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The Flip-Side of Cultural Diversity?

A study conducted by Harvard political scientist Robert Putnam finds less civic activity in diverse communities.

The study is the largest ever on civic engagement in America, based on detailed interviews of nearly 30,000 people across America. Putnam surveyed residents in 41 US communities, sorting residents were into the four principal categories used by the US Census: black, white, Hispanic, and Asian. They were asked how much they trusted their neighbors and those of each racial category, and questioned their civic attitudes and practices, including their views on local government, their involvement in community projects, and their friendships.

The Findings: Lower “Social Capital”

The study found that the greater the diversity in a community, the fewer people vote and the less they volunteer, the less they give to charity and work on community projects. In the most diverse communities, neighbors trust one another about half as much as they do in the most homogenous settings. The study found that virtually all measures of civic health are lower in more diverse settings.

Putnam has studied the problem of declining civic activity for quite some time, finding that the US has experienced a pronounced decline in “social capital”  – which refers to the social networks — friendships, religious congregations, neighborhood associations and so on.  He states that when social capital is high, communities are better places to live, neighborhoods are safer, people are healthier, and more citizens vote.

Putnam writes that those in more diverse communities tend to:

distrust their neighbors, regardless of the color of their skin, to withdraw even from close friends, to expect the worst from their community and its leaders, to volunteer less, give less to charity and work on community projects less often, to register to vote less, to agitate for social reform more but have less faith that they can actually make a difference, and to huddle unhappily in front of the television…People living in ethnically diverse settings appear to ‘hunker down’ — that is, to pull in like a turtle.” 

These findings challenged the two dominant schools of thought on ethnic and racial diversity, the “contact” theory and the “conflict” theory. Under the contact theory, more time spent with those of other backgrounds leads to greater understanding and harmony between groups. Under the conflict theory, that proximity produces tension and discord. But Putnam’s findings reject both theories: In more diverse communities, there were neither great bonds formed across group lines nor heightened ethnic tensions, but a general civic malaise, with levels of trust lower even among members of the same group.

The “Diversity Paradox”

In a nation that is inexorably becoming increasingly diverse, how are we to interpret these findings?  

First, it is important to note that there are also some very positive recent findings about diversity, While ethnic diversity may, in the short run prove a liability for social connectedness, other research suggests it can be a big asset when it comes to driving productivity and innovation. In high-skill workplace settings. Scott Page, a University of Michigan political scientist and  author of “The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies”  finds that the different ways of thinking among people from different cultures can be a distinct advantage:

Because they see the world and think about the world differently than you, that’s challenging. But by hanging out with people different than you, you’re likely to get more insights. Diverse teams tend to be more productive.”

Page calls this the “diversity paradox.” He thinks the contrasting positive and negative effects of diversity can coexist in communities, but we must be wary of civic engagement falling off too far.

Putnam’s Take

When he published a detailed analysis in the journal Scandinavian Political Studies, Putnam argued that the negative effects of diversity can be remedied, and that history suggests that ethnic diversity may eventually fade as a sharp line of social demarcation.

In the final section of his paper, Putnam discusses how social identity can change over time, stating that experience shows that social divisions can eventually give way to “more encompassing identities” that create a “new, more capacious sense of ‘we.”

He also points out that increasing diversity in America is not only inevitable, but ultimately valuable and enriching. To help reduce divisions that hinder civic engagement, he suggests programs such as expanding support for English-language instruction and investing in community centers and other places to foster meaningful interaction. Putnam states: 

I think over the long run, as we get to know one another, and as we begin to see things that we have in common with people who don’t look like us, this allergy to diversity tends to diminish and to go away. So this is not something that I think as an argument against immigration. On the contrary, actually, I think in the long run we’ll all be better. But I don’t think that progressives and integrationists like me do our cause any service by hiding from ourselves the fact that it’s not easy.

Putting It Into Perspective

I believe it is important to remember that social diversity is a rather recent phenomenon, and the American consciousness is still evolving as is plainly demonstrated by the obvious dog whistle racism of the anti-Obama crowd.

What is also important to note is that Putnam does not extrapolate some universal principle that heterogeneous societies have any less potential for social cohesion than homogeneous ones -only that it takes time for people to look past their differences, and the American experience demonstrates that over time society can change.

For example, one of the remarkable aspects of the study is that it focuses on diverse communities. In fact, 50 odd years ago diverse neighborhoods were unheard of. I recall the changes in my old neighborhood, Bedford Stuyversant, Brooklyn. There was “white flight”following the construction of the subway line between Harlem and Bedford in 1936, as African Americans left overcrowded Harlem for more available housing in Bedford–Stuyvesant. But today, my daughter lives right near my old home in Clinton Hill, which is now a diverse neighborhood.

So it would not be fair to overgeneralize based on a study of diversity given such a short time frame.

Our Polarized Society

I believe that it would also be mistaken to lay off the problems of American polarization on attitudes about race on the part of the members of society themselves. To put this in perspective, bear in mind that even as America’s oligarchical structures have tightened over the  past few decades, society as a whole has nonetheless managed to trend toward a more diverse perspective.

This has occurred despite increased political polarization. When there is a demonstrative and concerted effort by the wealthiest class – including the media and politicians it controls- to manipulate people’s thought processes such that they devolve into a divisive, polarized mental framework, we should avoid the temptation to simply cite racial attitudes. While this is a contributing factor, alienation has much deeper roots, and It takes a great deal in such a divisive environment to take the bull by the horns and overcome the mental conditioning that is damaging the cohesiveness of American society,

I observe that change is inspired by trauma and shock. And given the increasing disparity in wealth distribution, mistrust of our leaders, expanding unemployment and the decline of the American middle class, we have a very interesting opportunity as a society today to evolve – together.

The key is to see past our differences, and Putnam agrees with me here. The only thing holding us back is that we submit to the mechanisms of control.

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Advertising Slogans Lost in Translation

from American Demographics

Here’s why it’s not about translation, but trans-adaption.

Braniff slogan: “Fly in leather.”
Spanish translation: “Fly nude.”

Purdue slogan: “It takes a tough man to make a tender chicken.”
Spanish: “It takes a horny guy to make a chicken hot.”

Pepsi’s slogan: “Pepsi Brings You Back to Life.”
Chinese: “Pepsi Brings Your Ancestors Back from the Grave.”

Coca-Cola: the name Coca-Cola
Chinese characters: “Bite the wax tadpole.”
(later changed to characters that mean “Happiness in the mouth.”)

Clairol: “Mist Stick” curling iron
German: Shit stick (mist is slang for manure.)

Snap! Principle of Multicultural Marketing:

It’s not about translation. It’s about trans-adaption.

Acculturation Model

The U.S. Hispanic Market

Tony Malaghan, CEO of Arial International in University Place, Washington (info@arialinternational.com)  points out the importance of the U.S. Hispanic market:

Huge: Hispanic population is projected to nearly triple, from 46.7 million to 132.8 million from 2008 to 2050. In other words:

  • The U.S. Hispanic population share will double, from 15% to 30%.
  • Thus, nearly one in three U.S. residents would be Hispanic.

Diverse: U.S. Hispanics come from more than 22 different countries and, although there are cultural similarities between the sub-groups, there are also differences in attitudes and behaviors that marketers  need to acknowledge to best serve the interests of these consumers.

Language Use Differences: The use of Spanish is of course an obvious difference between the U.S. Hispanic market and the mass market. However, the use of Spanish vs. English varies within the Hispanic markets. Some Hispanics  only speak Spanish; others choose to speak Spanish over English; others prefer English; and others almost exclusively speak English.

Cultural Differences: An important element often overlooked with respect to the U.S. Hispanic market is the differences that exist between the sub-groups that comprise this segment of the market. These differences include country of origin, differences in Spanish use and dialect spoken, differences in food, music, holidays celebrated, etc.

Acculturation Differences: The process of acculturation has a major impace on these market segments.

A Multidimensional Process

Malaghan cites a 2004 dissertation by Cecilia Alvarez from Florida International University titled The Acculturation of Middle Income Hispanic Households  in which she notes that acculturation is a multidimensional process. Individuals change along various dimensions of social functioning. Alvarez defines consumer acculturation as:

A dynamic selective process generated by the contact of a consumer with a different consumer cultural orientation via acculturation agents or facilitators, through which the consumer adapts to the new culture. This adaptation is expected to be reflected in the consumers’ behavior, affect and values.

Acculturation generates changes in three levels of functioning:

  • Behavioral – includes behaviors like language use, customs, food consumption.
  • Affective – includes emotions that have cultural connections; for example, the individuals’ feelings towards their country of origin or towards the U.S.
  • Cognitive – includes individuals’ belief systems and fundamental values

So, how does acculturation affect consumer behavior and the approach to targeting and servicing this segment of the market? Let’s look at the 3 levels of acculturation.

Why Acculturation Matters

  • Past generations of immigrants had their children leave old world customs behind for the process of assimilation.
  • Acculturation is the process of incorporating or acquire a new culture without foregoing another one.
  • Hispanics do not “assimilate”, they “acculturate” without letting go of customs and/or language

3 Levels of Acculturation

Hispanic Market Segmentation

The three segments by Acculturation Levels are:

  • Non-Acculturated: Persons that only navigate within the Latino culture. Most of them have recently immigrated to the U.S. and prefer to speak Spanish
  • Acculturated: Persons born in the U.S. of Hispanic descent. They prefer to speak English and can navigate into the Latino culture
  • Semi-Acculturated: People that can navigate in both cultures.

How fast will the market acculturate?

The speed at which this will take place depends on these three major factors:

  • Time: the longer they live in the US, the longer they are exposed to a new culture and are able to incorporate it into their everyday lives.
  • Education: the higher their education level, the easier the understanding of another culture will be.
  • Socio economic status in country of origin: the higher the socio economic status they enjoyed in their country of origin, the higher the likelihood that they have been exposed to other cultures, thus enabling a faster and smoother transition

A Rapidly Evolving Market

Hispanic Market Segments Size

Situational Acculturation: It is important to bear in mind that acculturation can also be “situational.” Companies truly interested in segmenting the Hispanic market can further defining the situational acculturation levels of their consumers. Some people can be considered unnaculturated/bilingual/acculturated 100% of the time while others can go through these different states throughout the day.

For instance, a person can be fully acculturated at work where he or she behaves and consumes products very much in line with the general population, but at home speak Spanish. Yet he may watch both Hispanic and English-speaking television and consume non Hispanic products.

Suburban Hispanics: A Consumer Dynamics study from Acxiom Corporation shows that the Hispanic segments are changing rapidly. For one thing, the rapid expansion of Hispanics into American suburbs presents opportunities for marketers who can better understand the rich cultural diversity and purchasing attitudes of this segment.  The study reveals:

  • Hispanic suburban expansion is projected to continue.
  • The Hispanic market encompasses four distinct Hispburbanite groups.
  • Marketers have above average growth opportunities in areas with high concentrations of Hispanics.
  • Marketers should segment this culturally diverse group for maximum marketing impact.

Generational Factors: Hispanic Millennials bring a new set of characteristics to the mix. Since Latinos will account for more than 80% of the growth in the population of 18- to 29-year-olds over the next few years, they are now a key demographic for marketers, who will need to take into account the rapid changes under way in the composition and characterstics of the population of the Hispanic youth.

  • English Language TV Preference: Since they are for the most part are now the children, grandchildren or even great-grandchildren and beyond of Latino immigrants, 73% of 18- to 29-year-old Latinos watched English-only television or a combination of English and Spanish language television in the past seven days, and only 4% watched Spanish-language television alone.
  • Highly Connected: Hispanic millennials are nearly 66% more likely to connect via mobile than non-Hispanic Caucasians, and nearly twice as likely to own a tablet such as an iPad. They are just as likely as other millennials to be heavy Facebook users but almost twice as likely to use YouTube.
  • English Language Reading and Online Preference: When Millennial Latinos read magazines or visit websites, English predominates. They are more likely to read English-language magazines alone then they are to look into a combination of English and Spanish magazines (28% vs. 21%). Online, 18- to 29-year-old Latinos are even more likely to choose to visit English-language websites alone rather than both English- and Spanish-language sites (38% vs. 25%).
  • Close Cultural Ties: Still, Hispanic millennials maintain close ties with their cultural heritage. The Pew Hispanic found that among the U.S.-born children of Hispanic immigrants, country of origin is still important. Hispanic millennials are also more likely to still be living in their parents’ home due to the economy and delayed marriage and children trends, as well as the fact that Latinos in general are the most likely to live in multi-generation homes.

Marketers targeting Hispanics therefore need to develop complex and sophisticate marketing strategies to reach this very complex market.

Marketing and Service Implications

Essentially, the more exposed Hispanics are to behavior and beliefs of the host country, the more similar they become in consumption patterns of the mass market. However, Alvarez reminds us that acculturation can be bilinear, which means that a segment of the market may choose to be Hispanic with respect to certain behaviors and beliefs and in sync with the U.S. mass market in others. This presents marketers and customer service managers with challenges and opportunities to serve their unique needs.

Marketing

Generational Segmentation: One way to segment the U.S. Hispanic market is by generation: there are new immigrants, first-generation U.S. , second-generation, etc. This approach assumes that the longer a person has been in the U.S. , the more their lifestyle choices, and response to marketing stimuli, and purchasing decisions should reflect those of the mass market consumer.

Multidimensional Segmentation: This fails to factor in the bilinear multidimensional aspect, resulting in the 3 levels of acculturation: low, high, and bicultural. Developing more in-depth segmentation categories allowing for the bilinear multidimensional influences, coupled with research, will provide marketers an added advantage over companies that segment solely by the generational approach.

Customer Service

Trans-adaption Capabilities: Once the Marketing Department has advised Customer Service where a consumer falls anywhere on a continuum from new immigrant (unacculturated) to bicultural/multicultural (acculturated), they may choose to speak Spanish, English, or switch between the two on service calls.

Bilingual Capabilities: To effectively serve the segment, companies need to deveop a bilingual customer service infrastructure. Best practices, cited by Malaghan, provide the following:

  • Testing language skills to recruit competent and fully bilingual staff
  • Bilingual training and certification for appropriate “Business Spanish”
  • Certification of bilingual call center operations to benchmark and delivering services to best practice standards

Case Study: Banks Face Acculturation Challenges

Latino banks spend more than a year teaching their underserved Hispanic customers how to use the ATM machines because most of their customers have never used one. The bank needs to play a role in acculturating them into American society.

The following chart shows some key differences in the bank services that different Hispanic customers would be inclined to use, by acculturation level.

Hispanic Market Segment Characteristics

Snap! principle of Hispanic Market Segmentation:

In targeting and retaining U.S. Hispanic customers, companies must be willing to 1) invest in the market intelligence required for successful segmentation and 2) provide the servicing infrastructure to gain a competitive advantage in these segments.

Quinceañera parties are major celebrations to mark a Latin girl’s 15th birthday – and they can sometimes be as elaborate and expensive as some wedding celebrations.

Fabian Yépez of Rumbo Cultural Marketing helps financial institutions build relationships with Hispanic consumers. In an article provocatively titled: Marketing Financial Services To Hispanics Takes More Than Spanish Lip Service, Fabian is interviewed by The Financial Brand.

He discusses the importance and challenges of reaching out to this diverse segment, as well as one of the campaign successes of their client Grow Financial, a firm that Rumbo is currently agency of record for in Tampa, Florida. Grow Financial  teaches young girls about saving money for their own Quinceañera Party.

Q1: What is the business case for marketing banking services to Hispanic consumers?

  • A: By 2050, 1 of 3 Americans will be of Hispanic origin.
Financial institutions cannot afford to ignore the growing Hispanic market. By 2020, 1 in 5 Americans are expected to be of Hispanic origin, and by 2050, it will be approximately 1 out of 3. It needs to be understood that this is not a passing fad, and that a long-term investment will pay off. The current U.S. landscape has evolved and will continue to do so in the next few years. Especially when financial institutions focus on younger audiences, it’s necessary to pay attention to the ethnic breakdown.

Q2. What’s the biggest mistake you see financial marketers make when targeting a Hispanics?

  • A. The most common mistake is assuming all Hispanics are the same, and that they can be addressed as one big homogenous group. 

 I can’t tell you how many times we hear someone say, “We tried reaching out to the Hispanic market. We translated all our materials and it just didn’t work.” Or another example, “We were thinking of hiring a mariachi band because Latinos like mariachi bands.” The Hispanic market is complex, and there are numerous variables that need to be considered, as there will often be with any niche market.

Additional mistakes I have seen? Some financial institutions think they only need to address the language barrier. Others believe that because something worked in one market it will work in another. Many are just simply unprepared internally to deal with a Hispanic market, even if they have the language component covered.

We have been hearing these kinds of examples for years, and unfortunately they are still happening.

Q3: Why is marketing financial services to Hispanics so tricky?

  • A. It takes time to build trust.

 While conducting research a few years ago, I spoke with some tellers who mentioned that it was too much work when Hispanics wanted to open a new account, particularly Spanish speakers. They said that when non-Hispanics wanted to open an account, the customer would usually just ask where to sign and get on with their day. But with Hispanics, opening an account meant an initial visit to gather information, a second visit with additional questions, and possibly a third visit to finally agree to open the account. And each time, they came accompanied by a friend or relative.

What the tellers didn’t understand was that for many Hispanics, this could be their first account in the U.S. — maybe ever — and may feel distrust, intimidation, or simply don’t fully understand how financial institutions in the U.S. work. An important aspect about this market is that they need to feel comfortable with whom they are dealing with, and need to build and establish a relationship first. This could take three or more visits. When Latino customers get to the point where they’ll ask tellers where they might find a trustworthy babysitter, or recommend a good mechanic, then the financial institution can be certain that a solid relationship has been established.

And remember the friends or relatives that came with them in the beginning as the relationship got underway? Many of them are also likely to become customers. Word-of-mouth referrals play a huge role with this market, so the extra time and patience invested in the one initial Hispanic customer can lead to many more flooding in, just from that first contact.

Once Hispanic consumers feel that your organization understands them you will start to see results, and move on to develop enduring relationships that will last long into the future.

Q4. What have you done right to target Hispanics?

  • A. Upfront Market Segment Research is Vital

When Grow Financial FCU came to Rumbo Cultural Marketing looking for a full on Hispanic Marketing program, we started with an in-depth research phase, prior to even saying “Hola” to any Hispanic members. The Tampa Bay Hispanic market is unique, with a very diverse breakdown unlike other parts of the country. Even though there are many cultural and traditional differences among the Mexican, Puerto Rican and South American population, we were looking for something that was shared by a majority.

The result? Quinceañera parties. When a Latin girl turns 15, a significant celebration takes place to mark the transition from childhood to young adulthood. These parties are sometimes as elaborate as a wedding. Many families acquire large debt in order to throw these events, so we wanted to help make this celebration possible. Project Quince was developed as an account that allows to start saving at an early age, requiring minimum monthly deposits, and with additional benefits over a traditional savings account. It has been very well received in the local market.

Also, if financial marketers are looking for ideas to connect with Hispanics, they should take a look at BofA. I like what BofA has been doing for this market, especially when targeting Spanish-speaking Hispanics.

Viral Dance Craze!

See the ABC news story about the viral craze here.

I’ve written about how entertainers have launched careers by going viral. Justin Bieber was discovered in 2008 on YouTube and got his first single released in 2009, and Colbie Caillat saw MySpace as an opportunity to launch a brand that the traditional media didn’t know quite what to do with. A new star was launched on Youtube – Psy, a Korean pop singer, whose invisible horse-riding rap video went viral.  See my post highlighting The Socioeconomic Message Behind Korean Singer Psy’s “Gangnam Style.”

As a result of his overnight viral success in America, on Friday, 9-14-2012, the Today show extended their Summer Concert Series by a week just to showcase the singer. A crowd of mostly Korean fans but some Americans as well flooded Rockefeller Plaza. Psy not only performed but interviewed, breaking two major barriers that Korean entertainers have striven to overcome: getting recognition from American audiences, and breaking the conversation barrier.

NewsFeed estimates that thousands of fans were packed to catch a glimpse of the entertainer.After his initial performance, he gave a second performance, teaching the Today hosts and the crowd how to do the four-step dance that’s stormed the world. The whole Today staff joined in – even fill-in host David Gregory of Meet the Press. Earlier that week on the Ellen show, Psy showed Britney Spears how to do the dance.

The Awesome Power of Social Media Untethered

It couldn’t have been more of a surprise. For years, Korean entertainers have tried unsuccessfully to break through, and this 34-year-old Korean rap star accomplished it so suddenly and easily by becoming an overnight social media phenom. Psy said in a sit-down interview before he took the stage:

I just uploaded this video only for the Korean viewers, and within 60 days, I’m here.

“Gangnam Style”, released in July, has become a viral success, the most-viewed K-pop song on YouTube and getting around six million views every day.

WATCH:

Mastercard Measures Women’s Financial Literacy

Chart1 B

In view of recent studies showing U.S. women to still lag men in financial literacy, an assessment of financial literacy conducted among women in the Asia-Pacific region has also turned up surprising results.  Intuitively it would seem that women in the most developed economies such as Japan, Korea, Australia or Singapore would have the highest level of financial savvy would be found in. But MasterCard Worldwide’s inaugural Index of Financial Literacy among women in the Asia-Pacific region shows this not to be the case.

The Thais Have It

The most financially savvy women were, in fact, found by MasterCard to be in Thailand, with an overall index score of 73.9 out of 100.

MasterCard’s overall index is made up of three components:

  • Basic money management weighted at 50%. This is to determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage;
  • Financial planning weighted 30%. This is to assess the level of knowledge of financial products, services, and concepts and the ability to plan for long-term financial needs; and
  • Investment weighted 20%. This to determine basic understanding of the various risks associated with investment, different investment products and skills required.

Notably, Thai women also had the highest scores in financial planning (87) and investments (69.3), outshining their peers in the other 12 Asia-Pacific markets surveyed by MasterCard.

Of the three components that make up MasterCard’s survey, women across the 13 Asia-Pacific countries as a whole scored the best in financial planning (average score 74.6), followed by basic money management (63.9) and investment (56.7). The overall average score across the 13 markets was 66.3.

Vietnamese Do Well Too: Also of significance was that women in another early-development stage market, Vietnam, also performed well to take sixth place with an overall index score of 70.1. Women in three other developing markets surveyed were also in the MasterCard’s index’s top-10: The Philippines (overall score 68.2), Indonesia (66.5) and Malaysia (66).

Georgette Tan, vice-president, communications for MasterCard, Asia-Pacific, Middle East and Africa, said of the strong performance of Thai and Vietnamese women in the rankings:

These are markets where rapid socio-economic advancement has given women vital and valuable first-hand entrepreneurial experience and exposure to financial planning and money management concepts.

Women in Singapore were in third overall place with a score of 72.4, thanks to good scores on basic money management (70) and financial planning (80.4). But they fell short in terms of investment skills and knowledge, scoring of 51.5, well below the regional average.

Women in Key Developed Markets Surprisingly Lag

Bringing up the rear in the survey were women in the developed markets of Korea, with the lowest overall index score of 55.9, and in Japan with the third-lowest overall index score of 59.9. Women in Korea and Japan were also the only ones in the region with financial literacy index scores of below 60.

Women In Other Developed Markets Excel

Women in New Zealand had the second highest overall index score (73.8) followed in fourth position (71.6) by Australian women, leading the field in basic money management with scores of 76.7 and 75.8 respectively. However, they both fared poorly on financial planning – coming in under the overall survey average – and on investments with scores of 58.3 and 55.2, respectively.

Indian and Chinese Women Lag

In the most populous developing markets, India and China, women had overall index scores of 62.5 and 60.1, respectively. This ranked Indian women fourth lowest and Chinese women second lowest. MasterCard found that Indian and Chinese women are particularly weak in basic money management, scoring 58.8 and 54.4, respectively.

Counter Intuitive Findings on Korean Women Yield Cultural Insights

Women are the Household Financial Decision Makers: Mastercard found that the majority of Korean women polled were the household financial decision makers. This was certainly true during my 15 years in Korea. I spent some years serving as General Manager of Marketing at Samsung Life, Korea’s leading insurer, where the traditional Financial Consultant channel was  female.

Yet Financial Literacy Remains Low: Ironically, Korean women had the lowest financial literacy scores:

  • Lowest financial literacy score (55.9)
  • Lowest in basic money management (51.1)
  • Lowest in financial planning (65.7).
  • In investing, only 22% of Korean women had a basic understanding of inflation and its impact on the future value of money.
  • Only 40% said they understood the concept of compound interest rates.
    • 36% did not understand the concept; 24% were unsure or did not know.

Japanese women had the lowest investment score (38.4).

Why? Traditional Societies Have Strong Cultural Differences

1. Little Experience With Equities Based Products: It is important to note that there are strong cultural differences that can largely account for these findings. Korea doesn’t have a long history with equities-based products. Traditionally,  investor clubs, called kae are used to raise seed money for businesses. The first recipients cede some of their cumulative periodic investment for the privilege of being the first to have access to a lump sum for investment. Later recipients receive back earnings as a result. But the pool is based entirely on monthly contributions of the members and there is no actual appreciation or interest on that pool.

2. Fixed Investments and Real Estate Are King: A second important Asian trend is a traditional emphasis on fixed income investments vs. equities. As highlighted in my article, The Declining Role of Equities, while investors in Europe, the United States, and wealthier parts of Asia, such as Hong Kong, hold 30% to 40% of their financial assets in equities, new investors in emerging economies keep 75% in deposit accounts.

General Observations and Conclusions

Women Need to Round Out Their Financial Skills: As an overall observation, while it is a broad generalization, women from traditional societies where they are the household decision makers tend to excel in money management, yet fall short in  investment skills and knowledge.

By contrast, research on U.S. women shows them still lacking confidence in money management skills, although their long-term family-oriented focus equips them to do better than U.S. men in long-term planning.  In comparison, the more transactional quantitative decisions such as budgeting or investing are typically more appealing to U.S. men who enjoy the “game” of it, than to U.S. women.

Financial Literacy Education Is Invaluable: The high scores of the women of Thailand, New Zealand, Singapore, Australia and Taiwan show that, regardless of cultural differences,  empowered women anywhere are a force to be reconed with.

One finding of the MasterCard research that can be generalized to all women was a close correlation between financial knowledge and planning – women who exhibited higher levels of financial literacy were more likely to be proactive in planning for their future. This shows that financial literacy training can be a potent tool for women financial consumers.

At Samsung Life, we invested heavily in educating the Financial Consultants in principles of financial planning that they could pass on to their clients, while introducing variable life, annuities and mutual funds to the product mix. The results were highly successful. This shows that an investment in female financial literacy is an invaluable investment for financial firms.

Financial planners have a receptive market with U.S. women, who have an advantage over U.S. men in long-term planning skills, and one way to reach them is to recruit and develop more female financial planners.  Helping women to round out their money management and investment knowledge will make them more confident consumers for investment products. In particular, women’s lower risk tolerance would make them a natural market for today’s Equity Indexed life insurance and annuity products, as well as Variable Annuities with living benefit guarantees that lock in gains and guarantee an income base for future annuitization.

Related Articles

Study: Gender Gap In Financial Literacy Grows

Seven Steps to Overcome Women’s Top Money Fears

The Declining Role of Equities

Equity Indexed Universal Life Insurance: Enticing New Alternative

Indexed Annuity Sales Excel in Low Interest Rate Environment

 

February is Black History Month. What are you doing to celebrate it? Think about this for a moment.  Do you think people aren’t quick to detect cynicism, seeing how companies are piggybacking on Black History Month?

“It has turned into a mundane, meaningless and commercialized farce,” according to this commentary by Huffington Post blogger Akilah Bolden-Monifa. She concludes:

Instead of a month of perfunctory gestures, we need yearlong efforts of recognizing African Americans who made – and continue to make – a contribution.

Many people hold concerns about black history being delegated to a single month.  Morgan Freeman, a critic of Black History Month, said “I don’t want a black history month. Black history is American history.”

But this doesn’t mean to take your African American customers for granted. It’s just important that you do it from an African American perspective. When a corporation that is not noted for ethnic diversity runs a Black History Month ad,  it’s often viewed with skepticism. Perfunctory treatment is worse than no acknowledgement at all. An example was an ad run by a large regional bank I worked with that depicted an African American teacher in front of a blank board. Some of the scathing reactions I heard were  “Really, you needn’t have bothered!” and “That must have taken a lot of thought. It really is offensive to view the holiday from a self-serving and self-referential perspective that does not begin to deal with the nuances of meaning and relevance to the intended audience. 

Meanwhile the competition was running an ad was associating the opening of an account with them with jumping the broom.

The broom jumping ceremony is a poignant reminder of a time when African American wedding vows were not legally sanctioned, and  the legitimacy of marriage was sought by jumping over the broom into the bonds of marriage. It’s an acknowledgement of  connection with a proud heritage, legitimacy,dignity and the strength of family bonds.  In a word, it’s a powerful message of respect and a clear indicator that “They get me. They are me.”

Snap Marketing Principle of Cultural Perspective

People like to do business with people like themselves.