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.
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.
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.
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.
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.
From Coachella to Taco Bell, creators are monetizing their crafts to bridge the gap between consumers and brands. Powered by social platforms like TikTok, Instagram, and Twitch, the influencer market for branded and platform deals is projected to reach $28 billion by 2026. And the models keep changing. Hashtag sponsored posts – influencer marketing 1.0 - represents where we’ve been. Brands are now leveraging the creator economy in new ways, paying them for their insights into what’s trending and developing that content to post to the brands’ platforms instead of the influencers’ news feeds.
Equity partnerships have also increased. Multi-hyphenated creators, many of whom are athletes, entertainers, or personalities, are being approached by brands to become ambassadors for their products in exchange for equity in the companies, e.g., 50 Cent and Vitamin Water and P. Diddy and Ciroc Vodka.
Other creators have expanded even further, like The Kardashians, Rhianna, and LeBron James, who have gone way beyond being Insta-famous or making music or moves on the court to launching media empires that are challenging conventions. The next frontier, the metaverse.
Donnelle Branche, Talent Manager at Digital Brand Architects, joins us on The New Mainstream podcast to discuss the evolution of influencer marketing and how multi-hyphenated creators are changing the game.
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.
Here’s a sneak peek at what we found:
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.
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.
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