According to a new report released by National Council of La Raza, the largest Hispanic civil rights and advocacy organization in the U.S., translating financial education materials often is not adequate in motivating Latinos to form relationships with financial institutions. Made possible by a grant from The Allstate Foundation, the new report titled Financial Education in Latino Communities: An Analysis of Programs, Products, and Results/Effects finds that the U.S. financial industry has failed to connect with Hispanics and many low-income families via financial education products and services.
"Teaching the Hispanic community how to avoid burdensome consumer debt, become homeowners, start a college fund, save for retirement and build wealth for their families all require financial education information and customized individual counseling that many Latinos are simply not getting," stated Janet Murguia, NCLR Executive Director and Chief Operating Officer. "Hispanics need the right kind of information delivered in the right way to foster their long-term economic growth and prosperity."
"As a major insurer broadening into the financial services arena, it is vital to understand the financial needs and desires of the Hispanic community that now constitutes nearly 14 percent of the total U.S. population - nearly 40 million persons - and represents great economic and financial potential," notes Gioia Giannotti-Frye, multi-cultural marketing manager, Allstate Insurance Co. "There isn't another group in the country that offers such an enormous capacity for building wealth. And, when Latinos build wealth, America will benefit from a more sound economy and improved financial security."
The three-phase study conducted over a 16-month period between 2003 and 2004 analyzed research and resources that confirmed the unrealized financial potential of the Hispanic community. Two roundtable discussions were held with financial education researchers, policy experts, financial industry players and community leaders to address the value and effectiveness of existing financial education efforts and strategies relative to the Hispanic community and low-income American families.
The report process also incorporated field visits to nine community-based financial education models and programs in six states. At such visits, NCLR staff interviewed organizational leaders and key personnel responsible for the direct implementation of financial education programs to examine the impact on immigrant and Latino families. The interviews provided valuable insight regarding barriers to asset accumulation in local communities; the unique financial needs of Latinos; the difficulties in administering effective programs; and the means by which practitioners measure program success.
The NCLR report revealed several elements of success for institutions serving the Hispanic market in ways that will truly guide this community to maximize its financial potential and build wealth:
- Programs should be product-centered to motivate Latinos by offering access to a tangible financial tool or product, such as savings accounts or mortgage products, rather than make the financial education a stand-alone service.
- Programs should be customized to help Hispanics absorb financial information and make decisions that are appropriate for their personal situations by providing one-on-one counseling with tailored information, answers to detailed questions, and specific advice relevant to the needs and resources of the individuals.
- Programs should be community-focused to partner and involve established community-based organizations that inherently offer experience and knowledge of the Latino community, which are in a unique position to deliver the information about relevant financial products in a credible, accessible manner.
- Programs should be relevant to the precise financial needs and demands of Latinos and supply specific information on those topics, such as identification requirements for establishing bank accounts, tax benefits for low-wage workers, and how to buy or lease a car.
- Programs should be focused on results and use a method - such as case management software - to track the financial progress and measure the outcomes of financial decisions made by program participants.
These findings will shape future programming and actions taken by NCLR and its more than 300 affiliates that serve four million Latinos across the U.S. and supported by The Allstate Foundation.
"Institutions in the financial education sector have a remarkable opportunity to become involved with a young and growing population," said Murguia. "Nearly 80 percent of Hispanic men are in the American workforce while approximately 50 percent of Latinos do not have a basic bank account."
The Allstate Foundation is an independent, charitable organization made possible by The Allstate Corporation. Allstate and The Allstate Foundation sponsor community initiatives to promote "safe and vital communities"; "tolerance, inclusion, and diversity"; and "economic empowerment". The Allstate Foundation believes in the financial potential of every individual and in helping America's families achieve their American dream.
