All people, regardless of background, upbringing, culture or life experience, have very similar planning needs if they live in this country—make money, save money, perhaps put the kids through school, hopefully save enough to fund a good retirement and do it all in a way that’ll minimize taxes.

With that in mind it seems like a fool’s errand, a politically incorrect one at that, to look for rules of thumb that could explain the different tendencies, sometimes different approaches, habits or concerns that seem to be rooted in culture.

There are more than a few gross generalizations floating around that don’t hold up under scrutiny—that Chinese clients are more willing to take on risk, for example. Companies are also rethinking strategies that assume they need Asian advisors to cater to Asian clients, Muslim advisors to cater to Muslim clients, and so forth. Although true in some cases, such as when language is a barrier, more recent experience shows it usually isn’t necessary.

That said, some common assumptions hold true.

Family takes on a whole new meaning for advisors dealing with people who’ve uprooted their entire lives in search of better circumstances for their children. A whole new level of multi-generational planning and knowing the family comes into play when oldworld ways of managing money and passing it on to the next generation come into conflict with a younger generation’s western education and values.

Mark Whitmell, RBC’s director of cultural markets, points to the example of Myin Hao Yin, a Chinese oil engineer who moved to Calgary. “The population was similar, size was similar, work was similar,” Myin tells the company cameras in a promotional video. But there are certain differences, some quite dramatic. This highly educated, competent engineer, who’ll likely establish his own business here at some point in the future, never needed a credit card until he arrived in Canada.

He needed to look up words like “debit” in the dictionary.

The need for credit poses a number of very interesting challenges for new immigrants who arrive without credit histories. And obtaining credit cards can be problematic for all foreigners, even those with established ratings in their home countries.

Religious prohibitions against the use of bank or store credit cards aside, some clients come from countries where private property and luxury items were not allowed. Those people can quickly get in trouble—lured by trappings, big cars, new shoes, gadgets and expensive toys—all to the detriment of their credit ratings.

“I’m seriously thinking about opening a branch in my business on ‘how to fix your credit.’ I’m going to charge them a fee and give them credit counselling,” says Hosein Ansary, financial planner and head of Ansary Financial Group. He’s been in business, primarily serving the Iranian community in Montreal and Toronto, for the past 22 years.

The credit problem, Ansary says, stems from something larger—temporary living. Instant gratification plays into it, but he says “their state of mind is always a temporary state of mind. They think they’re only here for two years. I know people who’ve been saying they’re going to go back next year, for the past 25 years. And the biggest challenge for me is to change that.”

This challenge not only affects discussions about credit problems, which in itself carries interesting ramifications— bankruptcy is a “big disaster” for people who’ve lived in countries where the penalty for insolvency is jail—it also affects discussions about insurance, wills and estate planning.

Oksana Mikouliak, branch manager and financial planner with Buduchnist Credit Union in Vaughan, Ontario, also sees problems when some of her clients, or their children, take a “live in the moment” approach to money—with consequences to long-term financial stability. Occasionally, image is a driving factor as well.

“I think it stems from the historical situation.” The majority of her clients are Ukrainian and Russian immigrants— roughly half of whom have been in the country for some time; the other half being relatively recent immigrants. “These people came from a society where they were not allowed to own luxury items, so they are now over-compensating for that.” They go into debt to drive a BMW but can hardly pay the mortgage. They will also remortgage to throw a sweet 16 party for their daughter, or an elaborate wedding—“ it needs to be at a certain level,” Mikouliak says.

At the other extreme are excessively frugal clients who deny themselves any luxuries to make sure they have money put aside, in some cases buying several houses to make sure their children will have larger inheritances.

Family First

One issue that is weighty within certain cultural contexts is the balance between education and eldercare. The discussion is not always one of money, whether there will be enough for school or care, but one of engrained values and significant expectations.

In many Asian countries, for example, Confucius’ teachings are popular. Among his Chinese clients, Rudy Chung, a Vancouver-based investment advisor with Dundee Securities, says family is the central unit—a parent would rather invest in a child’s future education than fund his or her own retirement. In turn, children are expected to care for elderly parents, a mindset that’s still closely adhered to by the older generation at least, even if they’ve been in the country for years. As a result, RESPs are very popular with this demographic, so much so that clients contribute to these education funds, or save up to buy a house for their son or daughter, even before contributing to their own RRSPs. Often, they do this despite the fact it makes little sense from a tax planning or cash flow point of view.

“Traditionally, for people coming from overseas—from China—their ‘retirement plan’ has never included things like RRSPs,” Chung says. “The pension system is a very new concept.”

New World Order
Future reliance on children, though, many of whom are growing up with western educations and a North American perspective, can be the source of significant conflict. Discussions are sometimes made even more difficult by the fact that some older Chinese clients still believe their entire estate should only go to the oldest son, regardless of how many other children they have.

Building a relationship with the family early on allows more room to offer advice, input and time to bring clients around. Even so, Chung jokes, he sometimes needs to talk to clients almost like a social worker or psychiatrist to help them reconsider long-held values. “It’s very important to educate these clients about estate planning. It’s definitely not something they’re used to.”

Similarly, Mikouliak says it can be a challenge to bring her clients around to the idea of creating a will or estate plan. “This notion is very new to the immigrant population. They never had to worry about it back home, because there was no private property.”

Omar Hayat, an Investors Group representative working in Montreal, also sees how old-world and new-world values can drive a wedge between parents and children. In the Muslim communities he serves, Hayat says parents and their kids sometimes move toward opposite extremes. “Either they’ve gone the very religious route, or the very liberal route,” he says.

But even the most harmonious family units require a different sort of consideration— in a lot of cases, getting to know the family is not just some best practice or ideal, it’s a requirement.

Rania Llewellyn is an Egyptian and Jordanian, born in Kuwait City, who immigrated from Cairo to Halifax, Nova Scotia in 1992. In her culture, says the vice-president of multi-cultural banking at Scotiabank, family is number one. “You pool your funds together, you live in the same house, you all dip into the same penny jar. You all help each other out. When you’re making financial decisions, you talk to your parents about it,” she says.

Cash flow planning for family affairs also needs to be done for some clients. Hayat says a lot of his East African clients, mostly Somalians, will starve before stopping payments to their children’s education accounts. It’s also true that gift planning can be a significant consideration. At some weddings, half the guests might arrive with kitchen utensils and dishtowels, but the other half almost inevitably show up packing cheque books or envelopes stuffed with cash to help the new couple make a down payment on property.

Mikouliak and Llewellyn both agree the example is a fair one for a lot of families. “For people of a Slavic background, it’s very important that when you’re invited to an affair, you bring a sizable gift, especially if it’s your close friend or relative,” says Mikouliak. “Truthfully, some people cannot even afford it and they remortgage their houses, take a loan, stuff like that to pay for these things. It’s engrained in their minds that if you’re invited to a family affair, you cannot come emptyhanded.”

Llewellyn agrees. “Holidays are a big thing. We make a big deal about pretty much everything. That’s just a cultural thing. In North America though, with my husband’s family [who are Irish and Welsh] it’s the idea that’s important. In our culture, the value is just as important. You can’t just show up with something that looks great, but it’s only a $10 gift.”

Investment approaches
Chung says his Asian clients appreciate his knowledge about strategies to improve and increase savings and notes that consistent RESP investments become a high priority once clients are told about the related benefits. He also says they tend to have a greater aversion to debt, even being uncomfortable with borrowing to invest in situations where the strategy makes sense.

This aversion is shared by many ethnic groups. The high propensity to save demonstrated by Chung’s clients, and the urge to purchase gold, houses or invest in a business, rather than make typical market-based investments, can stem from clients’ experiences with banking institutions in their own countries. “In South America, for example, there’s been a lot of political instability,” says Llewellyn. “Trust of the financial institutions isn’t necessarily the same as in North America.”

Likewise in China, Chung says there haven’t been many periods of peace and stability. “The first route has always been to save as much as they can for an uncertain future, rather than leave things to the whims of the market. Real estate is very attractive. They’ve had good experiences, historically, with tangible assets.”

Similarly, Mikouliak says her clients are usually more willing to risk investing in their businesses than in financial markets. She adds the banking experience in some communist countries can be a psychological barrier to possible investors. “They don’t believe in the system. They don’t understand that the markets [in the west] are regulated. They want the immediate effect of investing, instant coffee, right away. So they invest in tangible assets more than in investment products.”

However, once people come to Canada and find out how stable the system is, many advisors dealing with different ethnic groups say their clients are usually open to new product ideas.

“In a lot of these Asian countries, there aren’t a lot of social safety nets. They’re actually more inclined to do it themselves, to get some insurance in place and understand how to maximize the tax benefits.” says Chung. “They’re more willing to learn, it’s just that you have to develop the trust, and position yourself as the educator. Be an ambassador. They want to find out about schools, about RRSPs and RESPs. All those things need to be introduced from the ground level.”

Frequently, it’s simply a matter of time before clients become more accustomed to things—both Whitmell and Investors Group regional director Edward Matti say it takes about 10 years before a lot of clients are ready. Some, though, are never ready and insurance is often a taboo subject.

“[Sometimes] it’s just not something you’re used to. In Egypt, if you die, someone else will take care of it. It’s the same thing with car insurance. If you’re in an accident, you just pay for it. In North America, though, everyone has insurance on absolutely everything,” says Llewellyn. Insurance is also becoming more popular among some Muslim clients after scholars finally agreed that it was halal, or permissible, to purchase certain products. Matti says insurance is a huge area of growing interest among the Asian and Muslim clients he serves in his Toronto practice. “For many years, because of the shady grey area, whether or not it was acceptable [to buy insurance], they never looked into it. Now it’s more acceptable. They want to know how they can find out more.”

Meeting Needs
Many people who deal with charitable giving recognize clearly that giving back meets certain esteem and self-actualization needs for the giver (see “Religious Considerations,” page 26). But other needs in the hierarchy are just as important to consider.

When Investors Group surveyed its different advisory councils, the feedback showed Asian clients needed to see the corporate brochure in their own language to drive home the fact that the company is large, stable and has been around for some time. The Muslim advisory council, on the other hand, simply asked for printed material without pictures of people or living things, so Muslim clients would feel respected. “Nobody cares that Great-West Life is a sister company,” says Hayat. “I think what happens when I do presentations is people are thinking to themselves, ‘In this person, this individual, I see someone I can work with, someone who is inspired.’ At the end of the day, people buy our inspiration.”

And once satisfied with the service, these clients tend to be loyal. Word of mouth about good service spreads incredibly quickly, many times to relatives who have not yet arrived. Part of that service, though, requires an effort to move beyond typical planning into education about tax laws, since many Canadian products and services are based on a tax regime that is drastically different and usually more expensive than clients are used to. It also creates requirements to provide service in non-financial areas such as advice about schools, neighbourhoods, and how to get settled in a new land.

With two-thirds of Canada’s population growth fuelled by new immigrants over the past five years, it’s bad business to overlook these unique social, cultural and religious needs.