Asian Americans. Banks. LanguageLine

As the fastest-growing ethnic group in the country, Asian-Americans make up an important market segment for a variety of industries.

Because they are also the most affluent and educated of any U.S. racial or ethnic group, they are a key market for personal financial instruments.

Here’s what the financial services industry needs to know to reach this important demographic.

Growing Numbers

Asian-American consumers are growing faster—both in numbers and in buying power—than the general population, according to a Nielsen report released in May. The group is maintaining income and education rates higher than any other racial or ethnic group in the country, the same study finds. According to Pew Research Center, the U.S. Asian population grew 72 percent between 2000 and 2015 (from 11.9 million to 20.4 million)—the fastest growth rate of any major racial or ethnic group.

No single country-of-origin group dominates the U.S. Asian population, but the largest groups are of Chinese, Indian and Filipino origin. As of 2015, 24 percent of Asian-Americans (4.9 million) were of Chinese origin, the largest single-origin group.

Despite the large percentage of immigrants in this group, around 70 percent of Asian-Americans ages 5 and older reported speaking English proficiently. However, this share varies widely across subgroups, with a large majority of Japanese (84 percent), Filipino (82 percent), and Indians (80 percent) speaking English proficiently and groups with large populations of recently arrived immigrants, like Bhutanese (27 percent) and Burmese (28 percent), having significantly lower rates of adoption.

Financial Goals—Family Matters

Prudential’s most recent study of the Asian-American financial experience notes Asian-American households are more likely to:

  • Include a married couple (63%)
  • Have children under 18 in the house (39%)
  • Be multi-generational (26.7%) compared to the broader population

The study also indicates that Asian-American sub-groups are united by a shared focus on the financial progress, stability, and security of the extended family.

The Asian-American financial experience is influenced in almost every respect by the importance of family, according to Prudential. For many in the community, financial decisions are heavily influenced by their family responsibilities and aspirations.

For instance, 25 percent of Asian-Americans said taking care of family members is a financial priority, compared to 15 percent of the general population. One in five Asian-Americans responded that they provide financial assistance to relatives, and one in three act as caregivers for someone other than their children. Financial institutions would be wise to acknowledge this in their marketing, product offerings and resources. For instance, providing information on the best ways to help elderly parents manage their finances could be especially beneficial.

Growing Wealth

Asian-Americans surveyed by Prudential estimate the value of their household financial assets at $445,600 on average (excluding their primary residence or any business they might own), compared to $385,500 for the general population. Seventeen percent of Asian-Americans—about one in every six—have at least $500,000 of their equity in their homes, compared with 8 percent of the general population.

Like the U.S. general population, Asian-Americans rank retirement-related goals as their top financial priorities. The two groups diverge, though, on goals relating to debt and family issues. While 43 percent of the general population responded that reducing personal debt is a top priority, only 35 percent of Asian-Americans surveyed share that concern.

In addition to having higher levels of household financial assets, Asian-American respondents are more likely than the general population to have access to a retirement savings plan at work and feel better about their overall financial health. A solid majority (58 percent) of Asian-Americans feel they are better off financially than their parents were at the same age, compared to 49 percent of the general population.

Asian-Americans are also more likely than the general U.S. population to own individual stocks. Despite their higher than average participation in both workplace retirement plans and individual stock ownership, relatively few Asian-Americans engage financial advisors, a possible window of opportunity for companies looking to market personal financial instruments.

Opportunity for Financial Professionals

According to Prudential, relatively few Asian-Americans seek the help of a financial professional, but many are open to the idea. Only 18 percent of Asian-Americans currently work with a financial professional, compared with 26 percent of the general population. But many are open to the idea given the right circumstances.

Much of this comes down to building trust. Understanding more about Asian-Americans’ goals and values could help bridge that gap. And for those with limited English proficiency, overcoming language barriers is a critical first step.

LanguageLine Solutions has been a trusted partner for the finance sector for more than 30 years. Our work covers many areas of the financial sector, including diversified financial firms, securities firms, over 60 percent of top financial data services firms, and 15 of the top 27 commercial banks.

To learn more about how we can help your organization expand its reach and prepare for the future of financial services, check out our latest eBook: The Future of Finance: Banking on the Massive Potential of Limited-English Consumers.

Saul Schulman is a strategic account executive with LanguageLine Solutions.