A new survey finds that Asian-Americans are less likely to work with an advisor than the public at large. And while there are various reasons, trust – and fees – seem to be an issue.
Among Asian-Americans, “I have never found one I can trust” is a strong reason for not using a financial professional, cited by 21% of those surveyed, according to Prudential’s “Asian American Financial Experience” study. The authors say this is significantly higher than the 13% of the general population. Moreover, those Asian-Americans with the least amount of trust are also most likely to think fees are too high (48%).
Only 18% of Asian-Americans currently work with a financial professional, compared with 26% of the general population. But many – 43% – are open to the idea given the right circumstances.
Among Asian-Americans and the general public, reasons for not using a financial professional include:
- “Fees are too high” (34% of Asian-Americans and 35% of the general population)
- “I don’t feel I have enough assets” (28% versus 37%)
- “I prefer to do it on my own” (28% versus 35%)
Not that it isn’t an issue – though having enough money to maintain their lifestyle throughout retirement is a financial priority for just 49% of Asian-Americans, compared with 56% of the general U.S. population. Concerns about not outliving their savings is a closed shared concern: 36% of Asian-Americans compared with 38% of the general population.
Ironically, presented with a dozen possible reasons for not feeling prepared to make financial decisions, more Asian-Americans (31%) chose “I have not consulted with a financial professional” than any other selection. Other top factors included not being sure what to consider when evaluating options (cited by 27%), not knowing what options are available to them (24%), and not receiving enough education regarding managing personal finances (21%).
On the other hand, Asian-Americans who responded that they use a financial professional feel much more knowledgeable on financial issues than those who said they do not. However, as those working with financial professionals also index higher on wealth and wanting to maximize the growth of their investments, causality is hard to determine. Moreover, 63% of those who are financially very well prepared report that their own current financial situation is better than it was five years ago, while 54% of those who need limited financial help, 39% who need extensive help, and 33% of financial beginners feel this way.
Only 31% of Asian-Americans surveyed feel they are “very well prepared” to make financial decisions, similar to 33% of the general population. And 43% responded they’re either beginners or, if not, still need to increase their knowledge in many areas. They are also less likely to think they’ll need to supplement their income in retirement with part-time work (25% of Asian-Americans have plans to do so, versus 38% of the general population).
Family members are cited as the preferred source of financial information by 44% of Asian-Americans, followed by friends (37%), financial professionals (36%) and employers or employer-sponsored resources.
The majority of Asian-Americans (73%) today are first-generation immigrants, according to the report.
The authors note that while this paper covers the financial experience of the Asian-American community as a whole, there are important differences between the various subgroups that make up the Asian-American population.
