Many Asian Americans Don't Use Financial Advisers

Despite recognizing the need to have a plan or saving for retirement, less than one-fifth (18%) of Asian Americans have engaged in a conversation with a financial professional, according to research from Prudential Financial.

Prudential’s research looked at sole or joint financial decisionmakers between the ages of 25 and 65 with total household income of $50,000 or more. 

About one in 10 Asian Americans view their friends and family as their financial advisers.  When asked what they think are ideal qualities in a financial professional, 74% said it is very important to be knowledgeable about financial matters, 69% cited experience, 68% said a financial professional should understand their personal needs, and 65% chose “supports recommendations with facts.” Only 9% indicated it is “very important” for a financial professional to speak their own ethnic language. 

Unsure about Retirement

Faced with other financial priorities, saving for retirement is a challenge for many Asian Americans, and often an afterthought, according to the research. When asked about their financial situation, only 37% of Asian Americans polled feel comfortable enough to save for the long-term. Nearly half (48%) said their savings and investments were hurt by the market downturn. 

Looking back, nearly nine in 10 said they wish their assets had been better protected, and express regret and fear. Eighty-five percent expressed caution going forward, but find themselves torn between investment growth and protection. 

Eighty-three percent indicated they would rather retire later with more as opposed to earlier with less, if forced to choose. For those closest to retirement, postponing retirement is a possibility, as nearly a third have less than $50,000 in retirement savings or aren’t sure how much they have.

The large majority of Asian Americans disagree that relying on family or the government will pave the way to their desired retirement. Instead, nearly all (98%) are tying retirement success to their own ability to plan well.  

Ensuring that their savings will enable them to generate an income and live comfortably throughout retirement is a very important financial goal for seven in 10 Asian Americans, according to Prudential’s research. Across all age segments, health care coverage is the number one financial goal (78%). 

About 1 in 4 Asian Americans hope to “do whatever I want” in retirement. For 72%, retirement years should be “comfortable” even if not indulgent. Few (5%) would be happy just to pay the bills and remain independent. 

Albeit a “very important” financial goal for two-thirds of Asian Americans, only about one in five feel “very confident” in their ability to achieve their desired retirement lifestyle. Confidence is lowest among those in their family formation years, majority of which have young children. 

Creating an Income Stream

The study found more than 80% of Asian Americans are planning to convert their retirement savings to a monthly stream of income, but less than 10% of Asian Americans feel very well-prepared to draw a stream of income in retirement. However, among those who understand “very well” their options for doing so, 55% feel very well -prepared. 

The majority of Asian Americans are unaware of the benefits of variable annuities, but once explained, more than 75% are interested in learning more about a variable annuity product. 

Only three in 10 consider mutual funds very important to their retirement planning. Those that recognize the importance of mutual funds are twice as likely to have taken important planning steps, and more than 40% have over $100,000 in retirement savings. 

For nearly half of Asian Americans polled, life insurance is viewed as a “very important” vehicle in order to protect their family. More than 30% intuitively understand how life insurance can help pay for unexpected medical expenses and other debts in retirement years. Three in 10 Asian Americans are uninsured, and another 17% rely solely on coverage provided at work. 

For “Asian Americans on the Road to Retirement,” Prudential Financial polled a total of 656 Asian Americans.