Abogados

Only 70 percent of Hispanic households have any type of bank account, versus 98 percent of non-Hispanic whites, says Aida Levitan, vice chairman and chief communications officer of Bromley Communications. Citing the Synovate 2004 Hispanic Market study, Levitan says Hispanics have been slow to apply for credit, too: Fifty-seven percent of Hispanics have credit or debit cards versus 89 percent of non-Hispanic whites.

The financial markets might seem like foreign territory because of language barriers and a general mistrust of banks, says Steve Teixeiras, a Merrill Lynch financial advisor in New York City.
“There is no question that Hispanics are moving from keeping money under the mattress to using it as capital for homeownership or business growth. But they bear the legacies of their own experiences in their own countries. In their own countries, [Latinos] don’t use mortgages. They don’t borrow. They don’t leverage to buy a home,” Teixeiras says.

Despite these statistics, Hispanics’ increasing financial clout has placed them squarely in the crosshairs of Wall Street’s big guns: Many big investment houses are making a push toward servicing clients in Spanish. In the last two years, for instance, Merrill Lynch has added 350 Hispanic financial advisors to its roster, and the number should rise to 450 by year-end, says Mario Paredes, director of Hispanic business development at Merrill Lynch’s Multicultural and Diversified Business Development Group in New Jersey.

“We need to penetrate this market,” Paredes says.

The economic reasons are compelling. In just four years, the purchasing power of the Latino consumer will rival the gross domestic product of Canada—$1 trillion—according to University of Georgia’s Selig Center. And the number of affluent Hispanics in the United States is increasing at above-average rates, with more than 3 million Hispanics worth at least $100,000, Paredes says. In fact, the number of affluent Hispanics increased 126 percent between 1990 and 2000, compared with 77 percent in the general population of those with $100,000-plus assets, according to a 2003 Merrill Lynch study.
“Three things can be said of [affluent Hispanics]: No. 1, the majority are business owners; No. 2, they are not familiar with the services of a firm like ours; and, No. 3, they tend to put their money outside the arena that Merrill Lynch is known for—stocks and bonds,” Paredes says.

Still, as they become more market savvy and amass more disposable income, Latinos progressively are testing the financial markets and are hungry for information on how to invest.

Finance expert Julie Stav can attest to that. A best-selling author and regular columnist for Hispanic Magazine, both her books—Get Your Share and Fund Your Future—have been published in English and Spanish and developed into PBS television series on personal finance. Besides creating Finanzas Sin Barreras (Finances Without Barriers), an audiovisual course in investing strategies, the teacher-turned-financial-guru also emcees a daily hour-long HBC radio show broadcast in the 10 largest markets nationwide. Her mission: to demystify investing for Latinos.

Stav’s phenomenal success is proof that Latinos are ready to explore financial options. “Financial companies have to realize that if they’re going to see growth in the next three to five years, it’ll be from the Hispanic community,” says Dan Stav, Julie’s husband and manager.
Latinos work hard for their money, but they should let their money work harder for them, says Christopher Guzman, a financial advisor for Raymond James and Associates in Orlando. He recently helped a Latino couple—both teachers—put $30,000 to work in the stock market. But when Guzman took a more detailed look at their savings, their assets more than tripled.

“It just trickled in. In subsequent meetings and just getting to know them better, I learned that they had other funds available, and it grew to $100,000,” says Guzman, whose clientele is 60 percent Hispanic.

Besides a sound stock-market strategy, the comfort level established between Guzman and the teachers—and between Stav and her audience—is the key to success, says Rossina Gallegos. She spearheads the Hispanic market initiative for Union Bank of California, the fourth-largest commercial bank in the state.

“Our studies have shown that a lot of us might be bilingual, but we may prefer to speak to someone in Spanish if it’s a difficult subject,” says Gallegos, vice president and Hispanic segment manager for Union Bank’s emerging markets administration.

Most of Guzman’s Hispanic clients speak English well, but he says Spanish sometimes is the language of choice when discussing, for example, the pros and cons of a Roth IRA versus a Coverdell account.
Performance, of course, is as important to the Hispanic investor as it is for any other, says Jay Garcia, research director at New York investment bank Samuel A. Ramirez & Co. The bank is not only focusing on Latinos as investors, but as an asset class all their own. Ramirez’s research led it to launch the Ramirez & Co. Hispanic Index fund, which tracks the largest Hispanic companies in the United States and Puerto Rico based on this premise: Either 51 percent of the company is owned by Hispanics or 51 percent of the products are sold in the Hispanic community. Based solely on market capitalization and trading volume, the RCHI index fund debuted in February, offering investors a shot at the Latino market some call a nation within a nation.

“These companies, fundamentally, are the right companies to outperform the average index in the U.S.,” Garcia says. The index fund’s 19 companies have posted annual revenue growth of 30 percent, which is three or four times faster than the rest of corporate America, he adds.

“You have a growing population with increasing purchasing power. You have things like language barriers that instill a lot of loyalty to products that the Hispanic community buys, and you have Latin American companies that want to be in the U.S., and they feel that the best way of doing it is coming here and buying existing U.S. Hispanic companies,” he says.

“The rationale behind it, what we’re playing here, is the economic power that Hispanics are wielding in this country.”

Bertrand M. Gutierrez is a staff writer for The News Virginian in Waynesboro, Virginia.