Looking for a way to grow your financial advisory business? Target Hispanics, since as a group, Hispanics are woefully underserved by the financial services industry. With rising incomes and a growing population (now at 40 million), Latinos are now being targeted by financial services companies, such as Citigroup, Bank of America, Freddie Mac and GE Financial, reports today’s Wall Street Journal. Consider the depths of the problem: About half of all Latinos don’t have bank accounts or credit cards, reports the Journal, and only one in three has life insurance, compared with roughly half of the general population of the U.S. Seventeen percent of Hispanics have not saved for retirement, nearly four times the percentage for whites and 70 percent more than blacks. Why have Hispanics been so financially negligent? There is the language barrier, for starters. A bigger problem is that the average Hispanic family income is only $45,300 (below the national average of $66,900). But that fact belies their growing financial strength. Total disposable income for Hispanics is estimated to be $650 billion but is expected to reach $1 trillion by 2008. In a survey by Allstate, half of Hispanics said, “Financial institutions aren’t interested in having someone like me as a client.” Not so, reports the Journal. Many financial services companies and banks are now beginning educational classes in Spanish, launching Spanish Web sites and establishing Spanish speaking call centers to ease some of this anxiety. GE Financial has set up “1-866-Llame-GE” for life insurance and other services to help. FleetBoston Financial Corp. is doing the same, offering Web sites and brochures that teach about mortgages and “annuities versus CDs.” Other companies have similar services, but banks have a few obstacles to overcome before luring Hispanics into financial services. A lack of sufficient identification and a mistrust of the industry are common among Hispanics. Cultural understanding is imperative to each marketing strategy in order to make clients feel comfortable allowing strangers to handle their money. Bank of America reported that in the next couple of years 80 percent of its growth will be in multi-cultural markets, and 60 percent of that will be from Hispanics. And as their population and economic influence increase in the next few years Hispanics will undoubtedly be a hotly contested market for financial services companies. So, how’s your Spanish?
