As a financial advisor of Hispanic extraction, I am often asked about the best ways to appeal to Latino audiences. Other advisors are also curious to know how I manage a practice with offices in Chicago, and San Juan, Puerto Rico, that are more than 2,000 miles apart. The answers to these questions are at the same time simple and complex.
In many ways, the Hispanic or Latino market is very similar to any other market of financial planning clients. Hispanics have the same aspirations and dreams and the same desire for financial security in retirement that any other ethnic group of Americans has.
On the other hand, if you don't know many Hispanics or have any Hispanic clients, it can be a hard market to break into. I grew up in San Juan, and have many friends and family members in this growing community.
As for managing offices so far apart, strong organizational skills and a strong technology platform are crucial. Most important, I must stay focused.
While many consider Puerto Rico part of Latin America, it is in fact an American territory, and all Puerto Rico citizens are U.S. citizens. My financial planning practice is regulated in exactly the same way as a mainland U.S. financial planning firm. I manage assets in the $50-$100 million range, and strive to provide holistic investment and financial planning advice.
My investment role models are Mohamed EL-Erian, the CEO and co-CIO of Pimco, and Warren Buffett, among other visionaries. I admire their disciplined focus on the intermediate, rather than the short-term, and their attention to understanding the economics behind market movements.
I also work with a pension advisor in Cleveland, consulting on asset allocation, manager search and portfolio lineup. Soon we will have the chance to provide advice for the individual pension participants. It's exciting.
Although I work with foundations, institutions and others, my target audience is Hispanic entrepreneurs and professionals. This group shares characteristics with other Hispanic demographic groups and Anglo entrepreneurs, but there are some important differences. As a Hispanic entrepreneur myself-I have started two businesses in the past 20 years-I can relate to them and help them map out a secure financial future.
I find that Hispanic entrepreneurs are most like the millionaires who were portrayed in the book, The Millionaire Next Door, naturally frugal. Yet many entrepreneurs are risk-takers, and that can be especially true of Hispanic entrepreneurs who have to overcome large obstacles to succeed.
When they carry this attitude over into investing, they can get into big trouble. As with other high-net-worth investors, they assume that their success in work means they can repeat that success when managing their own investments, which very often is not the case.
I see generational patterns among Hispanic entrepreneurs: The first generation is so busy working hard and providing for their extended family the opportunities they missed that they don't save. The second generation does save, but may be wary of investing. This wariness can stem from a variety of factors, including a lack of education about investing, too much noise in the news, bad advice from commission-based salespeople and fear of losing control or bad experiences with investments.
To allay these fears, I emphasize that my firm's philosophy is not to take a lot of risk with their hard-earned-capital. Clients want to know that someone they trust is worrying about the markets, the news, the economy, and what opportunities and risks are out there. We have a bifocal vision because we start by examining risk and then analyze returns; most people work the other way around.
I communicate with them and listen; I also educate them that working with our firm involves far more than investing: It's a process to reach long-term financial goals. I emphasize that I will help them manage what they've earned, so they can have a better life in their less productive years and preserve their wealth for their children and generations to come.
It's hard to achieve good investing results that will last if the rest of a client's financial house isn't in order. Some may have too much debt; others may have to accumulate more assets to have the kind of retirement they want.
THE HISPANIC MARKET
Many Hispanic clients are attracted to my firm because they feel more at ease with us, but we do have clients from many different ethnic groups. Hispanics are a growing market; within the next five to 10 years there will be a growing number of Hispanics in the government and even more entrepreneurs than there already are. The 2010 U.S. Census and the American Community Survey reveal that the percentage of the U.S. population that is Hispanic rose by 29% between 2000 and 2010.
Joining organizations oriented toward Hispanics, such as the Hispanic Chamber of Commerce (www.ushcc. com), which has branches in many cities, is a great way to connect with this growing demographic. There are many specialized business Hispanic groups affiliated with the Hispanic Chamber of Commerce, including business groups for Hispanic Women, groups dedicated to specific industries and Hispanic business groups affiliated with large firms.
Some examples of specialized business groups oriented toward Hispanics are the Latino Association of Tax Preparers; the National Society for Hispanic Professionals; 100 Hispanic Women; and the Latinos in Information Sciences and Technology Association. Other organizations that are oriented toward Hispanics, such as boards or nonprofits, are also a good place to start.
As you obtain more clients, your organization needs scale to grow. I set up a business infrastructure that had a lot of capacity so that we can grow as we acquire more clients. That really helps when managing offices and client bases that are more than 2,000 miles apart.
With technology, it's possible to leverage the strengths of the entire organization. I leverage technologies such as video conferencing, toll-free numbers, call transfer to my current location, tax libraries, constant email access, HTML email communications, desktop sharing, Dropbox (www.dropbox.com) for remote file access and remote consultation with clients when necessary.
As for investment management technology, I use an integrated portfolio reporting system that is web-based, so I can access it on the go. I also employ asset allocation, data aggregation and manager evaluation tools.
One area that distinguishes my practice is that I don't use automatic rebalancing or market timing services. I prefer to rebalance manually to take advantage of market opportunities that I can see when reviewing individual accounts. That helps me stay in touch with each client's situation and react more quickly to opportunities.
We use Schwab Institutional as a custodian because it provides one of the best technologies, trading platforms and access to any money manager, which gives our clients many investment options. For clients who have assets outside of our firm, we aggregate all of their accounts so that we can see the entire picture and provide holistic planning and advice based on that information.
Success leads to more success; as my practice grows, I have more chances to grow than before. I use my two offices as bases to serve my clients and the new clients they refer to me. When you provide excellent service and good advice and are organized and growth oriented, the opportunities are limitless.
Eduardo Ramos is the founder of Freedom Advisory, a financial planning firm, and Ramos & Co, an accounting firm. He splits his time between offices in San Juan, Puerto Rico, and Chicago.