From the June 01, 2012 issue of Life Insurance Selling • Subscribe!

Multiple Cultures, Multiple Financial Needs

A new study highlights the areas where various cultures differ in their financial preparedness.

While many factors in the financial landscape may be in flux from day to day, one long-term trend is certain: America’s multicultural population is growing rapidly, presenting life insurance producers with an historic business opportunity. According to the U.S. Census Bureau, by 2050, non-Hispanic whites will no longer be the nation’s majority population. Between now and then, Hispanic and Asian populations are expected to double, and the African-American population is expected to remain stable.

Despite this opportunity, however, many life insurance producers are cautious. They understand the need to take action to ensure the future of their business. But they’re not clear on what steps to take and how to avoid making errors that may alienate the very multicultural prospects they’re trying to attract.

A recent study* is shedding light on some of the issues insurance producers must understand to effectively market to multicultural groups. The study, commissioned by the ING Retirement Research Institute, looked at the behaviors, attitudes and preparedness of various ethnic groups — including African-Americans, Asians and Hispanics — regarding their financial security and future retirement. The study confirmed that Americans, regardless of background or cultural heritage, aren’t planning enough for their financial security and retirement, aren’t saving enough, and are not always getting the professional advice that could help them get on track.

Despite these common challenges, however, the study also uncovered key differences between ethnic groups that may help life producers adopt more nuanced approaches in their marketing efforts. Here are some highlights from the study:

Life Insurance: Nearly 1 in 4 African-Americans (23%) responding to the survey have life insurance coverage equal to four or five times their salary. That’s higher than coverage among the total population (18%). The majority of respondents have life insurance — 90% or more for all groups, except Asians. Roughly 1 in 10 have life insurance but are unsure of the amount.

Estate Planning: Nearly all respondents plan to leave their heirs an inheritance of some kind, typically personal belongings, real estate or a house, or assets, savings or investments. About 70% of African-Americans plan to leave life insurance proceeds, compared to 51% for whites, 55% for Hispanics and 44% for Asians. This is consistent with the higher-than-average coverage levels purchased by African-Americans in the study. Asians were the least likely to have a last will and testament (26%), compared with 31% for Hispanics and 37% for white respondents.

Retirement Preparedness: Across the board, respondents expressed that they do not have a good handle on their retirement preparation. Hispanics responding to the survey feel the least prepared for retirement, with 54% indicating they feel “not very” or “not at all” prepared. This compares with the 50% of African-Americans, 48% of whites and 44% of Asian respondents who indicated they don’t feel prepared. These feelings correspond with the amount saved in employer-sponsored retirement plans, where Hispanic respondents reported having the lowest average balances ($54,000) in their retirement plans.

Financial Information: The study found non-whites were more likely than whites to use the Internet and media to gather investment information and guidance. African-Americans (54%), Asians (53%) and Hispanics (50%) pointed to the media and Internet as primary sources for financial information and guidance. Just 45% of white respondents showed that same preference. By contrast, 31% of whites reported that they were working with a financial professional currently, which was more than Hispanics (19%), African-Americans (20%), or Asians (22%).

Barriers to Saving: Nearly 3 in 4 respondents (73%) said they were encountering barriers to saving, but the specifics about those barriers differed from group to group. For nearly all groups, insufficient income was the biggest barrier to savings. Hispanics and Asians were more likely than whites and African-Americans to say they need to know more about their savings options. African-Americans were more likely than other groups to say debt was their biggest barrier. Asians were least likely to have a savings barrier.

These findings underscore the important role life insurance producers can have in better engaging African-American, Hispanic and Asian prospects. Laying out a process that identifies goals and challenges, sets forth a workable plan and encourages positive steps can lead to greater financial security. At the same time, the survey demonstrates there can be no cookie-cutter multicultural marketing approach. Different factors are at play for every ethnic group, and of course, individuals within each group have unique life circumstances that never neatly fit into a preconceived pattern.

Connecting with carriers

The key to any successful multicultural marketing is to pay attention to the details. There are too many examples of producers approaching a specific ethnic group with a translated brochure that winds up having an unintentionally improper phrase. Similarly, some websites or marketing materials may use stock photos that demonstrate that the producer knows nothing of the difference between ethnic groups and the way they live their lives. It is so important for materials to be “in-culture,” meaning the messages, emphasis and graphics are appropriate for each ethnic group. Thus, for example, an effort to reach a Chinese community should feature a campaign that reflects that specific culture, paying attention to its subtleties.

To get started, turn to carriers who have expertise in serving multicultural markets. Many carriers can provide culturally relevant sales collateral and will, ideally, be able to support customer service in certain languages after the sale is made. Some carriers may also be able to provide web-based resources and guidance into how to integrate multicultural marketing into your mainstream business strategy.

The time is now to take the first step. Sincere efforts to understand and meet the needs of multicultural clients today will position you to seize the ever-increasing opportunities America’s changing demographic landscape will present.

* Findings are from an online survey conducted by ORC International during the period of Oct. 5-13, 2011. Respondents were 4,050 adults (including 500 African-Americans, 500 Hispanics and 350 Asians) between the ages of 25 and 69, who are employed full time, with an annual household income of $40,000 or greater. Data were weighted to make the results representative of the U.S. population.

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