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6 Ways Financial Advisors Can Empower Hispanic American Clients

By Miguel Ramos

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What You Need to Know

  • Hispanic American households have a relatively low 401(k) plan participation rate.
  • Hispanic Americans are also less likely than other Americans to report reviewing finances monthly.
  • One possible solution: Show clients their opportunities.

During Hispanic Heritage Month, we acknowledge and celebrate the contributions that Latinos have made to American culture and society.

But even as we honor those accomplishments, we can’t ignore the fact that many Hispanic Americans still lag in understanding personal finance.

A recent Motley Fool survey found that Hispanic Americans are the least likely of all groups to have a retirement account, review their finances, and know their credit score or mortgage rate.

As a Thrivent financial advisor originally from Venezuela who serves many Latino clients, I’ve witnessed this gap first-hand.

Other economic data reveals similar findings.

In 2021, a Morningstar report found only 31% of Hispanic households with income reported participating in a 401(k) program. For non-Hispanic white households, the participation rate was 51%.

From my perspective, this lower rate of retirement savings is at least partially attributable to a lack of education on financial topics and language barriers.

Whatever the cause, the result is many Hispanic families are late to building generational wealth that can help support their lives and their extended families for generations to come.

As financial advisors, we can help more Hispanic families understand money basics and build wealth by providing meaningful guidance specific to their unique needs.

Here are six tips for empowering clients down that path.

1. Teach financial literacy.

The Motley Fool survey found that 58% of Hispanic Americans review their finances at least every month, the lowest of any group surveyed — the overall average was 74%.

Without keeping close track of their finances, it can be difficult for clients to reach their goals.

Make sure your clients know the basics about budgeting, saving, and investing.

It’s also important to consider potential language barriers when teaching financial literacy.

For example, at Thrivent, we offer Money Canvas, a free coaching service designed to help people create healthier day-to-day financial habits.

The coaching service has Spanish-speaking coaches as well as Spanish resources and materials.

2. Demonstrate the value of thoughtful retirement planning and help clients set clear goals.

Developing a plan for retirement can help set a family up for success later in life.

As shown in Thrivent’s 2022 Retirement Readiness Survey, people who have a plan are four times more likely to achieve some or all of their retirement objectives.

Encourage clients to set realistic, attainable goals and demonstrate how following through on those goals will help them achieve what they want later in life.

And wherever your client is in their journey, remind them that there’s value to be gained by having a financial plan and sticking to it.

3. Connect clients to basic financial tools.

Hispanic Americans are the least likely of all Americans to have a checking account (60%) or savings account (50%).

This means there’s an opportunity for us to share what the benefits are to leveraging these types of tools, including having more security than storing cash at home, growth opportunities (even low-interest accounts earn some money), and modern conveniences (debit cards mean clients don’t have to carry cash everywhere).

As financial advisors, we know that taking advantage of opportunities offered by the financial system will help clients make their money work harder for them, now and in the future.

4. Explain how credit scores work, and why they matter.

A person’s credit score impacts the price of some of the most significant purchases they will make in life, like cars or homes.

Hispanic Americans are the least likely of all those queried in the Motley Fool survey to know their credit score: Only 55% said they did, compared to 70% of all other respondents.

Furthermore, through guiding my clients, I’ve found that many of them don’t know how their credit score is established.

Clarify with your clients that their score is determined by a combination of factors like payment history, length of credit history, and current and old debt.

Discussing credit scores with clients is also an opportunity to educate them on savings and investing as well as sound debt management.

5. Show clients the opportunities in front of them.

If a family sees that making meaningful financial decisions and building wealth over time — and having an estate that can be passed down to loved ones — is an attainable goal, most will develop a plan to do so.

By showing them how incremental changes in spending, saving, and investing have outsized effects over time, you can help families chart a path for their long-term financial goals and priorities.

6. Reinforce the importance of generosity.

As a Latino, I’m passionate about caring for my family and the community, which I know is true for many of my Hispanic clients.

As a culture, we value being able to support the people who matter most to us as well as those who are in need.

This reinforces why having financial clarity is so important: because it allows clients to express acts of generosity while leaning into their values.

Have your clients discuss ways they’d like to give back and incorporate those goals into their financial plan.

And don’t forget to remind them that giving back doesn’t always have to be a financial donation. They can care for others through their time and talents as well.

As financial advisors, our job is to help our clients build wealth — not as an end in itself, but as a way to create a life full of meaning and purpose.

Through education and guidance, we can help empower Hispanic Americans and close the gap.

Miguel Ramos. Credit: ThriventMiguel Angel Ramos Guerrero is a financial advisor with Thrivent.

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