Many Hispanic Investors Seeking Investment Education

Almost half of surveyed Hispanics (45%) say that no one ever taught them about saving and investing, compared with 31% of U.S. investors overall, according to Wells Fargo. About three out of four (76%) Hispanic investors wish they had learned more about managing money when they were growing up—about 15% more than the general U.S. investing population (61%).

The findings suggest there’s a big opportunity for financial advisers in finding ways to bolster the long-term investing confidence of the U.S. Hispanic population, says Steve Novak, a senior investment strategist for Wells Fargo Private Bank. “These findings highlight some interesting attitudes among Hispanic investors and shed light on their strong desire for more education on the fundamentals of investing,” he adds.

Despite a strong interest in personal finance and investing, one in three Hispanic investors surveyed (34%) does not feel comfortable investing in mutual funds, stocks, or bonds—versus 27% among U.S. investors overall. However, when looking at Hispanic investors who already invest for the long term in stocks and bonds, a strong majority (70%) felt they would earn money on those investments. Twelve percent of this group expects to lose money, and 18% feel they will break even.

Novak says these findings suggest that Hispanic investors in general have a good sense of the opportunities that exist in the investment markets. For retirement plan sponsors and advisers, there needs to be a focus on building on this knowledge, so all investors “can act on what they intuitively know to be true around the importance of investing for their financial futures.”

Additionally, survey responses indicate many Hispanic investors are more risk-averse than the general U.S. investing population, with almost half (47%) preferring to put money for the future into savings with no risk of losing it, compared with 35% for the population overall. More than half (56%) of Hispanic investors feel that the best place to keep their savings is in bank accounts (38%) or real estate (18%). In contrast, fewer than half (45%) of all U.S. investors feel that the best place to keep their savings is in bank accounts (32%) or real estate (13%).

Just one in 10 (10%) Hispanic investors give themselves an “A” when it comes to their financial and investing literacy, versus 17% among U.S. investors overall. Half of Hispanic investors (47%) give themselves a grade of “B”, and another third (34%) give themselves a “C” (similar to U.S. investors overall).

Strong Connection to Family and Community

Wells Fargo says family dynamics play a significant role in how many Hispanic investors think about their personal finances and financial future. This is true in terms of lessons learned about money growing up, a sense of responsibility for taking care of family members financially, and how they think about their future retirement, the research suggests.

Fifty-five percent of Hispanic investors agree that “raising and investing in kids is the best retirement plan,” compared to 41% among U.S. investors overall. About a quarter (24%) expect to rely on family members to live and make ends meet in retirement, compared to 13% of U.S. investors overall.

Hispanic investors are also more likely than other investors to lend and borrow money within their families. Almost 60% provide financial support to others in their families or communities, compared to 44% of U.S. investors overall, while half (54%) have lent or given money to an adult family member in the last year, compared to 39% of U.S. investors overall. Of those providing financial support to others, 81% provide direct financial support by giving money or paying bills, Wells Fargo says.

Thirty-one percent of Hispanic investors are supporting adult children, parents, grandparents, extended family, or others, compared to 26% of U.S. investors overall, and 6% are providing financial support for people who live outside the U.S. (compared to 1% of U.S. investors overall).

Among Hispanic investors with kids, 28% say they want their kids out of the house and on their own the day they turn 18 (same as U.S. investors overall). Fifty-nine percent say they want to have money to pass on to family or friends (similar to U.S. investors overall), and 17% say that wanting assets for an inheritance most motivates them to build up their savings and investments (compared to 8% of U.S. investors overall).

Conversations with Parents

Wells Fargo says nearly all Hispanic investors polled (92%) say their parents talked “a lot” or “sometimes” about the value and importance of hard work when they were growing up (similar to 89% of U.S. investors overall). But fewer than half said their parents talked as much about financial issues, including the following:

• How they managed money and spending (45%, similar to 40% of U.S. investors overall);
• What they were saving for and how much (36%, similar to 31% of U.S. investors overall);
• How they were planning for retirement (29%, similar to 33% of U.S. investors overall); and  
• How much money they made (27%, higher than 19% of U.S. investors overall).

How the Industry Stacks Up

More than half (57%) of Hispanic investors feel that the financial issues and needs of Hispanic Americans are different from other Americans. Currently, Hispanic investors give above-average grades to their primary banks or financial institutions with which they do the most business.

The average grade for being “Hispanic-friendly” was a “B.” The primary banks and financial institutions of those Hispanic investors reached for the poll also received a “B” for “addressing the needs of Hispanic customers.” At the same time, 76% of Hispanic investors say financial services providers treat them with respect, yet 46% feel like they don’t have enough money to get personal attention from banks.

These survey findings are based on an online survey conducted with Versta Research in June among 528 self-identified Hispanic investors nationwide. Qualified respondents were non-students, ages 25 to 75, who are the primary or joint financial decision-maker in the household with household investable assets of at least $10,000. The survey also included a national comparison sample of 530 general population investors.

More information on Well Fargo research and financial education resources is here.