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The demographic makeup of America is changing. Latinos now make up almost 20 percent of Americans, up from seven percent in 1980. But while the number of Latino Americans continues to grow, only about four percent of financial advisors identify as Latino.
This gap may be significant because while wealth within the Latino population is growing, the advisor population is not keeping pace. Over the last 10 years, Latino household wealth has grown at an annual compound rate of 12.5 percent – almost double that among non-Latino whites – and the demand for financial advice is also growing. Forty-two percent of Latinos in the U.S. received advice from a financial professional in 2023, up from 35 percent in 2022.
Clients choose their advisor based on criteria from years of experience to assets under management, but many also look for someone like them. A 2021 survey found investors often look for a financial advisor whose race, gender or age is similar to their own.
Carson Group partner Tim Avila, wealth advisor at Yuma Investment Group, agreed. He advised that speaking the same language as your prospective clients can be a big advantage. “People are more comfortable speaking to someone who speaks their primary language. Our business is all about trust and it’s a lot easier to build that with someone who speaks the same language as you.”
After graduating from Yale University Cum Laude in 1991, Avila moved back to his hometown of Yuma, where he practices today.
Avila’s community has a large Latino population, but a similar approach can be taken to growing a wealth management practice in any community, he said. “It’s important to look at the demographics in your region. If there is a population growing in size and affluence, you may need someone on your team who speaks the language of that community.”
Another option is to include adult children in the conversation with their older family members, and build a relationship with the next generation of clients. “Kids can translate. Invite them to meetings and build a relationship with them as they grow their own wealth or get ready to become beneficiaries.”
U.S. demographics will likely continue to shift and pose both a challenge and an opportunity to the financial advice industry. Out of all affluent subgroups, Latinos represent the largest, with particular growth among younger generations. This could represent a growing market for financial advice.
According to McKinsey, Latino households could produce $265B in potential revenue for financial services by 2030. Advisors who create a plan to capture new clients from this demographic will be in a good position to see their books continue to grow.
Carson Group is working to help create a more diverse advisor workforce to serve shifting investor demographics. Participating in the SER Summit, a conference created by and for Latino financial professionals, Carson hopes to engage with and support the growth of Latino advisors. The goal of SER is to create a community to support Latinos in the industry while attracting new Latinos to financial firms.
Advisors who can connect with clients, whether that connection is based on language or something else like culture, values or shared experiences, are more likely to form the bond needed for a successful client relationship. This can go a long way to not only establishing new client relationships, but eventually also providing financial advice to the next generation when wealth transfers to beneficiaries.
Gregg Johnson is the National Sales Director for Carson Group. Carson Group, a registered investment advisor with over $38 billion in AUM, serves more than 50,000 families and is dedicated to helping clients find their freedom through a planning-first approach, objective advice, and unmatched personal service.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
