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In the fourth article of our emerging market series, we consider the Latin American market: what they appreciate in an advisor, key trends to make note of, and common priorities that inform their financial decisions. This growing demographic will play a significant role in shaping the retirement market, and having insight into these clients can help set you up for success.

Previous articles in the emerging market series provide insight into the Chinese, Filipino and Arab markets.

A GROWING OPPORTUNITY FOR ADVISORS

According to the Government of Canada’s Labour Program, Latin Americans make up 6% of Canada’s visible minority population, and this group appears to be quickly growing.1 For example, between 1996 and 2006 the Latin American community grew by 72%, compared to 3% of the overall population.2

Ana Rosa Parra, a Sun Life Financial advisor based in the Greater Toronto Area, has been working with clients in the Latin American community for several years. “This is a key retirement market. Spanish people tend to value insurance and investment products, and they typically like to start saving early with a view to enjoying their years in retirement,” says Parra.

With a tendency to be open to financial advice, she says the main challenge with these clients is the advisor’s ability to build a solid foundation of trust, and to devote the time necessary to get to know clients and their families’ true needs.

INVESTING IN THE FUTURE WITH AN INTERGENERATIONAL FOCUS

Canada’s Latin American community has the distinction of being the most likely to have seniors living at home with extended family. In 2001, 20% of Latin American seniors lived with relatives, like their son’s or daughter’s family, compared to 5% of Canadians in general.3

“Typically, Spanish people don’t like to live alone. Having extended family groups under one roof is common in this community,” says Parra.

When it comes to making financial decisions, she points to family protection and guarantees as high priorities. “With many young families and their long-term commitments, clients fully understand the importance of insurance, and they also understand the importance of having a financial plan and working with a skilled advisor.”4

Taking a long-term approach to financial planning, including how needs change over time, resonates well with this market. Take the opportunity to focus on intergenerational considerations when building a plan with clients — it’s likely they’ll appreciate the peace of mind and added protection that a solid wealth-transfer strategy provides. Parra suggests the following:

  • Focus on guaranteed investments: Latin American clients are often receptive to long-term wealth strategies with guaranteed growth potential. Products that provide the opportunity for growth, combined with protection against volatile markets, are particularly appealing. Guaranteed investments, like payout annuities and Sun Life Milestone Funds, or Sun Life Guaranteed Investment Funds, are good options to consider as part of their wealth strategy.
  • Provide insurance solutions with optional benefits: “Life and health insurance products that include savings or guarantee components are of great interest to this market,” says Parra. Insurance products that offer optional benefits, as well as professionally-managed investment accounts or return of premium, provide the family protection benefits they value, and also have the potential to transfer their wealth in a tax-efficient manner.
  • Connect with the adult children: A projected $895 billion in assets is expected to change hands within the next decade.5 Consider how you can assist your clients in having conversations with their families about their wishes for their estate. By building connections with your client’s family early, you increase the chance that they’ll see you as a trusted partner and continue working with you after their parents’ passing.

DEVELOPING CONNECTIONS IN THE COMMUNITY

Building relationships with Latin American clients may largely depend on your ability to connect and provide consistent customer service. “The Spanish market tends to look for a strong emotional connection with an advisor. Care, trust, and a willingness to take time and explain products carefully are essential,” says Parra. Reputation and community branding are important; she recommends building trust with centres of influence in the Latin American community. “There are also some unique particularities in each of the Spanish countries that need to be learned and addressed by advisors, in order to break the ice and build relations and trust with these clients.”

As the Latin American market continues its rapid growth, consider how you can reach out to these clients and expand your work with members of this important community. It’s not just good business — it will likely become a requirement of doing business as Canada’s retirement landscape shifts, and minorities increasingly hold a larger share of the country’s wealth.

In this series, we’ve addressed some of the considerations for key minority communities in Canada. The rapid growth of these communities, and the increased need for financial advice, mean it’s paramount for advisors to expand into these markets. In the retirement market of the future, successfully connecting with clients in these communities will play a critical role in the success of your business as an advisor.


1 Government of Canada Labour Program, 2006 Employment Equity Data Report

2 Statistics Canada

3 Statistics Canada

4 Only advisors who hold CFP (Certified Financial Planner), CH.F.C (Chartered Financial Consultant), F.Pl. (Financial Planner in Quebec), or equivalent designations are certified as financial planners.

5 Investor Economics, 2013 Household Balance Sheet Report

Originally published on Advisor.ca