More than half of Americans are living paycheck to paycheck and household debt has risen to $12.68 trillion in 2017, a peak that has not occurred since the Great Recession of 2008.  According to Northwestern Mutual, fifty-eight percent of Americans believe their financial-planning efforts need improvement.  Record high credit card and student loan debt combined with lack of savings for emergencies and retirements (The Federal Reserve, 2017) have necessitated a need for a better understanding of financial planning. As financial planning falls under the domain of financial well-being, it is important for marketers in wealth management to conduct research about consumer choice in such areas as insurance preference and investment portfolios, among others.   

Thus far, research in financial planning has focused on an individual’s financial knowledge or financial literacy as the main antecedent to future-oriented financial planning.  In other words, prior research has mainly viewed whether or not a consumer makes a financial plan for their future (e.g., retirement, college education) as a function of how well they are informed about financial products.  Some research has also investigated the emotional aspects of consumers in their financial decision making or in their financial well-being and satisfaction. While one’s knowledge about financial products and one’s emotional status are important factors, these works have overlooked a person’s value system that might impact their future-oriented financial planning behavior.  Much of the planning toward future financial health in retirement, college education, and life insurance rests on how much one values their own immediate and extended family. Missing from the extant research is an investigation that captures cultural values as an antecedent to future-oriented financial planning. 

Investigating cultural values in financial behavior is particularly important in the United States. U.S. is a very diverse country with many ethnic groups. These ethnic groups are laden with diverse cultural values. One such group is Hispanic Americans.  Hispanic Americans are the largest and fastest growing ethnic group in the United States. From 2000 to 2010, Hispanic Americans had  a 43% increase in population, and are expected to grow 167% from 2010 to 2050. There is an urgent need for financial service managers to understand this ethnic group in their behavior as there are limited conclusive research findings other than that they are reported to behave differently than non-Hispanic groups.  There is a lack of research that investigates the causes of  WHY this group act differently than non-Hispanic consumers in the U.S, particularly  when it comes to their choices of financial services. 

One of the most distinguishing aforementioned features of Hispanic culture is its collectivist and family-centric cultural value, known as familism.  Familism is the most important value in the Hispanic culture when compared to other cultural values. Because of this cultural value, many Hispanic Americans have extensive strong family ties and multigenerational relationships.  As a result, financial matters are often viewed as family matters that are influenced and supported by parents, grandparents, and relatives. We therefore suggest that it is appropriate to investigate familism as an important factor in Hispanic consumers’ financial planning. Consider the following questions:

1. What are your thoughts on this topic?

2. Are there other cultural values that could have an influence?

3. Can you relate to this topic?

4. What are some managerial implications of this suggestion to incorporate familism when trying to understand/influence Hispanic American financial planning behavior?

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South Florida is a multicultural area with a strong, vibrant Hispanic community that is an essential part of our culture and economy. Florida has the 3rd largest Hispanic population in the United States. The success of Hispanic-owned businesses is vital to our community and our local and national economies. However, there is one significant challenge that could potentially impede the levels of growth and success for Hispanic entrepreneurs as revealed by research stemming from collaboration between DBS Financial Group and Nova Southeastern University.

Results of the survey showed that in general they lacked in-depth understanding of financial products and services. Findings revealed challenges in 6 key areas where effective financial planning is extremely important for personal and business success and survival: family responsibility, levels of financial knowledge, retirement planning, achieving long-term goals, generational differences, and succession planning.

Major findings of the study included the following:

1. 80% of these business owners are financially responsible for dependents including children, parents, and other family members.

2. 51% have family members other than children who rely on them for financial support.

3. 43% have both children and family who depend on them for financial support.

4. Those with business revenues below $500, 000 were less knowledgeable than those with revenues above $500, 000 for both businesses and families.

5. All respondents shared that they do not believe that they are doing a good enough job preparing for retirement.

6. Business owners had achieving their long-term goal as top priority but were not sure of their ability to do so.

7. There is a relationship between the number of employees and business generation type. For example, 1st generation businesses have an average of 7 employees; 2nd generation, 6 employees; and 3rd generation, 19 employees.

8. 90% of the business owners surveyed expected to pass their business onto a family member.

Since financial knowledge is critical yet lacking, it is important to educate Hispanics about financial responsibility as this affects entrepreneurial success, local economic growth, and personal and family well-being. It is recommended that the Hispanic community actively seek opportunities available through business, academic, and professional organizations to learn more about financial planning.

Suri Weisfeld-Spolter, Ph.D., is Assistant Professor of Marketing and Acting Chair of Doctoral Programs at the H. Wayne Huizenga School of Business, Nova Southeastern University. She can be reached at 954-262-5192 or sw887@nova.edu Read More

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