Building Relationships with Asian American investors

Speaker 1 (00:08): Welcome to Global Atlantic's Multicultural podcast series. I'm your host, Dan Corcoran. Global Atlantic is a leading retirement and life insurance company that creates innovative products to help meet your client's financial goals. The Asian American population of the United States is rapidly growing, projected to grow from 22 million today to over 46 million in 2060, made up of a diverse swath of cultures. First in multi-generational demographics. It's also highly influential. Several subgroups. Notably Indians and Filipinos have annual household incomes far higher than most other Americans. The Asian population is more highly educated, more likely than other groups to be employed in the coveted stem jobs, more heavily represented among patent holders and more likely to own homes than other racial groups.

At the same time, Asian Americans are not well represented by financial professionals and observers. Note that while Asian Americans are inclined to save money through such instruments as IRAs and 401ks, there's a general lack of understanding about the stock market and investing, much like we did in our previous episode on the Latino market. In this podcast, we'll dig deeper into the Asian American population to help financial professionals communicate with this group and all of its subsets while offering some practical ways to help them achieve their goals. Joining us for this discussion is Fred Wong, a managing director of Forest Hills Financial Group in New York. Fred, welcome to you.

Speaker 2 (01:44): Thank you. My great pleasure to be here.

Speaker 1 (01:48): And I'd also like to welcome back Joey, Senior Advanced Markets Analyst at Global Atlantic. Good to have you back with us, Joey.

Speaker 3 (01:55): Thanks for having me again, Dan.

Speaker 1 (01:56): And Fred, I'd like to start with you, what are some of the first things financial professionals should really understand about the Asian American market in the U.S.? Paint us a picture.

Speaker 2 (02:06): Asian American segment is the fastest growing segment. Not only in terms of the population, but also the purchasing power as well. And to me, I think Asian American is more like, uh, social political concept rather than, uh, socioeconomic concept or business concept. Because Asian Americans are basically comprised of Japanese, Chinese, or Vietnamese Filipinos. They each represent different cultures, different languages, and some nuances in terms of their philosophies or values and also political systems in which they used to live. So if you look at that, especially from a business perspective, you really need to dig deeper into this Asian American segment, which country they are particularly from.

Speaker 2 (03:19): And also not only the culture, political system, but also the history of immigration. So while I was working at the advertising agency, you know, we, we have this interesting segmentation that for first generation we divide them into a one, 1.5 or two. So for Americans, basically they're all Asian Americans. But then if you look further, one are those we call immigrants through, uh, families, right? And 1.5 are those who come here and study and stay here and work as professionals. Why? Because professionals, basically, they are less language dependent, but they're still culturally dependent, right? And that's very important because those are the special segment that they usually are relatively dependent and they assimilate far easier than the ones, but the twos are basically probably the second generation, right? But again, because they grew up in, uh, Asian culture or in Asian family where they still, they inherit some of the Asian heritage or learn something from their parents.

Speaker 2 (04:26): So they're very unique. So in the eyes of Asian American parents, they are Americans, but then, you know, in the eyes of the mainstream Americans, oh, you're, you're Asian American, right? Sort of different. That's very important. So I think my, my experience is we need to understand the history, the immigrants and the political system as well. And we need to understand they come from different cultures as well. For example, the Chinese from men in China probably have more difficulty assimilating into the American system because the men in China operates as a socialist country versus, you know, Taiwan, Korea, Japan, or even Hong Kong. They operate pretty much like a, a western system, a capitalist system. So they assimilate far better than the men in Chinese. So that's basically what I want to share with our audience, that especially the financial professionals, that they need to understand the differences between each Asian American segments as well as the past history, the political system and the cultures.

Speaker 1 (05:28): It's so important to talk about the differences and the history, but what sorts of financial instruments are Asian Americans likely to use to protect their assets? I'm talking big picture here. So Joey, how can financial professionals help to facilitate this practice for their clients?

Speaker 3 (05:43): Thanks, Dan. I totally agree with what Fred is saying. Asian-American financial experience a lot of time it's very much influenced in almost every aspect by the importance of family or, so it depends on generation. I like how Fred gives examples of each generation because each generation, they all have a very different historical background. So they will have a very different perspective on matters in financial planning. So when it comes to savings, so for example, those born between fifties and sixties or seventies, like my parents, they believe cash is king. They will save as much as they can in their entire life. So some of them, they will diversify a small portions of their savings into cities, property and stock investments. But cash is always the first thing they will go with because back in the home country in a lot of Asia country, the is not as much yet as compared to the US financial system. So what they can really believe is to holding the cash in the bank account.

Speaker 2 (06:45): You know, in Chinese, traditional Chinese, you know, have a saying that to have a good life, you need to cover your e tuition. Okay? Easy tuition in Chinese means clothing, eating, housing, and moving, moving, basically it's travel or or transportation, right? And there's nothing about like a financial management or a system like that, right? So all they do is to save, you know, in a bank that, that's all I understand. So here, when they came first came to the United States, there are so many financial instruments, like so many aspects about managing their finances, including loans, car loans, mortgages. To be honest with you, I didn't even understand what a mortgage means because that's in our language, you know, it's just a loan is a loan, but a mortgage is totally different word vocabulary. Then there's credit cards and there's debit card bonds and then municipal bonds, government bonds, corporate bonds, you know, to, you know, it's so confusing. There are so many items. The United States, we all know that it's probably one of the most advanced countries where financial system is very mature, where you have a variety of mature financial instruments or products to meet, uh, diverse range of needs. But back in Asia, for many first generation immigrants, when you talk about financial instruments, what they think is probably just a bank savings and they open a checking account and then they have a city where they put a deposit and that's it.

Speaker 3 (08:18): But compared to the second, third, or younger generation, they get access to more information and resources. They start looking at very different financial instruments that making them have a high expectations of the tools that use to accumulate their wealth. So what financial professional can really do is always create credibly use their clients and build trust. This elder the generation, especially the baby boomers, which the first generations who just moved to the United States who are not really familiar with the financial systems in the US as they're not as tax savvy, as competitive younger group. The conversation blueprint is always so important to show the clients step by step in planning for the financial instruments they need in their entire life.

Speaker 1 (09:02): And Fred, you touched upon this earlier talking about saving. Saving is certainly ingrained in the Asian American population. So can you talk about why that is?

Speaker 2 (09:11): Well, I think historically back in Asia, most countries are less developed as in the west. A lot of people in Asia, uh, have experienced hardships and they sort of have a feeling that they need to save for the future, alright? It is also rooted in Asian American culture that they always want their next generation to be better than themselves. So the life to create a better future, they have such high tolerance of hardships because there's hope that the next generation, their children or grandchildren are doing better. Which is another reason why there are so many Asian immigrants who wanted to build their American dream here with such an open opportunity system where they can, you know, work hard and hopefully their children can do far better than themselves. So that's why saving comes first from this culture of for the future, next generation. And the second is because of those difficult times or experiences and they know how important saving is to give them leverage in their lives.

Speaker 1 (10:19): And Asian Americans also have a very high rate of home ownership. So Fred, in what areas of investment are there some knowledge gaps that we can talk about, such as the stock market and other forms of investment that you believe financial professionals could actually help with?

Speaker 2 (10:35): If you live in America, you've never traveled overseas or never traveled in other parts of the world, you probably take it for granted that you can live, you know, such a big house in America because you only have 300, 340 million people. But if you go to just China alone, that's a 1.4. If you go to India as a 1.4 billion people, so owning a piece of land, owning your own house is like a dream come true. It's a property as well, it's an investment as well. So that's why Asians are so much into owning their own property. When they come to United States as compared to a piece of land or or home, it's so much cheaper and more affordable because of the financial system. They can take a loan as long as they have income or or job, this whole thing come together. So the financial system is just built in such a way that owning a property or home is so easy as long as you work hard and you can put down the income. And also you may, I think many of us have noticed that the Asian Americans usually are able to put down a much higher down payment and some of them even buy home with cash, which leads to another interesting culture for the Asian Americans. They don't want to own a lot of debt. A debt is something that can make them feel unsafe. So they love to put down a much higher percentage of down payment or just paying cash.

Speaker 1 (12:04): And Joey, what do you believe are some of the gaps that financial professionals could actually help fill? What can they do?

Speaker 3 (12:10): This is one of the cultural nuances in which we believe home ownership signified security and stability for family. Also, we strongly believe that it is a generational investment. Each is a safe and lasting a set to pass down for the generation, which is very important. But the problem here, especially when we look into the new immigrant clients, many of them aren't familiar with how complex the problem taxes are when it comes to the estate planning and they need of strategy and a financial instrument to fill the gap. And here's where the financial professional can step in. So how can a financial professional help their client is we always encourage our partners, our financial professional, to help their client to look for the instruments with double or triple duty.

Speaker 3 (13:05): It means one single product, but it comes with a different riders that can support the client in different stage of your life. We start with the lifestyle, which they need a daily study spending of bleeding in daily life. And they need liquidity, which is the money they reserve for unexpected longevity, which is the function such as the long term care features that they can find in a lot of annuity products and the legacy which is the enhanced that benefit features, which is that will help them to have the ability to passing their set to the next generation. We call this the four else planning. Also the most important part is providing them with a strategy for managing their wealth with the taxer features, especially when you need to deal with the complex taxes.

Speaker 1 (17:10): And there was a topic that came up in an earlier episode that you brought up Joey, that I think is worth revisiting in this conversation that was about life expectancy and how that's a factor in saving. Can you talk more about that?

Speaker 3 (17:23): Yeah, sure. We actually found the research thing that, which is a fun fact, the Asian American population, they have the highest life expectancy, which is 85.6 year, seven years over the generation population based on the United State Life table. So among all the ethnic cities, they have the highest life expectancy. And then we talk about the risk of living too long, that refers to the potentials that a person might outlive their saving.

Speaker 1 (17:56): Such an important part of the greater conversation. So let's move on now to talk about annuity products. Fred, first to you, what place does the annuity product have in the Asian American market and why?

Speaker 2 (18:08): Annuity is a very unique financial product where it has both investment savings components as well as an insurance component. This is a product that can enjoy some tax advantages and it also has the benefit of providing a lifetime income. So there are so many features and benefits with regard to this particular financial product, but it's so complex as well. I think the questions I have from many of my clients and the prospects are, gosh, I, you know, they complain to me, okay, this is too complicated or it's too expensive or I don't know what it is because it looks like everybody explaining it in a different way. So that's where we really need to spend more time providing training sessions, workshops or seminars and make it simple to understand, right, as a financial product, especially either the lifetime income portion, because that's probably the only insurance product or a financial product that would provide a lifetime income.

Speaker 2 (19:17): Very much like a patient, very much like a social security benefit, you know, social security income as well. I mean that would be easily understood. So for many immigrants from China, the first generation immigrants from China, a lot of them used to work for the government. So when they retire they get a lifetime sort of retirement income from the government. So that's something we use as reference, hey, you know, this is something that you can use as a lifetime income, you are never going to run out of the money. So they understand the concept and then as the details, how they're gonna use it, whether the money is gonna be in, uh, an investment or is gonna be just a fixed rate of return. That's the easier part.

Speaker 1 (20:03): And so much of this conversation has been just about understanding and how important that is. So what specific information needs do Asian Americans have that financial professionals can help with when it comes to their 401k, life insurance, equities, bonds, and even new business formation? Fred, what do you think?

Speaker 2 (20:20): Well, we just have to produce some, what we call in-language material. I read a stat for adult Asian Americans, probably more than 70% are foreign born, uh, which means they are probably more comfortable reading materials in their own language. So that's gonna help a lot because in Asian culture, usually they don't want to say no, they don't want to expressly complaining when they are approached by a financial professional and the first thing they're gonna say is not to make an appointment with you, the first thing they're going to say is, Hey, send me some information. Now if you send them all the material in English, and they probably don't even bother to read it. So if you just send one piece of, you know, information that's in Chinese or Korean, they're gonna read it. Number one, they probably will be amazed, Oh, you know, you're, you're talking to me specifically.

Speaker 2 (21:14): So that's very important. I think the companies should also be very active and present in community events or cultural festivals so that they know who is that guy, you know, he doesn't look like us, but I see him very often. Could be a corporate executive, it could be a local political figure, whatever. So they know that you are concerned about me, about our community, and over time that's going to create a good will, a positive image about your company. And then of course would bridge the gap between the communication of your target audience and and with the, the company who provide those products and services.

Speaker 1 (21:55): And Joey, you hear Fred talking about the differences and obstacles that are out there. What obstacles do you believe Asian Americans may face in getting their voices actually heard and in feeling more represented by financial professionals?

Speaker 3 (22:09): I think the first thing that comes to my mind is, again, go back to what we discussed earlier. Asian Americans are very diverse, just like what Fred mentioned earlier. They come from a very different historical background each we've got different own immigrant stories. We all have so much in common. So I'm Chinese from Malaysia, sometimes people taught I'm Korean, they taught I'm Japanese, they taught I am Chinese from China. So people start confused what is my background and where I grew up with. So we have so much in common, yet we are different in the culture, the country of ours or the language that we speak. So many financial professional, they are fear of offending. They worry if this is something wrong that might offend their customers. And also because of not knowing how to build a relationship with this segment of clients, they walk away from this business.

Speaker 3 (22:59): And secondly, even though the Asian American population is growing rapidly, the percentage is still smaller compared to other a city. So our boys have been treated as minor as the needs are not seen by the society. Also, because of that, the industry has misconceptions about our needs with like how they should pass a message to the Asian American thinking. We are the same as the majority really bringing the products and brand that not speak to the culture and not able to catch our attention. That's why we are here today, to let the Asian American community know that we understand one size doesn't speak all, and we're here to hear a voice, support your business growth and provide you the financial solutions and strategies that you can bring to your, your customers and create a more effective conversation.

Speaker 1 (23:48): And Fred, you're right, those initial connections, those first communications are so important to how a relationship is gonna develop. So talk a little bit more about that. How have you cultivated and maintained a client base in this particular market?

Speaker 2 (24:01): Understand their values is very important. I understand the history of immigration is very important. I understand what particular segment of Asian American, where they're coming from. They're coming from Hong Kong, Southeast Asia, Taiwan, China. That all makes a difference because you have to understand also there are communication styles. Many Americans don't realize that in Asian culture, collectivism is more like something they value. They, they don't want to be too different. They wanna be among a group or want to be recognized socially. They don't wanna do something that's, you know, too far fetched and they wanna be, hey, what everyone else is doing, right? So I mean to introduce a financial product, you would say, oh, many people like you are doing this. For example, who is who? And then that will be very powerful rather than, you know, in American culture, okay, this is my choice, I do it, I don't care about others.

Speaker 2 (25:02): So that's very different because again, American culture is more individualistic and entrepreneurial kind of culture and that comes to their communication styles. So Asian Americans in general, they're more like high contacts communication, more indirect, where you're going to find them hard to say no. If you approach them, they're gonna use, I will think about it and I would call you or I would check with my wife or I would check with my friends, my parents. So all those are actually rejections, but it really does, you know, because they wanna save face, they don't wanna be wrong and they want to leave room. So these are very important things that uh, financial professionals should pay attention to and it should also understand. And you gotta be extremely patient. You don't push, you don't be too direct. You know, when I first entered the industry, I remember during the training class we were trained to use the language.

Speaker 2 (25:58): Like what would happen to you if you pass away? What would happen to your children? I mean, in American culture its okay, but in Asian culture probably they don't like it. It is something very bad mentioning, you know, about death, right? So that's why, you know, cash value life insurance, for example, is so attractive because you can focus on talking about savings, you can talking about having it permanent, you own it and you can use the cash value for whatever purpose. That's very different, even though in American culture, okay, life insurance is life insurance. So more mainstream Americans probably buy term insurance versus Asian Americans buy cash value life insurance. I mean that's an example. So coming back to the point that learning their culture, learning their communication style, learning also their behavior. Like they don't trust strangers a lot. They like to seek opinions of community leaders or families or their parents. Those are very important.

Speaker 1 (26:55): And finally, Joey, before we go, just to reiterate what the main purpose of these conversations is. It's to help financial professionals better communicate with these markets and also help those clients achieve their goals. What are some last minute thoughts you wanna offer our audiences?

Speaker 3 (27:10): When I talk to a lot of financial professionals who are not Asian Americans, the first reaction when I talk to them about the multicultural markets, they're always fear of, of offending. This is what I mentioned, a like offended. They were like, if I greet someone, for example, we are going to give a gift, a gift giving during the Lunar New Year, but he or she doesn't look like a Chinese and they're from Philippines. Are they celebrating doula year? Like something like that. They have, they are kind of confusions within their mind and they're not share whether they should give the gift to the client and that pushed them away from the business. So what I really want to tell the financial professional is we always need to think about how the customer experience knows about offending this group of people. They're not that sensitive. Again, always seek first to understand before we understood.

Speaker 3 (28:01): If we pretend that we know what they really need, it's always very easy to create a trust and do credibility with them by asking them question ask before you tell, ask what you really want to know and avoid being too product oriented. And instead focusing on explaining to them the general idea of behind why you are approaching them. And go to the community and talk to the group of people to understand the awareness, the sentiments, the barriers that they're facing and what their motives. And most importantly, always be interested before. Interesting. You need to be curious, learning what people really want before you can provide them something

Speaker 1 (28:43): That's such great advice for many aspects of life. So Fred, what do you want the financial professionals who are listening right now to take away from this conversation?

Speaker 2 (28:52): I think not only a financial professional should look at the purchasing power of this market, but also to be curious about what drives the connection, what drives the trust, what drives, uh, the long term relationship between you and the Asian Americans. And to really understand the nuances, uh, in terms of each segment of Asian Americans. Again, I want to point out that it's not a overnight thing. It's really a long time commitment.

Speaker 1 (30:20): It does take time and I think we all have a lot to think about after hearing from both of you today. Fred, Joey, thanks so much for offering your expertise to us.

Speaker 2 (30:27): Thank you so much and for having us. Thank you, Fred. This is awesome.

Speaker 1 (30:37): And for our listeners, there are many more resources available for you to access on global atlantic.com/professionals. And if you like, we are hearing, be sure to subscribe to your thriving practice on Apple Podcasts, Spotify or Google Podcast so you can keep up with our latest episodes. Until then, I'm Dan Corcoran. Thanks so much for listening.

Speaker 4 (31:02): The opinions, beliefs, and viewpoints expressed by the guests on this podcast do not necessarily reflect the opinions, beliefs, and viewpoints of Global Atlantic Financial Group. Global Atlantic Financial Group, Global Atlantic is the marketing name for the Global Atlantic Financial Group LLC and its subsidiaries including for thought life insurance company and Accordia Life and Annuity Company. Each subsidiary is responsible for its own financial and contractual obligations. These subsidiaries are not authorized to do business in New York.