Leveraging culture in preparing Hispanics for retirement

Leveraging culture in preparing Hispanics for retirement

One of the challenges in motivating a group of people to save for retirement, is crafting a message to a diverse audience. Age, gender, education, cultural background and experiences combine into individual prisms that distort the message. People see and listen to the message through the prism that makes them who they are.

It is just in recent years that financial professionals started tailoring their messaging for their female audience. The results are encouraging as more women have engaged in their financial lives. It is time to focus on the Hispanic audience as well.

There are unique characteristics in Hispanic culture that can be leveraged to encourage long-term savings. In order to do it, there is a need to provide a message that is culturally targeted, and which respects the complex value system of Hispanics. Waiting for Hispanics to assimilate into America may take too long; swifter action is needed.

 

Can we facilitate retirement savings among the Hispanic population if we incorporate greater awareness of Latino culture into messaging?

Among those cultural characteristics we need to better understand and use more effectively are language, social structures, relationship with family and relationships with time. Let’s consider each one in more detail below. 

1)    Leveraging language is intuitively the first place to start. The relationship between Hispanics and money is emotional, and emotions are better conveyed in one’s own native language, so presenting information in Spanish helps. However, a lot of material has been translated into Spanish, and yet it fails to engage many Hispanics into long-term saving. Why then is there no emotional connection? The examples need to better reflect relevant life contexts for the Latino readers. For example, publications with references to “winter” or “golf” can be translated but they will not have the desired impact as the majority of Latinos in the U.S. come from countries with temperate climates and where golf courses are scarce. It is culture, and not only language that moves Latinos to action.

2)    Another characteristic of the Latino culture is embedded in how social structures work; through hierarchies. From the hierarchical structure of the family, a cultural legacy going back all the way to the Romans, where the respected authority figure of the paterfamiliasdecided the actions for family members. Religion also follows a hierarchical structure, where the priest will interpret and instruct what to do. Hierarchical structures are also observed in schools where critical thinking takes a backstage in favor of lectures from the position of the teacher’s authority, and even into politics, in which ideas are not accepted if they are outside the hierarchy tree of the party in office.

Plain and clear instructions, from a position of authority, are not only more effective but expected by many Hispanics. In my experience, when provided with similar facts and logic, Anglos will reach conclusions and act, while their Hispanic counterparts will not. They are more inclined to expect a clear directive on what to do.

3)    Family plays a much prominent role in the life of Latinos than it does for Americans, and it is not uncommon to see the family’s influence span wide to second and third order relatives and deep through different cohorts and for generations. Family is the de-facto safety net and usually includes the extended succession network. Latino families are living longer and are decreasing in size, but the cultural obligation to financially support parents and in-laws remains intact. There are fewer children to share the burden of supporting their aging parents, which increases financial pressure.

Trust among the family network is high, based on membership, and trust outside of family diminishes significantly. It is important to note the particularly low level of trust in financial institutions; a sentiment created over the years due to an environment exposed to abuse and wrongdoing. Leveraging family is an overlooked step in generating the motivation and trust required for long-term saving.

4)    Latinos’ relationship with time is complex and it affects both their time management and their relationship with the future. It stems from the practical acceptance of uncertainty in the world that surrounds them. Hispanics have a reputation for being unpunctual. Why do meetings start late? If the infrastructure to get to a place is not reliable, then each person can either spend a lot of time and effort building slack into the different factors that can go wrong in the journey, or intuitively accept that the time for starting a meeting has some margin of error embedded; a non-written rule socially tolerated. It is easier to be punctual in the U.S. and other countries with reliable infrastructure. Latinos quickly adapt to this reality once they immigrate to the U.S. But, the relationship between uncertainty and time goes beyond the impact on meetings, it also distorts the relationship with our uncertain future.

Uncertainty for Hispanics can be very stressful, taking the form of political instability or personal safety to passively stressful impacting common issues like job security or variability of income. Uncertainty demands focus in the short term, making the future difficult to visualize. Urgency overtakes long-term planning. When uncertainty is present, people apply a mental discounting model, or better yet, a mental expected value discounting model which reduces the reward and shortens attention span. Decisions with high levels of uncertainty will be significantly discounted. Committing to a retirement project that occurs 30 or 40 years into the future is fraught with unknowns, either real or imaginary, making it difficult for most Latinos to justify committing resources to it. This vision changes as people age and the time to retirement shortens, but unfortunately, is almost always too late. Better retirement outcomes come when certainty is increased and the long-term retirement project is broken down into shorter, more specific, five- to seven-year milestones. 

Building a broader view of retirement security among the Latino community will come in steps. In their path to prosperity, there are more immediate benefits and considerations than those a 401(k) can accommodate. There is a need to develop an approach that considers these cultural realities in a way that builds prosperity towards retirement. A culturally-targeted financial education effort for Hispanics is urgent and needs to be considered through their prism. More on this will be forthcoming.

There are a couple of small and practical takeaways: (1) not only spend in translating materials but make sure they consider culture; (2) work on the clarity of the message and provide a direct explanation of the conduct that is expected; (3) double the efforts in building trust and recruit the goodwill of family; and, (4) break the retirement project in smaller, more certain milestones. With this, Latino employees will have a better framework to make the decisions that will enable them saving for retirement.

A final note;

By writing about the Hispanic culture in the U.S., I run the risk of being misinterpreted. Many readers will not recognize their own experience or the experience of those Latinos working with them represented, and I believe this is a reasonable response. Immigrating is a difficult process that transforms us deeply. The original culture starts blending with American values. The progress towards acculturation shows a general trend but is neither linear nor constant. Acculturation is achieved gradually and lies in a continuum from low to high.

This process creates the Hispanic-American cross-culture, which is fluid and in which most of us become culturally different from both pure Latinos or pure Anglos. Communicating with Hispanics about long-term savings should consider this cultural backdrop if success is desired.