Mainstream Hispanics are first- or second-generation citizens who are English speaking; many are bilingual. Fairly self-reliant when making financial decisions, they depend on family, friends, and work colleagues for information. For professional financial guidance, they prefer accountants, lawyers, financial planners, and credit-union personnel to stockbrokers and bank personnel. Although they use the internet for many of their transaction and credit needs (see the May 2013 MacroMonitor Market Trends newsletter), for other financial needs they prefer face-to-face interactions and appreciate when the financial professional recognizes them by name.

Demographics

The majority—almost three-quarters—of mainstream Hispanic household heads are either Millennials or Gen Xers. In particular, Mainstream Hispanic Millennials (40% of all Mainstream Hispanics) live in the present and are not thinking seriously about investing or retirement. Many Mainstream Hispanics focus on building their careers and families first and on asset accumulation second.

• The mean age of the household head is 42; this mean age is lower than that of household heads in other ethnic groups; almost one-half are age 40 and younger.
• About one-quarter have a household income of $75K or more; median household income for all households is $50 000.
• Roughly one in five have a college degree or higher, in comparison with about one-third of all US household heads; one-third have some college education.
• Slightly more than one-half are married; household heads are significantly less likely than all household heads to be single, separated, or widowed and significantly more likely to live with a partner or to have other living arrangements.
• Almost one-half have dependent children; 11% have financially dependent adults.
• Half own their home and half rent; home ownership is significantly below average. Although over one-third of this group live in the suburbs, they are significantly more likely than average to live in large and medium-size cities.

Products and Services and Financials

Half of Mainstream Hispanic households are satisfied with their current financial situation; half are living paycheck to paycheck. Because they are young, their average net worth ($189K) is little more than half the net worth of all US households ($364K).

• Ownership of most basic financial products such as checking and savings accounts is average.
• Ownership of savings and investment products such as US Savings Bonds, money market mutual funds, stocks, bonds, and IRAs or SEPs is significantly below average.
• Ownership of second mortgages and HELoCs is below average; ownership of consumer loans (25%) and vehicle loans (32%) is average. In fact, 29% have no credit products.
• Incidences for most types of investment accounts—except for packaged or relationship-banking accounts, wrap accounts, 529 plans, and educational savings plans—are below average.
• Ownership of most types of property/casualty insurance products is average; mortgage (5%) and credit-insurance-product ownership (8%) is above average; life-insurance and individual-health-insurance ownership is significantly below average but not as low as for African American–headed households.

Financial Attitudes That Differentiate Mainstream Hispanic Households

In the vast majority of their financial attitudes, Mainstream Hispanics are not very different from most US households. (For comparison, the same is not true of African Americans and Asian Americans.) The fact that, with few exceptions, they do not vary from the norm may be attributable to their strong resolve to become part of the mainstream. However, their high proportion of Millennials influences some of their attitudes.

• Similar to Millennials, they are more likely than all households to resent financial-institution profits and excessive executive pay.
• They would consider eliminating financial relationships to simplify finances and to consolidate debts for easier management.
• Their bank orientation differs from Millennials'. For example, over one-third would not use a bank if they need to borrow money.
• Because many are financially pressured, few are investors; many have difficulty in saving. The majority (66%) report, "the stock market is too risky for me."
• Although many understand the value of life insurance, few have individual policies; the majority who are covered by life, disability, and health-care policies are covered through their employer.

Interesting Tidbits

Living in the present, with many focused on cash flow, the majority of Mainstream Hispanics are financially organized and responsible but not interested generally in financial matters. For example, only 10% report having a financial strategy; 44% say they have none.

• Three in five are not interested in learning about any financial topics; almost three-quarters use no sources from a list of over 20 for financial information.
• Most use credit judiciously; seven in ten plan to borrow no money in the next year; more than seven in ten would not get a mortgage or a consumer or vehicle loan with an interest rate that would change; two-thirds prefer a debit to a credit card to control spending.
• For households that indicate having financial goals, the most important goals are to secure an education (6%), to buy a home (9%), to marry (6%), and to take a vacation (4%); 27% have no savings and investment goals.
• On par with all US households (47%), one-half believe that home ownership is no longer a big part of the American Dream.

Implications

Mainstream Hispanics are important because they are members of the fastest-growing immigrant population in the United States. It is a mistake to characterize Mainstream Hispanics as a monolithic group. Companies can market to Mainstream Hispanics in English; messages should focus on trust, friendly service, and—when necessary—readily available assistance. Opportunities for financial-services providers such as insurance companies to engage this group will grow as more Mainstream Hispanics mature into the next life stages and seek to protect the gains they have achieved.

For more information, contact CFD.