Financial firms have bolstered their efforts to help financial advisers connect with minority clients, who typically aren't saving significantly for retirement.
A study released July 7 from the Ariel Education Initiative and Ariel Investments LLC, as well as Hewitt Associates LLC, showed that blacks and Hispanics are behind in their retirement savings.
The study, which analyzed data from nearly 3 million participants across 57 companies, showed that such workers are less likely than their Asian and white counterparts to participate in their company's 401(k) plans. In fact, 66% of black employees and 65% of Hispanic employees participated in 401(k) plans, compared with 77% of white workers and 76% of Asian workers.
The Ariel Education Initiative is a non-profit affiliate of Chicago-based Ariel and Hewitt, a global human resources consulting firm based in Lincolnshire, Ill.
These findings aren't new to financial companies, which contend that their efforts must go beyond simply translating materials to a different language, and they have begun trying to help advisers understand cultural issues minority clients face with finances.
For instance, Strategic Financial Group, an agency of Springfield-based Massachusetts Mutual Life Insurance Co., has begun a program aimed at working more closely with Hispanic investors.
In the past year, it has developed Spanish-language advertising, bro-chures and business cards, and has formed a group of 14 advisers in the Houston area that meets monthly to discuss and learn more about Hispanic clients. MassMutual has also launched similar efforts across the country and has formed partnerships with black and Hispanic groups nationwide.
Windsor, Conn.-based ING Re-tirement Services, a division of Amsterdam, Netherlands-based ING Groep NV, has also developed a program this year aimed at its minority clients. In recent months, it has begun efforts to recruit Spanish-speaking advisers to work with its Hispanic clients in the 401(k) arena.
ING has also improved its marketing materials aimed at Spanish-speaking clients.
“This is not just a language issue; it's a cultural issue. There are firms that have translated things that would be correct, but not culturally correct,” said Rick Niu, executive vice president and chief growth officer.
“For certain products, there are accelerated death benefits, but in some translations, it may read, "die faster benefits,'” he said. “So the literal translation and the cultural translations can be very different.”
Mr. Niu said that about 70% of the requests for proposals submitted by public companies considering a defined contribution plan with ING involve some type of multicultural features, including a bilingual interpreter or translated marketing materials.
If advisers and financial firms ignore minorities, they miss out on some 600,000 minority-owned businesses with 10 to 500 employees, which is ING's prime market for corporate 401(k) plans, he said.
Advisers who work with minorities such as blacks also need to be sensitive to cultural differences despite having a language in common, Mr. Niu said.
In fact, J. Michael Salley, an adviser with Salley Wealth Advisors Group LLC in Summerville, S.C., which manages about $35 million in assets, said that about 30% of his clientele is minorities.
“The perception by advisers is, there's no money in the minority community, and it's not true,” he said.
“African-Americans are some of the biggest spenders,” Mr. Salley said. “Unfortunately, we're not spending it on retirement.”
Mr. Salley represents a black-owned radio station in New York that has a few hundred employees.
“Wall Street has been a closed community,” he said.
“My role is to basically turn around the misperceptions about Wall Street,” Mr. Salley said. “I've heard from African-Americans that the stock market is like gambling, and there's a perception that the best place to put money is in the bank.”
PERSONAL ISSUE
Mr. Salley, who grew up in New York's Harlem and worked at several major brokerage firms before going independent, said that this is a personal issue to him, and he thinks it is important to help educate minorities.
“I feel I need to give something back to my community,” he said. “I realize there are so many people who have paved the road for me.”
The issue of helping minorities is also personal for Mariana Ruiz-Posada, director of multicultural marketing for Strategic Financial Group in Houston. She has spearheaded the company's efforts to recruit advisers and offer improved services to Hispanics during the past year.
Ms. Ruiz-Posada meets every month with 14 advisers who are actively working to get more Hispanic clients, and talks about ways to approach such clients. Three more advisers will be added to the group shortly, she said.
“Hispanic clients require more hand-holding. Once they trust you, they'll introduce you to all of their family and friends,” Ms. Ruiz-Posada said.
E-mail Lisa Shidler at [email protected].
