Savings and Investment Lag but Appetite for Financial Knowledge Exists

Social Security is not enough. Anyone currently living on a monthly Social Security check can attest to that. Unfortunately, most Americans don’t fully grasp that reality until they reach retirement age. This problem is even more pronounced in the Hispanic community, which lags other groups in retirement savings. ThinkNow recently conducted research for the Hispanic Marketing Council’s 2022 Virtual Summit on Hispanic attitudes towards saving and investing and found key areas of concern and opportunities where the public sector and financial services companies can step in to help.

Optimism Can Be a Liability

Hispanics are very optimistic, and this serves them well in most cases. But retirement savings is not one of them. Many Hispanics believe their family will be able to support them in retirement. They are the least likely group to say that being a burden on their family is a primary reason for retirement savings. This reliance on family support may contribute to a lower prioritization of retirement savings accounts. In fact, our research found that Hispanics were less likely to have all types of savings accounts than non-Hispanics and are 44% less likely to have an IRA than non-Hispanics.

Another factor influencing lower savings rates among Hispanics is the financial strain of living expenses. Younger Hispanics are also saddled with higher levels of student debt than non-Hispanic White or Asian American students.

There’s a Thirst for Financial Knowledge

The financial strain Hispanics are under is real, but there is reason to hope. Hispanics are more likely to seek out financial information than other groups. They especially lean on banks and online sources such as YouTube.

Banks are uniquely positioned to help since they’re the source Hispanics look most to for financial guidance. The FDIC developed the Money Smart program to help teach financial literacy, and some banks have trained their staff to share this information with their clients. Savvy financial institutions realize that helping their customers build wealth is also good for business.

Another key finding in our study was that Hispanics are interested in investing if given the opportunity. While only 10% have individual stock trading accounts, 35% would choose stocks when asked to allocate $1,000 across various investment options. Some stock trading services such as Robinhood and SoFi have attracted Hispanic and Black traders, but the jury is still out as to whether the platforms' short-term trading is leading to long-term wealth building.

Crypto is Popular but Risky

Ownership of digital assets like cryptocurrency and NFTs were the only area where Hispanics over-indexed other groups. Age is the primary driver. Digital assets are more commonly held by younger individuals, and Hispanics are, on average, ten years younger than the overall U.S. population.

Cryptocurrencies are more volatile than other forms of investment. Their value as long-term assets is unproven, so reliance on this type of investment for Hispanics may prove problematic.

What the Future Holds

California recently implemented mandatory retirement savings accounts for all businesses with five or more employees. Businesses that don’t have a retirement savings account in place must have one by June 30th, 2022 or enroll their employees into a new State plan called CalSavers and deposit 5% of their pay into an IRA. What’s nice about CalSavers is that employees opt into the program unless they specifically opt-out. Unlike a 401K, which is employer-based, CalSavers IRAs will follow workers when they change jobs, so there’s no need to transfer the funds when that happens. This is a positive development because California has the country's largest population of Hispanics, so the likelihood that we’ll see an increase in Hispanic retirement accounts is high.

Student loan forgiveness would also disproportionately help Hispanics. The Biden Administration appears ready to enact some form of loan forgiveness by executive action. Reducing the burden of student loan repayment will open up funds for young Hispanics to be able to start funding their retirements.

The future of the U.S. is multicultural. One hundred percent of the population growth recorded in the 2020 Census came from multicultural Americans, and Hispanics are the largest segment of the multicultural market. Providing the financial literacy education they desire and improving their ability to save will increase the chances that they’ll be able to retire successfully, which pays dividends for them as a group and for the country as a whole.

Growing up as an Ecuadorian American, I felt that people heavily associated Latinos with soccer so much that it seemed synonymous. While I’m not a sports fan, I think it’s important to point out that Latinos are multifaceted, enjoying many sports and pursuing various interests. While we can have this discussion about Hispanics in general, in honor of Pride Month, we’ll take a deep dive into LGBTQIA Latinx sports enthusiasts who are not soccer aficionados to see what stands out.

In a study of 500+ LGBTQIA Latinx consumers that identified a favorite sport other than soccer, we found:

Demographics: the age range reported the most was between 23 and 38. Of which, 62% of respondents identified as bicultural, and 52% stated having a strong attachment to the US. Furthermore:

• 16% are currently unemployed
• 2.5% identify as non-binary
• 37% identify as bisexual

Media Consumption: 9-1-1 (FOX), Grey's Anatomy (ABC), and The Good Doctor (ABC) were the top three most watched TV shows. No shows from the traditional Spanish language networks made the list. To see how traditional Spanish language networks performed with the majority of bicultural LGBTQIA Latinx sports enthusiasts, we asked which of the following Spanish-language networks have you watched in the past months, if any? About 40% have watched Univision, and less than 40% have watched Telemundo. Brands need to understand where their consumers are consuming media.

Brands: speaking of brands, among LGBTQIA Latinx consumers who aren’t soccer superfans,

• 35% have consumed Grey Goose in the last six months
• 17% go out to a casual dining restaurant 2-3x a month
• 52% have consumed Arizona / Arizona Tea in the last six months

Financial: among this audience, digital current presents a significant opportunity, as:

• 5% own digital currency as a financial product
• 19% have invested between $500-$2,500 in cryptocurrency

Yet, 23% don't have a driver's license.

And finally, when asked which of these sports would you consider to be your favorite? Soccer came in fifth place behind basketball, football, and boxing.

My point. US Hispanics are a diverse population influenced by the cultures of their countries of origin and by acculturation to American ways of life. Brands who are successful in audience targeting understand these nuances and use innovative segmentation tools built on rich data to improve targeting criteria and consumer insights.

America’s youth, the first multicultural majority generation in U.S. history, is growing rapidly, adding over 2.3 million consumers (about twice the population of New Hampshire) to the population each year, making them a significant force to be reckoned with. These "mini-millennials” challenge brands to address societal stereotypes, particularly around gender identity, and use their influence to support or disapprove of brands’ diversity and inclusion efforts.

In our first report on diversity and inclusion last year, we analyzed consumer reactions to companies' public declarations of support for social justice in 2020. In our latest wave of ThinkNow Diversity & Inclusion: Brands and Consumer Purchase Intent, we find differences in perceptions and expectations among key demographic groups compared to last year’s report.

Download the report here:

Diversity & Inclusion Means Racial Equality

As in 2021, most U.S. consumers equate diversity and inclusion with ‘racial equality.’ Among LGBTQIA consumers, however, 70% consider ‘LGBTQIA equality’ a stronger representation of D&I. Youth are more likely to see ‘gender equality’ as an example of diversity and inclusion.

Multicultural Consumers Support Inclusive Brands

African American and Hispanic respondents are the most likely to support a company that makes a public commitment to diversity and inclusion initiatives, which differs significantly from non-Hispanic Whites. This metric has held steady over the past twelve months as black and brown audiences, galvanized by the events of 2020, seek out brands that “understand the assignment.”

Consumers who support inclusive brands do so in various ways, but the extent to which they do it has shifted. Overall, we’ve seen a slip in the percentage of consumers willing to share their support on social media. The polarity of the platforms is likely driving this drop. However, there’s been an increase in those willing to spend more money at these stores or go out of their way to shop there – even if they’ve never done so in the past.

We did see a dip in the percentage of consumers willing to break up with their favorite brands if they don’t step up.

At the micro-level, non-Hispanic Whites are more likely to say that they would share their support on social media. Compared to a year ago, fewer Hispanics would share on social media, but more would go out of their way to support a store they had never frequented.

The number of African Americans willing to spend more money at a store that publicly supports diversity and inclusion significantly increased from 2021 to 2022. In 2022, this segment is more likely than other segments to be willing to spend at least 50% more at these stores.

While Millennials have become less likely to spend at least 50% more at stores that show a commitment to diversity and inclusion, Gen Z, on the other hand, has become more likely.

It Just Makes Cents

While it may not be making headlines or spilling out into the streets, consumer expectations for more diverse and inclusive brands are holding steady, driven by America’s youth. From race to ability, sexual orientation to gender, consumers want to see themselves represented authentically and sincerely by companies and brands.

A brand’s ability to do that impacts consumer sentiment and purchase behavior. Brands unwilling to step up run the risk of alienating consumer groups and the spending power at their disposal.

To see additional insights, download the 2022 ThinkNow Diversity & Inclusion: Brands and Consumer Purchase Intent Report today.

A decade ago, the Hispanic travel market was a niche, and many marketing agencies considered it too small to devote time and resources to. Fast forward to the present, and agencies are now eager to tap into the trillion-dollar market, and for a good reason. Research shows that Hispanics travel more across all income levels, especially among affluent Hispanics with household incomes of $80K+. They tend to spend more while traveling and travel with larger parties.

In 2019, Hispanics spent $113.9 billion on domestic leisure travel, accounting for 13% of all domestic leisure travel that year. But the travel industry is still leaving money on the table and could benefit from making a few tweaks in its outreach to Hispanics and other underrepresented groups.

Hispanic Travel Habits

As with all underrepresented groups, Hispanics want to feel seen and heard by the travel industry, from advertising to bookings. This starts with a deep understanding of Hispanics and how identity, language, culture, and other factors impact their behavior, motivations, and purchase decisions. Hispanics are poised to become 30% of the U.S. population by 2050 and are rapidly joining the middle class, making connecting with them a top priority.

[bctt tweet="Essential to building relationships with Hispanics is addressing stereotypes and false assumptions." username="@ThinkNowGlobal"] As mentioned earlier, Hispanics are becoming increasingly affluent. It’s often said that if they were an independent country, they’d have the world’s seventh-largest economy. U.S. Hispanic travelers spend more money and travel more than the non-Hispanic U.S. population. To be exact, 31% of U.S. Hispanics travel internationally compared to 18% of non-Hispanics. Texas, California, and Florida are their top three domestic destinations.

An affluent Hispanic traveler spends an average of $6,000 per trip, about 30% more than the rest of U.S. travelers, and makes two more trips per year. This will only increase as more U.S. Hispanics enter the middle class.

Hispanic Representation

As immigration slows, language habits among U.S. Hispanics are shifting, which could impact marketing messages. Although many Hispanics speak or are familiar with the Spanish language, they prefer to speak English or only speak English, especially younger demographics like Gen Alpha, Gen Z and some Millennials. Neither of these groups like being targeted in Spanish.

[bctt tweet="Marketers need to deliver cultural relevance." username="@ThinkNowGlobal"] Hispanics want to be represented in American society, not reduced to cheezy Spanish language commercials that skew more toward parody than fact. Hispanic representation requires cultural research, which dives into the nuances of this audience, and creatively uses language to communicate culture.

Finding the Balance

Hispanics are shaking up the travel industry, and wielding their influence to change the narrative of Hispanic travelers. Travel brands, including those in hospitality, entertainment and dining, and destination management, must work to ensure Hispanics feel that their culture is seen and welcomed in those spaces and thoughtfully integrated into all aspects of it. The company that can find the right balance in marketing to Hispanics will tap into a massive revenue opportunity.

Latino immigrants once feared that practicing their native cultures would make them seem "less American" and thus less accepted, so they tried to acculturate to American ways of life quickly. Fortunately, most Latinos have evolved in how they see themselves. They embrace the concept of the "the 200%" (100% Latino and 100% American) and the ability to be ones authentic self without abandoning who they are. Language has been one of the biggest indicators of that. In the past, immigrant parents may have insisted that everyone in the household speak only English and stifle their native tongue.

But today, bicultural bilingual households across the U.S. are thriving, primarily driven by younger generations who refuse to conform or apologize for their lineage. Gen Z is the first multicultural majority generation, and Latinos have the highest rate of interracial marriage.

So how should marketers engage this demographic? Connecting with the new mainstream requires understanding the dynamics they navigate daily, taking into account their cultural lens, contextual environments, and behavior. To do that, they must be invited to the conversations and a part of the decisions being made. By relying on people with these experiences, you can assess the authenticity of your marketing efforts and decrease the chance of missing the mark.

In this episode of The New Mainstream podcast, Vanessa Vigil, General Manager, mitú, distills the notion of "the 200%" and why it's important for marketers to dive deeper into multicultural consumer insights.

Hispanics are capturing a piece of the American dream as a record number of Latinos move into the middle class. It is estimated that by 2030, the number of Hispanics in the United States will increase from 18% to 30%. As the population has grown, the poverty rate among Latinos has dropped to the lowest levels in recorded history, according to Census data. Median income, however, continues to rise. Hispanics are becoming an immigrant success story similar to those of Irish, Italian, and Asian descent who’ve chosen to settle and thrive in the U.S.

Income Growth

Hispanic Americans' income increased by 20% from 2014 to 2019, the highest rate of all ethnic and racial groups.

While the income gap between White Americans and Hispanic Americans is still relatively wide, it is starting to close. Is it possible that within a couple of decades the income of Hispanics will rival that of mainstream America? Maybe.

A few factors are influencing Hispanics' rise to the middle class. First, the children of the first wave of immigrants are more educated than their parents. Hispanics now make up about 23% of all people enrolled in school in the U.S. With better access to education, there is a better chance of obtaining more lucrative jobs. Secondly, the new generation of Hispanics are English dominant and not as fluent in Spanish, enabling them to acculturate even further into American society.

Homeownership

Homeownership among Hispanics is one of the most significant indicators of a shift in economic status. Nearly half of Hispanics own a home, an increase of 33% from 2016 to 2019. It's still below White homeownership of 75%, but it’s getting closer. The balance of Hispanics currently renting plans to buy a home in the next five years.

Entrepreneurship is also a key influencer. Hispanics are opening more small businesses than any other racial group in America, and they embrace the free market. According to the 2020 State of Latino Entrepreneurship Report, Latino-owned businesses have grown 34% over the last 10 years compared to just 1% for all other small businesses.

Although Latino-owned businesses have grown rapidly, they lag behind their White counterparts in some areas, such as gross revenue. The average Latino business brings in $1.2 million per year compared to $2.3 million for non-minority firms. Within 20 years, the earning gap is expected to narrow, however.

Interracial Marriage

Hispanic Americans are open to marrying outside their race. A Pew Research report found that intermarriage rates are highest among Latinos and Asians. Interracial marriage could impact the growth of Hispanic ethnicity in the coming years. Multiracial is among the highest growing race group in America, expected to become 90 million of the U.S. population by 2030.

Overall, Hispanics are an American success story. Work ethic, resourcefulness, and unity have laid the foundation for a happy ending.

Mobile apps like Apple Pay have made online and offline purchases more convenient for consumers, liberating them from having to pull out their wallets, credit cards, and wads of dollar bills and loose change. But the innovations of Web 2.0 are in the rearview, as consumers explore Web 3.0 where digital currency is just a fraction of what the virtual experience has to offer.

For enthusiasts, Web 3.0, or Web3, is a way of democratizing the internet, shifting power away from the behemoths dominating search, sales, and social and giving it back to consumers. The blockchain has made bitcoin, non-fungible tokens (NFTs), and other forms of cryptocurrency ubiquitous among devotees, and the metaverse has become a virtual utopia for consumers and brands.

In our second look at cryptocurrency, ThinkNow conducted a nationwide online survey of adults ages 18 to 64 to understand their familiarity, usage, and interest in cryptocurrency and other Web3 technologies.

Download the report here.

Here’s a sneak peek at what we found:

Cryptocurrency Most Popular With Asians and White Men

Most adults have heard of cryptocurrency. Those most likely to be familiar are Non-Hispanic White men, Millennials, and individuals, in general, living in higher income households.

Of all cohorts, Asian Americans are more likely to use or own cryptocurrency, and Hispanics are more likely to own a cryptocurrency wallet.

Women lag men in usage of these forms of digital currency.

Non-fungible tokens are used most by individuals with a total household income of $80,000 and above.

Bitcoin is by far the most utilized form of cryptocurrency, followed by Ethereum.

Nearly everyone who uses a cryptocurrency wallet has the online/app version, as opposed to the thumb drive, likely to mitigate the risks associated with losing it.

Privacy and Ease of Use Concerns

But not everyone is sold on Web3. The technology is still evolving, and privacy concerns linger. And there’s a certain level of disbelief surrounding the metaverse. Are these concerns enough to slow the rate of adoption?

Download the ThinkNow Web 3.0 Cryptocurrency report today.