After eight months on the job, Brad Burton didn't have much to show for it. While the 22-year-old agent could recite the ins and outs of insurance products, he lacked something just as crucial to succeed in this business: a steady stream of high-quality prospects. Up until now, his only recourse'cold calling'had netted him a meager $2,500 in total commissions. Meanwhile, the lists he was working off'mainly, phone leads and chamber of commerce numbers'had already been mined by every other agent and his brother. Safe to say, Burton was well on his way to becoming another industry statistic, one of 90 percent of all agents who quit within three years of joining the financial-services industry.
'It definitely was very tough,' says Burton, now 28, seated in his office in the Washington, D.C., area. He's clearly come a long way. On his shelf sit various industry awards: New York Life Agent of the Year, Northern Virginia Office, 2003; Career Life Producer Award, 2003; Agent of the Year, 2004. Burton, LUTCF, member of Northern Virginia AIFA, has also qualified for MDRT three times. His secret' After a lackluster first year, Burton stumbled upon an underserved demographic'Hispanics, to be exact.
'I noticed it was an untapped market,' says Burton. Today, more than 50 percent of his clients are Hispanic, and his practice is entirely referral-based. The really striking part is that this 6-foot-5-inch Virginia Tech graduate is neither Hispanic nor does he speak Spanish, shattering a frequent assumption in the industry that the best way to reach a demographic group is by being from it yourself.
Burton's story speaks to the opportunity that advisors, whatever their background, can find in diverse markets. The time is certainly ripe. The latest U.S. census report, released last October, found that America's minority population'particularly, Hispanics, African-Americans and Asians'now accounts for a third of the country's 300 million people.
This growth has been accompanied by hefty purchasing power. Over the past decade, Hispanics, the largest and fastest-growing ethnic group in the United States, have seen their purchasing power increase by 260 percent, while that of Asian-Americans' has grown by 252 percent. Meanwhile, African-Americans' buying power is expected to grow by 169 percent by the end of this year. 'These are not emerging markets, these are exploding markets,' says Vince Vitiello, chief business development officer with Allianz, who spearheaded a multicultural markets division at his company two years ago.
These markets are also underserved. That's where you come in'if you're first willing to rewire your thinking. 'The typical agent assumes that his best candidate is a white male married professional,' says Gregg Ward, an industry consultant otherwise known as the 'straight white guy with the diversity eye.' 'My argument,' adds Ward, 'is that market is tapped out ' so, why do you keep spinning your wheels, going after that elusive gold candidate, when you've got a burgeoning middle-class Latino population ' and so forth''
A big part of the answer comes down to perceptions. Some industry studies have shown that people in these demographic groups prefer to work with sales reps from the same culture; language barriers are a big reason why. And while insurance companies are doing their part to recruit more diverse agents, the change isn't happening fast enough to keep up with the changing face of America. So, what can advisors already in the field do to break into these 'exploding' markets' For answers, we spoke with several producers who have successfully tapped into a demographic group not their own. Along the way, they shared a surprising conclusion: Forget those industry studies, they said; the difference in background can actually work to your advantage.
Curious how' Read on.
'Ethnic' expertise, how to get it
David Vogt, CFP, an advisor with AXA Advisors in Falls Church, Va., had just finished his presentation, when his prospect, a retired doctor originally from China, delivered his verdict: Thanks, said the man, but if we're going to move ahead, I want a Chinese-speaking associate on board.
Vogt, a self-described 'middle-aged, white, grey-haired male,' was new to the industry, and certainly didn't know any Chinese-speaking advisors. In fact, he had only connected with this particular prospect after the man had called AXA's general office, saying he was an existing AXA client moving from Ohio to Virginia and in need of a new advisor. But Vogt was up for any challenge, even if that included finding a Chinese-speaking advisor to team up with. 'I just thought, if that's the path to success, let's take it,' says Vogt. Luckily, he didn't have to look very far. In AXA's home office was another advisor, T.C. Fung, CFP, himself new to the business.
'We are the strangest partnership on earth,' says Vogt. 'He [Fung] was born in Hong Kong, I was born in Denver. ' We truly are East meets West.' Over the past seven years, the two have built up a strong base of Asian-American clients, particularly among Chinese-Americans, who are among the most affluent of Asian immigrants today. These clients account for about 50 percent of the revenue that comes into their firm. Overall, the firm has ranked as one of the top-producing AXA practices in the Baltimore-Washington, D.C., area for the past six years.
Vogt will be the first to tell you: He couldn't have gotten so far, so fast, without his partner, Fung's help. 'I would have needed two or three years of studying the cultural differences before I really entered the high end of this market,' says Vogt. His advice to other advisors, then: Team up. 'We do joint work with people all the time for technical expertise; why wouldn't we do the same for ethnic expertise''
Fung's 'ethnic expertise' came in especially handy with one tough, prickly prospect'a Chinese-American man named Jim, who came to America in his 20s and later established a government-contracting firm that employs 500 people. Even after Jim became a client, he remained tough to please. Whenever Vogt or his partner, Fung, got off the phone with him, they'd ask the other, 'Did you get the good Jimmy or the bad Jimmy today'' But culturally sensitive actions softened Jim's demeanor. Upon Fung's advice, Vogt bought Jim a mooncake, a pastry eaten in honor of a Chinese mid-autumn festival. When Fung mentioned the purchase to Jim, he was so touched that he drove an hour and a half out of his way to pick it up.
'At the end of the day,' says Vogt, 'everybody is concerned about their children, everybody is concerned about outliving their money, everybody, at their base level, thinks they're paying too much in taxes'those things are common, it doesn't matter what your culture is.' The challenge, he says, is to 'get people to talk about those things and open up their hearts.'
And contrary to what those industry studies suggest, a prospect may, in fact, view an outsider as the safest person to discuss sensitive financial matters with. That's certainly what Vogt has found. The Chinese-American community he has encountered is pretty close-knit, he says; he may see 100 people at a community event, then, two nights later, see 60 of those same people at another gathering. 'Not wanting to play to clichés,' says Vogt, 'but a lot of Chinese, we have found, are very concerned about their personal information becoming fodder for gossip inside that community. ... So, there is a reluctance to do what I would call big business with [other] people inside that community.'
Not sure how to tap into one of these diverse markets' Gregg Ward, an industry consultant, offers several tips:
Generating a referral web
Tight-knit communities can also spell more referrals. Burton, the 28-year-old agent who successfully tapped into the Hispanic market, has discovered as much. 'Hispanic clients give me more referrals than any other market,' says Burton. In his practice, he has found that Hispanics are often willing to make a referral without first consulting with that person, something that other demographic groups might not feel as comfortable doing.
Like Vogt, and his success with the Asian-American market, Burton's work with Hispanics came about by happenstance. After a rocky first year in the business, Burton moved to New York Life and connected with a mentor who stressed the importance of meeting with at least three prospects a day, whatever their income level. Burton was also handed an orphan book of business. It included the name of a Hispanic couple, real estate agents who owned a term life insurance policy.
Later, through one of their referrals, Burton connected with a broker who, in turn, invited him to meet with 30 real estate agents, all of them Hispanic. Many were 1099 contract workers, with no benefits or retirement plans. Many also came from large families with one breadwinner, making the case for life insurance all the more imperative. 'The Latino market is very family-oriented,' says Burton, adding that he has encountered situations in which the extended family of a Hispanic client will pay the life insurance premium.
For about four years, Burton kept his name out there by visiting Hispanics in the real estate market'agents, as well as loan and title officers. Among the people who heard about Burton was Alfredo Carrasco, a 39-year-old immigrant from Peru. For several years, Carrasco had been thinking of getting life insurance, and every time he asked for advice from colleagues, Burton's name came up. Carrasco finally decided, 'OK, I can't lose with this guy.' As Carrasco sees it, Burton isn't a salesman, he's an advisor. 'I can pick up the phone and talk to him about market conditions, which is very beneficial to me,' says Carrasco. In the midst of the current real estate slump, Burton is seeing clients like Carrasco direct their entrepreneurial-minded spirit toward additional ventures, such as catering services, restaurants and delis. (Throughout the United States, in fact, Hispanics represent 82 percent of new business start-ups.)
While most of Burton's Hispanic clients speak English, he presents several options, up front, during the factfinder. Burton will say, 'What would you rather do ' work with me, work with someone who speaks Spanish, or work with both of us'' By 'us,' Burton is referring to his partnership with a Spanish-speaking agent, J. Ernesto Figueroa Jr. Their working relationship came about unexpectedly. Over a year ago, Burton had called up a referral; she said she was already working with an agent at another company. When Burton asked who it was, she gave the agent's name'Figueroa. Sensing the opportunity for a strategic partnership, Burton called Figueroa and asked how he was doing. The 27-year-old agent confessed that he was having a hard time generating new business. Burton made a promise: Move over to New York Life, and I'll show you the ropes. These days, Burton is part manager, part producer of his practice, and splits joint cases with Figueroa. Burton also makes a point of having a Spanish-speaking assistant.
Figueroa, for his part, works mostly with Caucasian and second-generation Asian-American clients. Hispanic prospects, meanwhile, prefer to work with Burton. 'They look at him [Burton] and see stability,' says Figueroa. Burton seconds that view. 'A lot of people in the Latino market like the fact that I'm American because they know I've been here, that I'm not going anywhere,' he says. They also appreciate Burton's deep roots in the industry; his father was an agent, too. Over at AXA, Fung has noticed a similar sentiment among the Asian-American clients he services with Vogt. When a prospect is faced with that critical moment of making a decision, something curious happens. 'Maybe 80 or 90 percent of the time,' says Fung, 'when they come to that moment, they look to David [Vogt] for confirmation.'
Creating a community presence
Even if your 'outsider' status works to your advantage, you still have to cultivate a community presence. That's the only way that Angelo Freda, an advisor in New York City, has been so successful in tapping into the African-American market; in fact, African-Americans account for 25 percent of his client base. (This number will likely grow, as African-Americans throughout the country continue to reach middle-class status in large numbers.) 'I have an Italian-American background,' says Freda, who's been in the industry three years, 'and because of that, I don't have instant access to the African-American community.' So, Freda prospects at home shows, block parties and stores like Toys R Us. He is also planning a seminar on college funding at a public library in a predominantly African-American area of Queens. But there's one place that he regards as off limits: houses of worship. 'I don't go to church events,' says Freda, 'I think it would be disingenuous of me.' The same, he adds, for political events.
'Being in the tri-state area, you have got to do multicultural markets or else you're not going to make a lot of money'that's the bottom line,' he says. The rewards are also big on the human side. Freda is a firm believer in life insurance and its role in protecting families. Luckily, so are many African-Americans. A recent LIMRA study, Targeting Multicultural Markets in the United States, has found that African-American ownership of individual life insurance stands at 68 percent'by contrast, the number for Hispanics is 34 percent; for Chinese-Americans, 47 percent; and for the U.S. population as a whole, 54 percent. But, Freda has found that many African-Americans own small policies, because that's all they can afford. Freda tries to get them to consider term insurance. They're generally resistant at first.
Take the case of one client-couple'both 40, from Haiti, raising three children, in a cramped apartment in New York City. The man worked as a teacher, and had a $50,000 whole life policy, the wife as a nurse's aide with a $25,000 policy. Freda encouraged the father, who had uncontrollably high blood pressure, to consider term insurance; Freda argued that if something were to happen to the man tomorrow, his family would never realize their dream of owning a home. It took several months, but Freda finally persuaded the man to purchase a term policy of $500,000. Within five months, the man had died. Today, Freda makes a point of visiting the family every six months'in their home in Rockland, N.Y. 'That's the best feeling in the world,' says Freda, 'That's why I'm in this business.'