Are you good with numbers; fluent in Mandarin, Cantonese or Filipino; and deft at rolling dumplings? If yes, then you may be just the blend some clients are seeking from their financial advisors.
At least that’s what Dorothy Chan, a senior investment executive at Scotia-McLeod in Vancouver, discovered when a prospective Chinese client expected her to spend hours talking about thoroughly non-financial matters and roll dumplings in her kitchen.
The financial milieu of Canada is fast-changing, with the influx of a new breed of immigrant clients who are increasingly demanding and complex, and have very culturally diverse financial needs.
Okay, you might not always have to roll dumplings to get their business, but sooner or later you’ll need to tailor your services to custom-fit the needs of these foreign-born customers.
Chan’s book didn’t focus too heavily on new immigrants until the recession hit and her existing clients buckled and started moving money out of stocks and into real estate. She ended up losing almost $6 million to this frenzied outflow.
And it isn’t just Chan who has realigned her base to encompass this growing population. Canada’s entire finance industry is beginning to realize the potential in this market, and is clamouring to grab the untapped loyalty of this segment.
Given the numbers, the scramble is understandable. According to Statistics Canada, this year alone Canada will become home to up to 265,000 new permanent residents. By 2031, almost half of Canadians aged 15 and older will be foreign-born. And by the end of that period, Canada will rely on immigration for 100% of its population growth.
Michelle Duke, head of client strategy at Royal Bank of Canada, says this market is extremely significant. “It’s our prime acquisition engine. There are only [so] many Canadian families we can draw from. The growth of our client base is going to come from immigration, and we realize that.”
Eye on the prize
And it’s just not their numbers; newer immigrants are especially attractive because they’re bigger, bolder investors. Carol Leong, vice-president and investment advisor, TD Bank Financial Group, says they’re also more financially savvy than people who made Canada home ten years ago. “Earlier, a lot of people, when they thought of investments, thought of real estate and stocks. Now they ask about our other offerings such as bonds, structured products and PPNs.”
Previous generations of investors were also given to moving their financial assets lock, stock and barrel. But many of today’s global investors don’t fold their business interests in their home countries; they work both ends at the same time.
And sure enough, Canadian offerings have evolved to cater to that global propensity, according to Ritu Narayan, program director of the Immigrant Investor Program, a Canadian Federal Government initiative within the international arm of RBC Wealth Management that specifically focuses on attracting immigrants with a minimum investable net worth of $800,000. “We offer not only Canadian-based solutions but international ones as well,” she says.
“We provide a full spectrum of banking and wealth solutions to HNW clients well before they immigrate. A lot of them don’t transfer all their financial assets here. We are uniquely positioned to help them manage their products and assets outside Canada through our offices in [places like] Geneva, U.K., Miami, Hong Kong or Singapore,” Narayan adds.
Most banks are interested in providing one-stop-shop banking solutions to these affluent investors, and start wooing them even before they land in Canada. Banks like CIBC, RBC and BMO all have international branches or local tie-ups that allow prospective immigrants to open bank accounts and build credit history prior to immigration.
Scotiabank, for example, has a tie-up with HDFC Bank in India – in addition to having five of its own branches there. Prospects can walk into any HDFC or Scotiabank branch to get preapproved for a credit card. Once they arrive in Canada, the courtship intensifies, with major financial institutions running multilingual ads – replete with cultural nuances – in mainstream and ethnic media.
Many also tie up with immigration agencies and lawyers to conduct sessions and seminars that provide a primer on life and basic banking in Canada.
Research by Scotiabank on how immigrants pick their financial service providers, however, shows that word of mouth is by far the most effective prospecting tool with this market segment.
“So from a strategy perspective, it’s not only important to talk to newcomers but also the established immigrants who are going to influence the choice of these newcomers,” says Rania Llewellyn, Scotiabank’s VP of multicultural banking. “Understanding both segments is critical.”
Chan, who tried prospecting through television and radio spots, also found word of mouth a more potent medium when reaching out to this consumer base. “I don’t think TV programs got me too much business. Word of mouth and referrals from my centres of influence, lawyers and the people I work with had the most impact,” she says.
The Big Five also ensure they make their presence felt in the communities of the main ethnicities they cater to, be it sponsoring awards and special events, or celebrating Diwali with the Hindus, Baisakhi with the Punjabis, and the Dragon Boat Race festival with the Chinese. And for those who have no local support in Canada, bankers eagerly moonlight as local consultants for miscellaneous services such as where to buy a home, where to send kids to school, what organizations to join and even what grocery stores to shop at.
“We try and make the service very personal for them. We’re not just their bankers, but also their confidantes, consultants, friends and their first reference to Canada,” Narayan says.
Adapting to the new game
Marketing to new Canadians not only requires ingenuity, but also sustained effort and an understanding of how these consumers differ from mainstream Canadians – not just demographically, but behaviourally and attitudinally as well.
Once again, Canada’s Big Five are doing just that by leveraging the diversity of their front-line staff. Closely mirroring Canada’s overall demographics, RBC has almost doubled the diversity among its rank and file over the last decade, from 14% in 1999 to 27% in 2009. Diversity among its management staff has more than doubled, from 13% to 29% over the same ten-year period.
CIBC, which today operates the second-largest branch network in the country with 1,076 branches, is investing more than $280 million to expand its branch network by another 70 over the next five years, predominantly in the Greater Toronto Area and Vancouver, where the bulk of the population growth will come from.
Rob McLeod, CIBC’s senior director of communications and public affairs, says the bank recently completed a $90 million upgrade to its ABM network to increase functionality, which included adding multiple-language capabilities such as Chinese, Spanish, Punjabi and Filipino.
Keeping pace with the competition, TD commits at least 10% of its community sponsorship fund annually to diversity-related organizations. The bank also has a special emphasis on staffing its branches with members of ethnic communities and establishing branches in key ethnic areas.
“We recognize an inclusive environment doesn’t come about simply because the leadership talks about it. People are often unaware of their personal biases and blind spots, and how these translate into their day-to-day behaviours,” TD’s diversity communications department says. To address this, TD has invested heavily in development programs that support employees at all levels in understanding and exploring complex and wide-ranging immigrant topics and issues.
Llewellyn, who helped establish Scotiabank’s multicultural banking department in 2007, now heads a full-fledged, ten-member team. The main mandate of the department, she says, is to be the bank of choice for immigrants and multicultural customers. “We’ve seen an increase in the new immigrants we attract since the inception of this department,” she adds.
Other banks, too, have started programs specifically geared to new immigrants, such as RBC’s Welcome to Canada campaign, Scotia’s StartRight Program for New Canadians, CIBC’s Newcomers to Canada Plan and BMO’s Immigrant Investor Program.
It’s a testament to the growing clout of immigrant clients that in addition to the money they’re spending on attracting this market segment, banks are also reassessing and revising credit, loan and remittance policies to accommodate the diverse needs of their newest clients.
RBC is revising its more stringent policies and procedures related to the access of credit, mortgages and loans. “We wouldn’t have ventured down that road had it not been for the large influx of new immigrations. We have to review our policies based on the demand,” Duke says.
In the past, immigrants were required to pay a security deposit to get a credit card. Now under certain categories, such as the skilled worker category, RBC offers a credit card without a security deposit. The bank is also working on getting access to credit files from banks in immigrants’ home countries so their credit history can be transferred and recognized in Canada.
CIBC offers enhanced adjudication criteria to include things such as assets rather than credit history, thereby making it easier for newcomers to access credit.
And most banks are working on recognizing the driving histories of people who immigrate to Canada when approving them for auto loans. “We’re trying to break basic barriers so we’re more welcoming of newcomers,” Duke notes.
Financial institutions are also realizing most new Canadians retain strong ties with their families back home, and are making it easy and cheap for these expats to remit money. Capitalizing on the rising popularity of remittances, Scotiabank has launched a partnership to offer the Western Union money-transfer service. It’s also sponsoring a wide array of grassroots initiatives to drum up business.
In addition, the Big Five provide various other incentives such as free performance banking plans for a year, bonus term investment interest for the saving-inclined and deposit boxes for immigrants who want a safe place for their gold, valuables or important documents.
Since good service is so much about good communication, providing that service in the language of their clients is another big thrust of all competing stakeholders. Clients who call RBC’s toll-free number have a staggering roster of 150 languages to choose from.
“If you aren’t comfortable speaking English, we can find someone who speaks your language,” Duke says. Srini Iyengar, director of multicultural markets at BMO Bank of Montreal, says his bank’s workforce uniformly mirrors the diversity of the Canadian mosaic. “Whenever possible, we provide services in the client’s preferred language at our front-line level.”
At the entrance of most of it branches, BMO posts signs saying, “We have staff to serve you in your language.” In Toronto, it isn’t unusual to see five to six language options posted: Cantonese, Mandarin, Punjabi, Hindi or Korean.
BMO also provides Mandarin and Cantonese language options on telephone banking, and has simplified and traditional Chinese, Korean and Punjabi online glossaries that explain in detail the financial terms and concepts mainstream Canadians take for granted.
When working with clients from diverse ethnic backgrounds, it’s imperative to try and understand the weight of the traditions and values they bring. Each culture has different norms in matters of wealth, children, the elderly, spouses, education and so on. Those who wish to serve these clients have to try and accept their differences with due respect.
Leong coaches her team not to meddle with clients’ personal preferences and beliefs, but to simply tailor products to suit the client’s style. “We’re not in the business of changing people’s lifestyles. If they’re vegetarians, we’re not here to make them start relishing beef. We just want to help them realize the differences in the Canadian system. The final choice rests with them.”
TD’s KYC process reflects its clients’ myriad cultural preferences about money, Leong adds. “We don’t just ask them how much money they have to invest, but also what their cultural, personal, religious or financial beliefs are regarding that investment.”
To get to know her foreign-born clients better, Narayan delves into specifics such as asking them if they’re into ethical investments, or if there’s something about an industry they wouldn’t like to be part of. Given how deep inter-racial enmities can run, she might even ask if there are certain parts of the world they don’t wish to be invested in.
“We try and get a very holistic understanding of the client but ask specific questions around investments. Our newly immigrated clients are sophisticated clients who also invest in their own countries—markets sometimes quite different from Canada. So we make sure we ask all the right questions, and factor in all their concerns before we provide them with any advice or solutions,” Narayan explains.
Calgary-based Girish Agrawal, senior executive financial consultant at the Investors Group, doesn’t have a huge predominance of new immigrants in his book, but when he’s approached by them, he makes it a point to ask detailed questions pertaining to their lifestyles. He then asks about their saving habits back home – deposits, stocks or real estate; whether they were saving all their money or just one salary; how they were sending their kids to school and whether they had domestic help.
“Many people come from countries where labour is low-cost, and they had lots of help. I try to get a feel for what their expectations are from life in Canada, and what their philosophy is toward saving and wealth planning. Then I tell them what they can consider,” Agrawal says.
ScotiaMcLeod’s Chan finds a lot of her affluent clients are exposed to private banking and financial planners back home. “Whether they believe in these concepts or not, they do understand them,” she says. So depending on her clients’ exposure and net worth, she sometimes skips the initial step of telling them how to acquire wealth or how to save money. “I don’t start out talking about emergency funds, etc.; they already have those. I go straight to the tax-planning part, and then into investment planning and portfolios.”
She also finds a lot of her wealthy Chinese clients tend to equivocate about their source of income. For example, a person who recently bought a pricey piece of land in a $14-million cash transaction wouldn’t say much about his profession except that he was in the railroad business. With such clients, Chan has learned to make educated guesses and not press for details she knows they just won’t divulge.
Chan also finds a lot of these nouveau riche immigrant clients have very high expectations of the scope of services their financial planners can provide. Some of them, like the lady who wanted her to roll dumplings, don’t know where to draw the line, she says. “They give you their business and then have humongous expectations – other than financial planning. You have to set your boundaries and convey what they can realistically expect from you,” she says.
While it’s alright to set boundaries and manage expectations, as advisors and planners in a country that has the highest per-capita rate of immigration in the world, you can’t afford to condemn your clients for being different. The more you try and understand the cultural values that underlie different attitudes, the more successful you’ll be in building relationships.
In the end, if you’re honest with yourself and your clients, you’ll know when to try to expand their horizons, and when to simply find financial options within their own framework of beliefs.
- Kanupriya Vashisht is a Toronto-based financial writer.