A TOTAL MARKET APPROACH - Life Insurance, Retirement ...

[Pages:16]A TOTAL MARKET APPROACH

Winning with women and multicultural consumers

Foreword

This "Winning With Women and Multicultural Consumers" white paper reflects key findings from research conducted by Prudential, as well as, demographic and industry studies on the multi-trillion dollar segment, affluent women's and emerging affluent multicultural markets. The purpose of this white paper is to provide researchbased information to support Prudential's commitment to expanding its relationships with and services to diverse communities, including women, African American/Black, Hispanic/Latino and Asian American consumers.

This white paper focuses on the business opportunity

of the women's and multicultural markets. The data

Stephen P. Pelletier

are compelling and the research is clear. Women and

EVP and Chief Operating multicultural consumers represent a new wave of

Officer of U.S. Businesses customers that have the potential to significantly expand

Prudential Financial

the business impact of financial professionals in protection,

retirement, and investment products and services.

There is no better time than now to ensure your business is well-positioned for continued growth as our nation and, by extension, our workforce becomes increasingly more diverse. Tapping into these markets requires building relationships, winning their loyalty, referrals and business for years into the future. Understanding what motivates and influences these segments as they explore financial products and secure their financial dreams is the first step to establishing success in the marketplace. Collaborating and following the recommendations outlined in this white paper are also essential strategies to winning with these consumers.

Caroline Feeney President Agency Distribution Prudential Financial

At Prudential, we believe in the transformative business power that women and multicultural consumers represent in shaping current retail and institutional strategies. We also understand that getting this right can help define and sustain the future of our industry. Our mission is to help all customers achieve financial prosperity and peace of mind. We look forward to partnering with you to expand the work that we do to help all Americans meet their biggest financial challenges.

2

Prudential

Total market approach

At Prudential, our goal is to enhance value among our most important audiences; our employees, shareholders, clients, and distributors of our products and services. We have adopted a "Total Market" approach for all of our business planning. This means that we consider our target audience to be all diverse markets. We also take into account behavioral research and the financial experiences of these markets, data that we use to inform our business strategies. This ensures that our focus is both broad and deep, facilitating our ability to engage cross-culturally, while also embracing the nuances of individual market

segments. We believe this approach will enable us to continue meeting the financial needs of the United States' increasingly diverse demographic.

Prudential utilizes a Total Market Strategy, which encompasses a broad spectrum of consumer and our customers from communities throughout the United States. In addition, segments such as Millennials are included in the Total Market approach because they are among the most diverse populations in U.S. history and represent a multicultural generation.

Female

Male

162,000,000 156,000,000

Gen X 41,000,000

Millennial 86,000,000

Hispanic/ Latino

54,000,000

African

Hispanic/

Asian

American/

Latino

American

Male Black

42,000,000

54,000,000

16,000,000

Women of Color

55,000,000

LGBT 15,000,000

People with Disabilities

54,000,000

Veterans 27,000,000

Total 318,000,000

Female 156,000,000

162,000,000

Gen X

41,000,000 Millennial

86,000,000

LGBT 15,000,000

People With Disabilities 54,000,000

Veterans 27,000,000

Hispanic/Latino 54,000,000 African American/Black 42,000,000

Asian American 16,000,000

Women of Color 55,000,000

Total Market 318,000,000

Current estimates for U.S. diversity segments1

A Total Market Approach: Winning With Women and Multicultural Consumers

3

Key themes for women and multicultural consumers

Women offer breakthrough economic growth for financial professionals; however, their confidence in meeting long-term and retirement goals wavers

Women control 51% of personal wealth in the U.S. and, over the next 40 years, are expected to inherit 70% of the $41 trillion in intergenerational wealth transfers.2 However, despite this wealth, women surveyed do not feel very well-prepared to make financial decisions. Unique concerns and priorities like managing household expenses, not becoming a financial burden to loved ones, securing long-term health care for retirement, and funding their children's college tuition exemplify the need for financial planning.3

Women under 35 desire financial education and planning to achieve their retirement goals

Unlike women baby boomers, women surveyed under age 35 frequently identify themselves as investment beginners and are less likely to feel very well-prepared to make wise financial decisions. Younger women are also the most likely to see financial decision making as their own responsibility, and feel empowered to participate in or make decisions on their own.4

African American/Black, Hispanic/Latino and Asian American consumers are a sizeable opportunity for financial services

Multicultural markets represent an audience with $3 trillion in buying power. A figure projected to grow to $4 trillion by 2017.7 These diverse segments accounted for over 90% of all population growth in the U.S. over the last decade (2000 through 2010) and currently account for 36% of the U.S. population.8 Collectively, these consumers represent an "emerging majority" in several states, including California, Texas, and Florida. The U.S. Census Bureau projects that by 2020 they will account for nearly 4 in 10 of the U.S. population; by 2050, they will be the majority U.S. population.9 While multicultural consumers feel confident to moderately confident about the future, some segments, especially the African American/Black and Hispanic/Latino communities, face significant challenges. Debt, funding near-term goals such as purchasing a home, creating an emergency savings account, and supporting their multigenerational families are among their top financial challenges and concerns. The 2013 Pru Asian-American Retirement study found that approximately 20% of respondents used a financial professional.

Women of color are an important segment within the women's market

African American/Black, Hispanic/Latina, and Asian American women account for more than $1 trillion in buying power. Fifty-six percent have head-of-household status and, with this, responsibility for their family's and multi-generational family's financial well-being.5 Among those surveyed, women of color are generally confident and optimistic about their future and are involved in the purchase of protection, retirement and some investment products.6

Buying Power WOMEN'S BUYING POWER

$5 TRILLION

The Women's & Multicultural Market Opportunity

(Figure A)

Multicultural Growth

90%

OF U.S. GROWTH OVER LAST DECADE

Household Breadwinners

44%

WOMEN EARN MORE THAN PARTNERS

MULTICULTURAL BUYING POWER

$3 TRILLION

Wealth Transfer AMOUNT WOMEN WILL INHERIT

OVER THE NEXT 40 YEARS

$29 TRILLION

4

Prudential

Why the women's and multicultural markets matter

The business case for building a stronger financial services relationship with women and multicultural consumers is compelling (see Figure A).

Nearly half of women surveyed ? 44% ? are the primary breadwinners in their households. Twenty-seven percent of married women say they "take control" of financial and retirement planning and manage it themselves, up from 14% in 2006.10

Studies show that Millennials ? 47% of whom are African American/Black, Hispanic/Latino or Asian American ? know they need to save, and they're not afraid of stocks, which account for more than 70% of their portfolios.11 They are also poised, along with their Gen X predecessors, to inherit wealth than aging Boomers. The two younger generations combined could see their wealth grow from $2 trillion to $28 trillion in the next five years.12

Women of color ? African American/Black, Latina, and Asian American women ? are important contributors to household income. Studies show that there is a high

percentage of Asian American and Black women who earn more than their partner.13 Among married women of color surveyed with a household income of $75K+, 50% manage financial decisions solely or with input from their partners.14

Multicultural consumers ? male and female combined ? have $3 trillion in buying power. Four in 10 African American/Black consumers (17MM) have an annual household income (HHI) of $75K or more; nearly 25% earn six figures.15 Twenty-nine percent of Hispanic/Latino consumers (15 MM) earn $50K-$100K; Asian Americans have $752 billion in buying power and the highest median HHI of all diverse consumer groups.16

Participation in employer-sponsored defined contribution plans is highest among Asian Americans (81%), followed by African American/Black consumers (78%).17 Among those that do participate, Hispanics/Latinos and Asian Americans trail (69%, 70%, respectively) on contributing at the full employer match level, while African American/Black consumers lead (74%).18

Women of Color

BUYING POWER

$1 TRILLION

EARN MORE THAN PARTNERS

31% 33%

African American/Black Asian American

Millennial Women

43,000,000

42%

47%

CLOSING WAGE GAP VS. MEN

In charge of Multicultural financial goals

Earn 94? for each dollar

Retirement Savings

African Hispanic/

Participates in a defined

AmBelar7icc8ka%n/

La7t5in%o

contribution 78%

75%

plan

African

Hispanic/

American/Black Latino

African Hispanic/

Fully matchesAmerican/ Latino

employer

Bla7c4k%

69%

contribution 74%

69%

Asian Amer-

8i1c%an

81%

Asian

AsAimaneriAcamn erican

70%

70%

Total

75%

75%

Total

Total

72%

72%

A Total Market Approach: Winning With Women and Multicultural Consumers

5

Financial concerns of women

Despite the growing business impact of the women's market, their confidence has not kept pace with their economic growth and influence. The majority of women surveyed are optimistic to moderately optimistic about their financial future and are receptive to learning about financial empowerment and having a more secure retirement.

Survey results from "Prudential's Financial Experiences & Behaviors Among Women" and other industry research indicate the following:

? The most important concerns among women surveyed revolve around expense management, not becoming a financial burden to loved ones, and having money to maintain their lifestyles in retirement ? especially with greater longevity on the horizon (see Figure B).

? They are concerned about rising healthcare costs, elder care, paying for their children's college tuition, and protecting investments from volatility.19

? Only 33% of women surveyed feel they are on track or ahead of schedule in planning or saving for retirement, down from 46% in 2008 ? but up from 24% in 2012.20

? Women of color lack time; the majority aged 15-44 (67%) are mothers and many work full-time.21 --79% of African American/Black women work full-time --78% of Asian American women work full-time --74% of Hispanic/Latina women work full-time

They may have less time to attend financial seminars, especially those scheduled during the day. Some may require childcare accommodations to attend a seminar and they may involve other members of the extended family in a meeting given the multigenerational dynamics of the culture.22

Click to access the "Financial Experience & Behaviors Among Women" Prudential 2014-2015 Research Study.

Women have financial challenges (Figure B)

Longer Life Expectancy

? Women's average life expectancy is 3-4 years longer than men ? On average a 65-year-old female will live an additional 20.4 years ? Money needs to last longer

Primary Caregiver

? More likely to leave the workforce intermittently ? Some stay home to care for children ? Care for parents or other dependents

Retirement Catch-Up

? On average, earn less than men ? Smaller contributions to Social Security ? Many don't have pensions, less cash available for retirement

6

Prudential

Top financial concerns of multicultural consumers

Household income over $75,000

African American/Black

Asian American

63%

Saving for retirement

57%

Reducing debt

79%

Have adequate health care insurance coverage

72%

Make sure you do not outlive savings

47%

Building emergency savings account & Protecting existing savings and investments (tied at 47%)

Click to access the "The African American Financial Experience" Prudential 2013-'14 Research Study.

64%

Have enough money to achieve desired retirement lifestyle

Click to access the "Asian Americans on the Road to Retirement" Prudential 2010 Research Study.

Hispanic/Latino

65%

Saving for retirement

53%

Reducing debt

41%

Building emergency savings account

Click to access the "The Hispanic American Financial Experience" Prudential 2014 Research Study.

A Total Market Approach: Winning With Women and Multicultural Consumers

7

Financial product ownership among women

The majority of surveyed women (70%) see themselves as savers rather than investors, and are interested only in guaranteed or FDIC-insured products.23 Among women with a HHI of $75K+, the major financial products owned are shown below (see Figure C).24

Among women of color (regardless of HHI), financial product ownership varies,25 as shown below (see Figure D).

Women

Financial product ownership with household income over $75,000 (Figure C) Life insurance purchased through an employer 66%

IRA 63% Life insurance purchased individually 57%

Individual stocks and bonds 47% Mutual funds 40% Fixed Annuity 17%

Variable Annuity 15%

Women of Color

Financial product ownership with household income over $75,000 (Figure D)

African American/Black Women

Life insurance purchased through an employer 74% IRA 56%

Life insurance purchased individually 76% Individual stocks and bonds 45% Mutual funds 37% Fixed Annuity 15% Variable Annuity 23%

Hispanic/Latina Women

Life insurance purchased through an employer 69% IRA 62%

Life insurance purchased individually 45% Individual stocks and bonds 49% Mutual funds 38% Fixed Annuity 25% Variable Annuity 14%

Asian American Women

Life insurance purchased through an employer 59% IRA 67%

Life insurance purchased individually 49% Individual stocks and bonds 57% Mutual funds 49% Fixed Annuity 22% Variable Annuity 12%

8

Prudential

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download