How One Immigrant Advisor Is Helping the Hispanic Community Save and Invest Their Wealth

According to the US Census 2020, Latinos and Hispanics combined control more than $2.5 trillion in consumer buying power, and the number of Hispanic millionaires living in the U.S. is growing fast. The Hispanic community can benefit by investing for retirement, yet they are less likely than other segments of the population to plan ahead financially. Why? A big part of the hesitancy is cultural and knowing where to turn for financial planning help.

We want to help make planning easier and more accessible for this community.

“Will I have enough? What things should I be considering?” These are common queries that many people who come to Wealthramp ask me, particularly those on the brink of retirement. But what if retirement isn’t the primary concern? For numerous immigrants, the focus is on day-to-day survival and figuring out how to cover expenses this month, let alone envisioning their lives 10, 15, or 20 years down the line. I had a conversation with Alonso Rodríguez Segarra, CFP®, one of my trusted advisors in the Wealthramp network based in Florida. Alonso shared his insights on how he assists immigrants in the US with their financial planning, and helps them achieve early retirement goals.

Views on Retirement

Views on retirement vary greatly and this is particularly true among immigrants, including Hispanic communities. Alonso shed light on his cultural background, and explained how long-term retirement planning takes a back seat to present-day living. Whether it’s investing in assets like a home or a car, or prioritizing their children’s education, for immigrants the focus is mainly on the here and now, with the expectation that their family will provide support in the future.

Alonso’s quick to point out that he is an immigrant himself. “While some Americans are thinking about retiring early at 55 or 60, most of the Hispanic immigrants that I know would never want to retire because they can’t afford it. So when you say it like that, they are willing to work more and to save more now”.

Transitioning to the U.S., many immigrants grapple with the unfamiliar concept of financial planning. Alonso navigates this journey with them, introducing concepts like IRAs, HSAs, and 401(k)s. By imparting valuable knowledge on tax savings and wealth accumulation, he guides his clients toward a secure financial future while emphasizing the importance of discipline in preserving their investments for the long haul.

Views on Investing

Alonso also points out that in Latin America, many view investments as ‘property’ such as real estate or businesses, preferring tangible assets over intangible ones. The traditional ‘under the mattress’ savings mentality is also still alive and well, especially in countries like Venezuela where unstable political conditions breed distrust in banks despite higher interest rates compared to the US. This cautious approach to finances is understandable given the circumstances.

For business owners, Alonso often offers unique and valuable insights into personal financial growth through various retirement account options that provide tax benefits.

Biggest Challenges

Cultural differences play a significant role in financial planning, especially when it comes to retirement savings. Many immigrants struggle with the concept of locking up their money for the long term, as opposed to enjoying it in the present. Alonso dedicates a considerable amount of time to educating his clients on various investment options, tax planning strategies, and emphasizing the importance of a long-term financial outlook.

Additionally, there is a humorous challenge Alonso faces in explaining to his clients that quality financial advice comes at a cost (meaning paying his fee). Due to the scarcity of financial advisors in their home countries, many clients are unaware that this is Alonso’s profession. 

Once his clients grasp the value of financial planning, they become eager to save more and expand their knowledge in the field. This is especially crucial for those who arrive in the US later in life, as they may not have contributed enough to Social Security to secure substantial benefits. As a result, diligent saving becomes even more essential.

How Working With the Right Advisor Can Help

Alonso recently took on a new client who had been working with a broker. This client had a portfolio of approximately $230K, however her previous broker was charging exorbitant fees, totaling over 3% per year. In many instances, like this one, Alonso has had to reverse the damage caused by previous investments. He explained how it’s not uncommon for his clients to have come from situations where they had been hit with a 5% commission upfront and ongoing 3% annual fees.

By reducing investment costs and fees to just .15%, along with his fee of .7%, Alonso was able to save his client thousands annually that can be redirected towards her savings. Not only was this client lacking in tax planning, but she also wasn’t receiving proper financial advice, causing unnecessary stress and fear around money management. Alonso helped his client craft a personalized spending plan tailored to her lifestyle, a solid investing strategy, and expert strategic planning, all while significantly reducing costs compared to her previous broker.

CFPs are hard to find in South America and Mexico. Moreover, a mere 2% of CFPs in the US are Hispanic, highlighting a substantial gap in access to quality financial advice for Hispanic immigrants. Advisors like Alonso, who can relate as an immigrant and Latino himself, serve two distinct client groups – immigrants with assets in need of investment guidance, retirement planning, and tax assistance, and individuals seeking a one-time comprehensive financial analysis.

When asked about why he does what he does, Alonso had this to say, “I’m in this business to transform people’s lives”. 

As we wrapped up our conversation, Alonso shared another remarkable success story with me. One of his long standing clients, a former executive and her spouse, had fled Venezuela 15 years ago with just around $900K in assets and no clear plan. Alonso stepped in to manage their investments, strategically diversifying their portfolio. Fast forward to today, and they are retiring with over $3.5 million, feeling financially secure and content.

Alonso is clearly transforming his clients’ financial lives.

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