Pitching with Education to Ethnic Groups

For ethnic minorities, education has traditionally been a stepping-stone to a better life. For firms that want to sell them investment products, it is also a marketing tool.

To tap this fast-growing market, investment products companies are rolling out seminars, Web sites, and brochures to help minorities get comfortable with the idea of investing — and to establish relationships with them. “People will not come to you if they don’t trust you,” said Wallace B. Louie, who heads Charles Schwab & Co’s. fastest-growing unit, the Asia Pacific Group.

African-Americans, Hispanics, and Asians are outstripping the general population not only in population growth but also in median-income growth, according to census data. Also, their aggregate after-tax buying power grew 73%, 84%, and 102%, respectively, from 1990 to 1999, against 57% for the population as a whole, the University of Georgia’s Selig Center for Economic Growth estimated.

One problem in selling to immigrants in particular is that many come from very different financial systems, said Saul Gitlin, a vice president at Kang & Lee, a New York ad agency that specializes in marketing to the Asian community.

To sell to such people, he said, financial services companies have to cover the basics — how to invest, what the products are — before they get to the sales pitch.

Education also forges trust and a positive view of a company’s brand, Mr. Gitlin said. “It’s the entry price for getting into this market,” he said.

Schwab’s Asia Pacific unit, which now accounts for 4% to 5% of the brokerage’s overall business, according to Datamonitor Corp. of London, offers Web sites in Chinese and Korean that explain investing terms and principles.

It has also contributed financial content to Sina.com, a Chinese-language Web site. Potential investors will find links to Schwab’s Chinese trading site on Sina.com. And if there is enough demand, Schwab will develop a Korean-language trading site, Mr. Louie said.

Mr. Louie said the Web sites do not merely showcase Schwab’s knowledge and expertise. They also bespeak “an element of integrity,” he said, because investors are getting a service rather than a sales pitch.

Establishing trust is so important to members of ethnic communities that banks may have a better shot than brokerages at their business, said Arnold Wechsler, chief executive officer of the New York-based financial services marketing firm Wechsler Ross & Partners Inc.

Ethnic minorities are more likely to invest with a bank because they “haven’t typically been do-it-yourself investors or clients of brokerages,” he said.

Of course, banks have to get the message out to potential customers. A number of national banks run investment seminars targeted to ethnic groups.

Charlotte, N.C.-based Bank of America Corp. holds investment seminars in areas with a large ethnic component, such as San Francisco, Los Angeles, and Florida.

Citigroup Inc.’s Salomon Smith Barney has set up departments that run investment seminars for specialty groups, including Hispanics and African-Americans, in major cities nationwide, and plans to begin seminars for Asians next year. The seminars cover topics such as market trends and asset allocation — subjects of interest to any investor.

“The information is generic,” said Aubrey Hurse, the manager of Salomon’s African-American initiative. What’s important, he said, is that potential investors feel that they are being personally addressed.

“We want to start a relationship and build a relationship by bringing information that people can use,” he said. “By virtue of our doing that, it starts a dialogue.”

Citigroup refuses, as a matter of policy, to disclose the number of leads or new accounts that such seminars generate, Mr. Hurse said. But the banking company does keep track, and both Mr. Hurse and his counterpart in Salomon’s Hispanic/Latino initiative said that the seminars had brought in a satisfactory amount of business.

Not all the education that recent immigrants are getting from financial services firms is financial, Datamonitor found. Some hold seminars that give advice and direction about general issues relating to living in America.

In fact, recent immigrants often turn to their insurance agents, for instance, for advice on where to buy a car or how to find a grocer selling their old-country food, the firm said.

On New York’s Long Island, an Allstate Insurance Co. agent began giving customers defensive-driving lessons in Spanish when he discovered that there were no Spanish-speaking instructors nearby, said Allstate spokeswoman Marissa Quiles.

“A lot of people who come to New York are new to the whole culture,” Ms. Quiles said. “He takes time to help his customers out, and that makes them loyal to him.”