Multicultural investors chart successful paths to generational wealth – UBS

Slow progress toward financial inclusion

Black (84%), Asian (80%), and Hispanic and Latino (78%) investors all noted the industry is more inclusive than it was for previous generations, according to the report Invest to advance: How multicultural families build generational wealth. Even so, until fairly recently, few banks, brokerages or trust companies existed to serve multicultural investors, limiting their full market participation.

A quarter of today’s HNW Hispanic and Latino investors (23%) and more than half of HNW Black investors (56%) state they’ve felt discrimination by financial firms. As a result, many HNW multicultural investors (MCIs) are still less likely to cite investing in equities as their primary source of wealth.

How are multicultural investors building and spending their wealth?

Nearly six in 10 HNW Black investors surveyed invest in real estate, income properties or vacation rentals. A majority use their wealth to advance their communities by buying goods and services from Black-owned companies or donating to Black-focused institutions. However, their portfolios are only 26% allocated to stocks, on average. As a result, Black investors may be missing opportunities. Sustainable investing could be a path to fuller stock market participation: more than seven in 10 HNW Black investors expressed interest in investments that make a positive environmental, social or governance impact.

44% of HNW Asian investors said workplace compensation was their primary source of wealth versus 24% of overall investors. Two-thirds (67%) of the HNW Asian investors surveyed are first- or second generation Americans whose families moved to the US for work opportunities. Our research found that most prioritize growing wealth and over half are self-taught investors. Because of this self-reliance, they may face limits to what can be achieved on their own. With eight in 10 expecting to leave an inheritance, professional estate planning advice could help minimize taxes and transfer wealth more efficiently.

85% of HNW Hispanic and Latino investors surveyed said that caring for family and friends is a core cultural value. Many cited receiving financial support as motivation and 81% currently provide support to parents, adult children or other family members. Nearly half are first- or second-generation Americans and almost six in 10 support family members outside the US. Survey results show that HNW Hispanic and Latino investors are more cautious about risk and thus prefer less exposure to equities. Broadening their investment planning could help balance their current needs with future goals such as a comfortable retirement and providing family support for major life events.

The way forward

Legislative protections and better access to professional advice, financial solutions and capital mean MCIs face less financial exclusion than at any other period in American history. Still, there is much work to be done. A strong majority of those surveyed mentioned the importance of …….