Leadership

Cultural Knowledge Key in Attracting Hispanic Investors

America’s rapidly growing Hispanic population remains underserved by financial professionals who either fail to realize or lack the ability to successfully capitalize on that market’s increasing demand for investment planning, insurance, and retirement advice. But serving that community is a specialty for Joseph D. Moya, who grew up in a Hispanic household where finances were openly discussed.

“Now, we weren’t poor, but my mother and father grew up during the Great Depression and wanted us to know that everything costs money. I grew up that way – never spend beyond your means,” Moya, the founder of Pegasus Insurance International LLC told “Advisors Magazine” during a recent interview. “The majority of Hispanics are middle market or lower market… but it’s a very conservative financial market and the reason it’s conservative is because they grew up with not a lot of money around them. Even if we have money today, our fear is losing it.

Consequently, for us to be in the market is unusual.”

JD Gale Justin 32Pegasus Insurance International maintains a nation-wide network of insurance agents to offer life, disability, long-term care, and other insurance products, as well as annuities, to the Hispanic and middle-class markets. Several studies show that the Hispanic market does remain difficult to tap, and that investors in that segment shy away from risk.

A 2014 Wells Fargo study found that Hispanics prefer to keep their savings in no, or low, risk investments. More than half (56 percent) of Hispanics responded that bank accounts and real estate were the best places to put their savings, with 38 and 18 percent respectively choosing those options. The study also found that 34 percent of Hispanic investors – versus 27 percent of U.S. investors overall – do not feel comfortable investing in mutual funds, stocks, or bonds.

Further, Hispanics lag behind whites in both money saved and tendency to own taxable investments. A 2013 report by the National Institute on Retirement Security found Hispanic households have an average retirement savings of $30,000, one-fourth of the $120,000 held by white households. Another study by the Financial Industry Regulatory Authority Investor Education Foundation in 2015 found that about 36 percent of white households have taxable investment accounts, compared to a smaller 25 percent of Hispanics; the study compensated for education and income differences, finding that the gap persists even with those factors being equal.

Hispanic investors, however, are more enthusiastic about financial literacy education compared to other racial groups.

“Our findings suggest there’s an opportunity to bolster the investing confidence of Hispanics through knowledge, so they can act on what they intuitively know to be true around the importance of investing for their financial futures,” Steve Novak, Senior Investment Strategist, Wells Fargo Private Bank, said in a statement released with the 2014 study.

Well Fargo’s conclusions seem to find support in Moya’s experiences. After working with countless Hispanic investors, he’s found that financial literacy education is a major concern, and filling that gap is key to having a strong client relationship.

“Not only are they hungry for it, but they will pay attention,” he said. “I find that me sitting down with a Hispanic client and spending two hours is not uncommon. If I’m dealing with an Anglo client, that’s almost impossible.”

Moya approaches clients with an open ear for their problems, fears, and goals. Too many insurance professionals push products on clients without taking the time to listen well. But that approach puts the cart before the horse, and prospective clients need to understand their risk profile, needs, and how a product can work for them, he said.

“Our industry has done a really good job of confusing people,” Moya said. “Our role, is to take the confusion that the insurance industry gives us and turn it into common everyday language … the average person out there is fearful, and they’re fearful because they don’t understand finances.”

As a Hispanic himself, Moya has an understanding of the unique cultural factors in play as well, something many financial professionals lack. For example, first generation Hispanics tend to remit money to their home countries, but rarely consider that life insurance will allow them to continue helping the people relying on them even if the worst happens. Subsequent generations, however, have different needs, but Moya understands how to get them to their financial goals, as well. And, as a member of the community, he wants to help, not just meet sales numbers.

“People can easily read someone that’s just trying to sell something from a person who’s genuinely interested in them and trying to sell what they need. Not what they want, what they need,” Moya said. “People can tell if you’re just trying to make a sale, or to be of assistance.”

The desire to be of assistance comes from Moya’s time in a Franciscan seminary, where he studied from the age of 14. Nine years later, Moya left the seminary to make sure joining the Franciscan order was right for him, took a job selling insurance temporarily (at the time, Moya did not know that 43 years later he would still be in insurance), and transitioned from spiritually guiding others to financially serving them.

“Service has always been key to me, I never forgot that,’ Moya said.

Service is why Moya works to educate clients, help them avoid serious mistakes, and advise them in preparing secure financial futures. Without that client education, few would know how to make the right decisions for themselves. After all, few people, if any, learn this in school, Moya said.

“The school that most people learn about finances is the ‘School of Hard Knocks’ and that’s not the best school to learn from,” he said.

For more information on Pegasus Insurance International, visit: pegasusii.com

 

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