising experience of wealthy investors among these three ethnic groups. About 67% of Hispanic respondents, 55% of African-American and 42% of Asian investors are satisfied with their financial advisers, compared with 75% of all other investors, the survey found.

Source: Spectrem Group

Mr. Walper said advisers seeking to attract or hold on to Asian clients, for example, may need to provide a higher level of service to help these clients feel content, he said. About 81% of Asian investors surveyed said they want access to a wealth manager to help with administrative tasks of investments. That service was chosen by more of this group than any other that could be offered in a wealth management program, according to the data. The research suggests African-American investors may be attracted to an adviser who specializes in a particular asset class, and all of these groups were more likely than other investors to introduce their family members to that adviser, Mr. Walper said. That can be valuable for advisers who are seeking to increase multi-generational planning, he said.

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