Long labeled the world's melting pot, our country's notable diversity has developed over the past several decades to encompass a wider range and percentage of minority groups. While we haven't seen an immigration rush on scale with those of the early 19th and 20th centuries, our population is evolving year by year, city by city -- and becoming more American in the process. In fact, the 2010 U.S. Census predicted that, in the next 10 years, minority groups will become the new majority.
For advisors, this means that now may be a very good time to refocus your practice. Growth, both individual and corporate, will be largely multicultural in the future, and many burgeoning markets are underserved. There is a vast opportunity to connect with these clients, providing the advice and products they need.
But where do you start? As with any new market, reaching these niche audiences requires a comprehensive, relationship-driven marketing strategy. It also calls for a healthy dose of product knowledge and an ability to view marketplace demands on both a macro and micro level.
Step 1: Know your market
The first question to ask yourself is this: Who is my natural market? The answer may be readily apparent, or it may take deeper consideration. Chris Mendoza, assistant vice president of multicultural marketing at the Massachusetts Mutual Life Insurance Company (MassMutual), recommends that clients consider both personal and professional connections as they seek to define their market. It's also important to stay open-minded.
"Review and strategize with what you know and who you know," he said. "Take some time for exploration, and really consider whether you're looking at all the variables in your life. Think about family and friends: What industries are they from? What's important to them?"
This line of questioning will help illuminate a group where you have a natural "in" -- in other words, people within your circle of influence who are being underserved and, ideally, who can provide a healthy stream of referrals. It may not always be a group that you are a part of yourself, or even that you know a great deal about. The important thing, Mendoza says, is to commit to entering into a community by spending time getting to know the people's needs, their hopes and fears and what they look for in an advisor. Agents who do their research and truly seek to understand a minority market can build very close relationships.
Of course, it's easiest to serve a community where you already have an established connection. Mai Vu and Jason Valle, agents based in Orange County, Calif., discovered this when restructuring their practice a few years ago. Although they already had a thriving business, they realized that many of their best clients -- the ones who were most loyal and brought in the greatest number of referrals -- were Hispanic or Vietnamese, communities in which they were already personally invested and involved. For them, refining their corporate mission to focus on serving these clients made perfect sense.
"It's just natural that we capture this market," explained Vu. "In fact, even before we began to focus on capturing this market, about 50 percent of our clients were not white."
In large part, this was because their ethnic clients had the greatest need. "Both Vietnamese and Hispanic clients tend to have little exposure to investments and insurance, and require more guidance and more product information. In turn, we've also found that they are very loyal, and will often refer family or friends to an advisor they trust."
Vu says this with the authority of an agent who understands her target market and knows how to meet their needs. It's this understanding that has led to her and Valle's steady success, and which points to a very bright future.
Step 2: Connect with your market
Understanding is only the first step, however. To have a deeper impact, you must connect with your clients -- and when it comes to minority groups, this often means returning to more traditional methods of contact. Having a personal, face-to-face relationship is critical.
Todd Lloyd, a financial planner with Prudential, based in Cleveland, Ohio, recently left a career in the non-profit industry to become a financial advisor. He primarily serves the LGBT community, a market that is grossly underrepresented and that, due to a multitude of legal and regulatory obstacles, needs a good amount of specialized financial guidance. In Lloyd's practice, technology takes a back seat to real, "in-person" communication every time.
"When I look at my practice, it's not transactional, it's relational," he said. "It's about helping people on a long-term basis, and the most powerful tool is meeting with people one-on-one. Technology can help you maintain a relationship, but if you want to deepen it, you have to meet in person."
Valle agrees. His clients want significant agent support and contact, but they don't want to engage through the latest technological tools. It took Valle awhile to fully realize this; although he noticed clients glazing over during PowerPoint presentations, the disconnect didn't fully click until he was visiting a client's home and his laptop failed him. He pulled out a piece of paper and a pen and explained an IRA in just a few minutes -- and the client immediately understood the product and the need.
This experience transformed his sales approach. "We now know that if we're going to explain a concept, we have to be able to do it in five minutes on a piece of paper, otherwise we can become like white noise," he said. "On a typical day, we'll have a stack of white paper and a thing of pens and that's how we present to clients."
After establishing an early relationship, Valle becomes much more integrated into his clients' lives. Relating on this deeper level boosts business and is personally rewarding, too.
"Since we've started working in the Hispanic market, I've been to so many baby showers and weddings. The communities are very open in that sense: They want to integrate you with their social circle, and all of a sudden, we're not just the investment and insurance people; we're Jason and Mai, the people at Jos?'s wedding. It makes our presence in the community so much more personal."
As with most worthwhile ventures, an investment (in this case, a social investment) is needed in order to get a return for your business. Mendoza explained, "If you take time to develop a solid relationship, it can lead to many things. Someone who can be successful in the Hispanic market needs to understand their cultural needs and not be in such a hurry to sell something."
Step 3: Expand your market
Another benefit of this more personal approach is that you'll rarely have to solicit referrals: In close-knit communities, a strong testimonial from one client will almost always send prospects knocking on your door. Mendoza says that when working with the Hispanic community, in particular, it's important to know just how big your client's circle of influence may be.
"Hispanics consider extended family as well as outside friends and acquaintances to be part of the family equation," he explained. "So, don't underestimate who might be in the circle of influence." By extension, don't underestimate the effect one good referral can have. Insurance is the same as health care or home improvement or any other service industry, says Mendoza. If they need financial advice, most people will ask friends and family if they can recommend someone.
In part, referrals are so effective because of the emotional nature of many of these products. Asked what his clients look for in an advisor, Lloyd explained, "I think one of the most important things is really having a comfort level with discussing their lives and hopes and dreams. Life insurance is an emotional purchase. Well, there are times when it's emotional and times when it's rational, and people will experience both motivations at different times in their lives."
A successful agent, he says, is able to connect with clients on a personal level and also offer them the rational information and guidance they need.
Mendoza agrees that these two tools are an agent's biggest selling point. "I think by far the most important skill an agent has is his or her ability to form relationships," he said. "The second most important thing is knowledge of the marketplace. The third thing is referrals -- especially if you've been in the profession for a relatively short time, having someone's testimony can be the most successful calling card you have."
It's a fitting metaphor, the calling card, for a way of doing business that, in the midst of the technology hustle, brings our industry back to its relational roots.
Nichole Morford is the managing editor of the Agent's Sales Journal. She can be reached at nmorford@sbmedia.com.
